TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, November 17, 2017

Tax Policy In The Trump Administration

Geier: Principled Tax Reform

GeierTaxProf Blog op-ed: Principled Tax Reform, by Deborah A. Geier (Cleveland-Marshall)

Republicans often say that their proposed tax reform is the first in 30 years, implicitly invoking the Tax Reform Act of 1986, but the efforts could not be more different in overarching philosophy and context.

First the context. In 1986, President Reagan said that he would not sign a tax bill that was not revenue neutral, at a time when the national debt was $2.1 trillion, the debt-to-GDP ratio was 46%, and the baby boomers were not near retirement. The effort was truly bipartisan with public hearings and significant changes made by both sides of the aisle so that the House passed its bill by voice vote and the Senate passed its bill by 97-3. The final bill reconciling the two versions passed by 292-136 in the House and 74-23 in the Senate.

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November 17, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

Tuesday, November 14, 2017

19 Tax Profs Weigh In On The House And Senate Tax Bills

Saturday, November 11, 2017

Oei & Ring: The Senate Tax Bill And The Battles Over Worker Classification

Shu-Yi Oei (Boston College) & Diane M. Ring (Boston College), The Senate Tax Bill and the Battles over Worker Classification:

Senate Republicans released their version of tax reform legislation on Thursday, November 9. The legislative language is not available yet, but the Description of the Chairman’s Mark (prepared by the Joint Committee on Taxation) suggests that one of the key provisions in the bill will clarify the treatment of workers as independent contractors by providing a safe harbor that guarantees such treatment. The JCT-prepared description tracks the contents of the so-called “NEW GIG Act” proposed legislations introduced by Congressman Tom Rice (R-S.C.) in the House and Senator John Thune (R-S.D.) in the Senate in October and July 2017, respectively. “NEW GIG” is short for the “New Economy Works to Guarantee Independence and Growth (NEW GIG) Act.” But notably, and as we further discuss below, the legislation is not limited in its application to gig or sharing economy workers.

Assuming the Senate Bill adopts the basic parameters of the NEW GIG proposed legislation — which looks to be the case based on the JCT-prepared description — we have some concerns. In brief, this legislation purports to simply “clarify” the treatment of workers as independent contractors and to make life easier for workers by introducing a new 1099 reporting threshold and a new withholding obligation. But the legislation carries potentially important ramifications for broader fights over worker classification that are raging in the labor and employment law area. Despite possibly alleviating tax-related confusion and reducing the likelihood of under-withholding, we worry that there are quite a few underappreciated non-tax hazards for workers if these provisions go through.

Summary of the Legislation

The legislation (assuming the Senate Bill more or less tracks the NEW GIG Act language) purports to achieve such “clarification” of worker classification status by doing the following:

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November 11, 2017 in Congressional News, News, Political News, Shuyi Oei, Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

Friday, November 10, 2017

Tax Policy In The Trump Administration

Thursday, November 9, 2017

The House GOP Tax Bill's Disparate Treatment Of State And Local Taxes Paid By Employees And Pass Through Entities

Wednesday, November 8, 2017

Shobe: The GOP Gets A Big Part Of Its Tax Plan Backward: State, But Not Local, Taxes Should Be Deductible

Tax Cuts And Jobs ActWashington Post op-ed:  The GOP Gets a Big Part Of Its Tax Plan Backward, by Gladriel Shobe (BYU):

The House Republican tax plan proposes repealing much of the state and local tax deduction, allowing individuals to deduct up to $10,000 of local property taxes but eliminating the rest of the deduction. This gets sound tax policy precisely backward. Smart tax reform would allow taxpayers to deduct what they pay to states — and would end the deduction for local taxes.

The treatment of the state and local tax deduction is one of the central points of contention in the tax-reform debate. President Trump and most Republicans want to repeal or modify the deduction, which could raise more than $1 trillion over the next decade. Republican and Democratic members of Congress from high-tax states are protesting any repeal because it would disproportionately harm their constituents.

