From The Hill: “GOP chairman: Tax reform could increase deficit.”
The Republican tax reform plan could blow a hole in the nation’s deficit for several years, House Ways and Means Committee Chairman Kevin Brady (R-Texas) said Wednesday.
“We will be open to losing tax revenues in these early years,” Brady said at an event on tax reform at former President Reagan’s ranch in Santa Barbara, Calif.
Any such deficits, he added, would eventually come down as a result of economic growth and eventually disappear altogether, a controversial prospect among economists and deficit hawks alike. Continue reading “Kevin Brady: Tax reform could increase deficit” »
From Dealbook: “Do Tax Cuts Really Spur Growth? It Depends on the Details.”
TL:DR — It’s a mixed-bag.
“At the core of decades of Republican economic policy is a simple idea: Cutting taxes will unleash investments and lead to higher incomes, more jobs and more rapid growth. And there are historical episodes that would seem to support that idea, most notably when Ronald Reagan cut taxes in the early 1980s, and the economy boomed in the years that followed.
But there’s considerably less evidence that this cause-and-effect applies at all times and at all places. George W. Bush’s 2001 and 2003 tax cuts were followed by years of disappointing growth. Bill Clinton’s tax increases in 1993 were followed by a boom that surpassed the Reagan-era expansion.
In a large body of academic research on this question, it seems that the exact time period and country examined and how tax changes are measured matters a lot — as does what the government does with the revenue.”
Continue reading “Tax cuts and economic growth” »
From The Hill: “Bipartisan beer caucus hops into debate over tax reform.”
A surprising cause might play a role in bipartisan tax reform later this year: beer.
Members of both parties are expressing support for craft brewing, with a caucus even forming in the House to champion it.
The House Small Brewers Caucus has 225 members, more than half of the chamber, making it the largest bipartisan caucus on Capitol Hill.
Beer might be the last truly bipartisan issue in Congress, according to caucus co-Chairman Peter DeFazio (D-Ore.), as it has a major economic impact on almost every congressional district.
“It’s about jobs, jobs and more jobs,” Rep. Mike Kelly (R-Pa.), another caucus member, told The Hill. “There are some 32,000 people involved in independent brewing in Pennsylvania alone. You look at those numbers and you say, ‘Oh my gosh, this has a significant impact on local economies.’ ” Continue reading “Bipartisan beer caucus hops into tax reform debate” »
From Frank Sammartino at the Tax Policy Center: “The Complex Relationship Between The State And Local Tax Deduction And The Alternative Minimum Tax.”
“The House Republican leadership and the Trump Administration want to repeal the state and local tax (SALT) deduction and the individual Alternative Minimum Tax (AMT). But as policymakers consider the combined proposal, they should be careful about the sometimes-surprising ways they interact with one another.
AMT repeal, which has widespread support on Capitol Hill, would primarily benefit high-income households. Over 5 million households pay more each year in individual income tax due to the AMT, the vast majority with annual income over $200,000.”
Continue reading “State tax deductions and the Alternative Minimum Tax” »
From The New York Times: “Trump Tax Plan Will Not Bolster Growth, Economists Say.”
President Trump says the perfect medicine for the economy’s sluggish growth is a big tax cut.
Mr. Trump and his advisers say that leaving more money in the hands of businesses and consumers will lead to more spending and investment, lifting economic growth, which has been stuck in a 2-percent-a-year rut.
But a range of economists, both conservative and liberal, are highly skeptical that a tax cut is the cure for what ails the economy. They say Mr. Trump has little opportunity to increase economic growth in the next few years because the economy is already growing about as fast as it can. The government’s focus, they say, should be on raising the economy’s speed limit, for example, by encouraging investments that increase productivity.
Continue reading “Economists react to Trump’s tax plan” »