But the reality of the distribution of benefits and costs of the state and local tax deduction is more complicated than high-tax (mostly blue) states vs. low-tax (mostly red) states. As the House Republican tax plan implicitly acknowledges, the state and local tax deduction in fact combines two very different deductions: a state deduction for state income taxes (or, much more infrequently, sales taxes) and a local deduction for property taxes. When looked at this way, the issue is both a high-tax state vs. low-tax state issue and a rich-locality vs. poor-locality issue, with the federal government providing a disproportionate subsidy to high-tax states and high-tax localities. ...

[S]mart tax policy would allow taxpayers to deduct the cost of state income taxes while eliminating the deduction for local property taxes. As it happens, because local taxes account for approximately half the overall deduction, this change would raise approximately $500 billion over the next decade.

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November 8, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (2)

Friday, November 3, 2017

Tax Policy In The Trump Administration

Saturday, October 28, 2017

Foreigners Would Receives $700 Billion (35%) Of Trump's Proposed $2 Trilllion Corporate Tax Cut

Steven M. Rosenthal (Tax Policy Center), Slashing Corporate Taxes: Foreign Investors Are Surprise Winners, 157 Tax Notes 559 (Oct. 23, 2017):

The Unified Framework for Fixing Our Broken Tax Code (the “Big Six” tax plan) would revise business and individual taxes. Most significantly, on the business side, the Big Six tax plan would lower the corporate income tax rate from 35 percent to 20 percent, which would reduce corporate taxes by an average of $200 billion a year, or $2 trillion over the 10-year budget window. However, in the short run, a surprisingly large portion of this relief would end up in the pockets of foreign investors.

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October 28, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (3)

Friday, October 27, 2017

Tax Policy In The Trump Administration

Tuesday, October 24, 2017

Stark & Zolt: We Don’t Need Tax Cuts For The Middle Class

Kirk Stark (UCLA) & Eric Zolt (UCLA), We Don’t Need Tax Cuts for the Middle Class:

Amid the partisan rancor surrounding the framework for tax reform developed by GOP congressional leaders, there is one area of remarkable consensus: lower taxes for the middle class. The political logic is not hard to understand. The middle class continues to struggle, and, with midterm elections just around the corner, both parties need the support of middle-class voters.

But missing from the tax debate is an appreciation that lawmakers have already crafted a tax-friendly regime for middle-income taxpayers. The result is a more progressive tax system that raises less revenue. Unless Congress is willing to dramatically cut major entitlement programs and eschew new social programs to address poverty and declining economic mobility, we need moretax revenue from the middle class, not less.

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October 24, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (4)

Saturday, October 21, 2017

Clausing & Kleinbard: Trump’s Economists Say A Corporate Tax Cut Will Raise Wages by $4,000. It Doesn’t Add Up.

Following up on Tuesday's post, Council of Economic Advisers: Reducing Corporate Tax Rate From 35% To 20% Would Increase Household Income By $4,000/Year:  Kimberly Clausing (Reed) & Edward Kleinbard (USC), Trump’s Economists Say a Corporate Tax Cut Will Raise Wages by $4,000. It Doesn’t Add Up.:

The President’s Council of Economic Advisers claims that slashing the corporate tax rate to 20 percent would boost the average American’s wages by $4,000 per year (“very conservatively”) — and perhaps by as much as $9,000. If true, that would be a remarkable gain for working Americans.

Unfortunately, it’s extraordinarily unlikely to be true.

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October 21, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (9)

Friday, October 20, 2017

Tax Policy In The Trump Administration

Friday, October 13, 2017

Tax Policy In The Trump Administration

Wednesday, October 11, 2017

How The Trump Tax Plan Affects Working Families

Two weeks after the release of their tax reform blueprint, the Trump administration and congressional Republican leaders still haven't said how much their plan would raise the child tax credit or how they would treat head-of-household filers. In the meantime, Kyle Rozema (Chicago) and I have tried to estimate the change in net tax liability under the Trump plan for working families (adjusted gross income of $75,000 or less) under a number of plausible scenarios.

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October 11, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (4)

Summers: Trump's Tax Plan Is An Atrocity

Washington Post op-ed:  The Trump Administration’s Tax Plan Is An Atrocity, by Lawrence Summers:

The Trump administration’s tax plan is not a plan. It is a melange of ideas put forth without precision or arithmetic. It is not clear enough to permit the kind of careful quantitative analysis of its expected budget costs, economic effects and distributional implications that precedes such legislation in a serious country.

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October 11, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

Friday, October 6, 2017

Tax Policy In The Trump Administration

Kleinbard: Only Jay Gatsby Could Love The Trump Tax Plan

Vox op-ed:  The GOP Says Its Business Tax Plan Will Help Workers and Small Businesses. It Won’t.
Instead, It’s a Gift to People With Lots of Capital, by Edward Kleinbard (USC):

To understand the business tax provisions in the Trump tax proposals, begin with F. Scott Fitzgerald’s insight that the rich are different from you and me — they have more money.

In particular, they have more capital. (Ever polite, economists call piles of money that have been invested “capital.”) Business tax reform really is an exercise in how we should tax capital income — that is, returns on investments. And because the rich have lots more capital than do you or I, the benefits of the multitrillion-dollar business tax cuts proposed by the Trump administration’s tax “framework” necessarily will be vacuumed up by the most affluent Americans. Business tax reform has only a modest connection to the economic future of working stiffs, and the small connection that does exist is a second-order effect.

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October 6, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (0)

Friday, September 29, 2017

Tax Policy In The Trump Administration

Thursday, September 28, 2017

Bartlett: I Helped Create The GOP Tax Myth. Trump Is Wrong: Tax Cuts Don’t Equal Growth

Washington Post op-ed:  I Helped Create the GOP Tax Myth. Trump Is Wrong: Tax Cuts Don’t Equal Growth, by Bruce Bartlett:

Four decades ago, while working for Rep. Jack Kemp (R-N.Y.), I had a hand in creating the Republican tax myth. Of course, it didn’t seem like a myth at that time — taxes were rising rapidly because of inflation and bracket creep, the top tax rate was 70 percent and the economy seemed trapped in stagflation with no way out. Tax cuts, at that time, were an appropriate remedy for the economy’s ills. By the time Ronald Reagan was president, Republican tax gospel went something like this:

  • The tax system has an enormously powerful effect on economic growth and employment.
  • High taxes and tax rates were largely responsible for stagflation in the 1970s.
  • Reagan’s 1981 tax cut, which was based a bill, co-sponsored by Kemp and Sen. William Roth (R-Del.), that I helped design, unleashed the American economy and led to an abundance of growth.

Based on this logic, tax cuts became the GOP’s go-to solution for nearly every economic problem. Extravagant claims are made for any proposed tax cut. Wednesday, President Trump argued that “our country and our economy cannot take off” without the kind of tax reform he proposes. Last week, Republican economist Arthur Laffer said, “If you cut that [corporate] tax rate to 15 percent, it will pay for itself many times over. … This will bring in probably $1.5 trillion net by itself.”

That’s wishful thinking. So is most Republican rhetoric around tax cutting. In reality, there’s no evidence that a tax cut now would spur growth. ...

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September 28, 2017 in News, Tax, Tax Policy in the Trump Administration | Permalink | Comments (2)

Friday, September 22, 2017

Tax Policy In The Trump Administration

Friday, September 15, 2017

Tax Policy In The Trump Administration

WaPo: The GOP's War On The EITC

EITCIn this op-ed in the Washington Post, columnist Catherine Rampell comments on a proposal in the Budget Committee Report 115-240 explaining the current budget legislation.  It's a proposal to tighten up processing of tax returns claiming the Earned Income Tax Credit (ETIC).  She writes:

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September 15, 2017 in Bryan Camp, Gov't Reports, News, Tax, Tax Policy in the Trump Administration, Tax Practice And Procedure | Permalink | Comments (7)

Friday, September 8, 2017

Tax Policy In The Trump Administration

Friday, September 1, 2017

Tax Policy In The Trump Administration

Friday, August 25, 2017

Tax Policy In The Trump Administration

Friday, August 18, 2017

Tax Policy In The Trump Administration

Friday, August 11, 2017

Tax Policy In The Trump Administration

Friday, August 4, 2017

Tax Policy In The Trump Administration

Friday, July 28, 2017

Tax Policy In The Trump Administration

Thursday, July 27, 2017

Trump, Congress Reach Agreement On 'Skinny Tax Reform'

GOP Statement on Tax Reform:

Today, House Speaker Paul Ryan (R-WI), Senate Majority Leader Mitch McConnell (R-KY), Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (R-UT), and House Ways and Means Committee Chairman Kevin Brady (R-TX) issued the following joint statement on tax reform:

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July 27, 2017 in Congressional News, Tax, Tax Policy in the Trump Administration | Permalink | Comments (3)

Friday, July 21, 2017

Tax Policy In The Trump Administration

Friday, July 14, 2017

Tax Policy In The Trump Administration

Friday, July 7, 2017

Tax Policy In The Trump Administration

Tax Reform Is Hard (#TRIH)

With the looming deadline on both the debt ceiling and the tax reconciliation bill (not to be confused with the ACHA reconciliation instructions), taxes and, hopefully, tax reform are moving to the top of the legislative agenda.   The rhetoric of tax reform is heating up.  Yesterday Paul Ryan tweeted:

Screen Shot 2017-07-06 at 9.43.05 AM

Speaker Ryan is not the only member of GOP leadership discussing tax reform.  News last week broke that Steve Bannon wants to raise the top bracket rate to a number that has ”a 4 in front of it”. So, the GOP continues to a least float the idea of substantive tax reform measures.  

I don't want to get too carried away about tax reform. Despite my optimism for "reform season," others does not seem to have the same zeal. First there is no "plan" to discuss.  Second, the House Appropriations Bill (which I wrote about at Surly) does not seem to be too keen on the chances of real reform measures.  For example, the Appropriations Bill addresses estate tax regulations and ACA penalties.  If the estate tax and the ACA are on the chopping block, then why worry about the measures in the Appropriations Bill?

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July 7, 2017 in Congressional News, Political News, Tax, Tax Analysts, Tax Policy in the Trump Administration, Tax Profs | Permalink | Comments (1)

Friday, June 30, 2017

Tax Policy In The Trump Administration

Thursday, June 29, 2017

NY Times:  The False Premise Behind GOP Tax Cuts

New York Times editorial, The False Premise Behind G.O.P. Tax Cuts:

With the Senate effort to upend Obamacare suspended for the Fourth of July holiday, there’s a chance to step back and examine the assumptions behind Republicans’ longstanding objections to the social safety net — as well as the flaws in those assumptions.

From Ronald Reagan’s invocation of a “welfare queen,” to Mitt Romney’s derision of “takers,” to the House and Senate bills to cut taxes for the rich by taking health insurance away from tens of millions of people, the premise of incessant Republican tax cutting is that the system robs the rich to lavish benefits on the poor.

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June 29, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (3)

Friday, June 23, 2017

Tax Policy In The Trump Administration

Friday, June 16, 2017

Tax Policy In The Trump Administration

Wednesday, June 14, 2017

Avi-Yonah & Mazzoni:  The Trump Tax Reform Plan — Implications For Europe

Reuven S. Avi-Yonah (Michigan) & Gianluca Mazzoni (S.J.D. 2017, Michigan), The Trump Tax Reform Plan: Implications for Europe:

On April 26, 2017, the Trump administration unveiled a one page tax reform outline (the “Trump Plan”) that differs significantly from the tax reform plan proposed in June, 2016 by the House Republicans (the “House Blueprint”). The two most important changes are deleting both the cash flow element and the destination based element of the House Blueprint. These changes have significant implications for European foreign direct investment (FDI) into the US and for US FDI into Europe.

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June 14, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (0)

Friday, June 9, 2017

Tax Policy In The Trump Administration

Friday, June 2, 2017

Tax Policy In The Trump Administration

Friday, May 19, 2017

Tax Policy In The Trump Administration

Friday, May 12, 2017

Tax Policy In The Trump Administration

Friday, May 5, 2017

Tax Policy In The Trump Administration

Friday, April 28, 2017

Tax Policy In The Trump Administration

Friday, April 21, 2017

Tax Policy In The Trump Administration

Saturday, April 15, 2017

Tax Policy In The Trump Administration

Friday, April 7, 2017

Tax Policy In The Trump Administration

Friday, March 24, 2017

Tax Policy In The Trump Administration