Taxes, Trade Wars, and Tradeoffs

Taxes

The Trump Administration says the French tech tax may be a trade violation. The White House announced it is opening an investigation into whether France’s proposed 3 percent tax on large US tech companies discriminates against US businesses. Trump could use the investigation as a first step toward imposing retaliatory tariffs on another close ally. The French Senate could vote as soon as today on the levy that would hit firms such as Google, Amazon, Facebook, and Apple. 

Trading off AMT relief for the SALT cap.  The Tax Cuts and Jobs Act reduced the number of taxpayers on the AMT by more than 90 percent but also capped the state and local tax (SALT) deduction at $10,000. A new TPC  analysis finds that most taxpayers who were on the pre-TCJA version of the AMT still came out net winners, though how well they did depended on how much money they made. TPC’s Len Burman explains.

A worker credit, a child credit, or both?  Earned Income Tax Credit reformers are divided: Should it be based on children, or on work? Democratic presidential candidates have fallen on both sides of the debate in recent months. Now, IRS Taxpayer Advocate Nina Olson suggests the credit could be split into both a worker credit and a child benefit that could replace both the current EITC and the child tax credit.  

Former Vice President Joe Biden releases his tax returns. The Democratic presidential candidate and his wife Jill reported $11 million in adjusted gross income and paid about $3.7 million in taxes in 2017 and paid about $1.5 million in taxes on $4.6 million of AGI  in 2018. They gave $1 million and $275,000 to charity in 2017 and 2018, respectively. The couple’s income grew considerably from books and speeches. By routing  income through S corporations they avoided  the 3.8 percent self-employment tax.

Kansas enjoys an economic rebound after a failed tax cut. For now. Two years after repealing tax cuts enacted under former Republican Governor Sam Brownback, the state has a budget surplus. But the Kansas Legislative Research Department forecasts that tax revenues will begin declining as soon as next year, as economic growth slows. Republican lawmakers want to restore the tax cuts, saying that the fiscal problem was not Brownback’s tax cuts but  insufficient spending reductions. 

In Wayne County, Michigan: A lawsuit over the county’s annual tax auction. The Pacific Legal Foundation has filed suit against the county and its treasurer, challenging the foreclosure of a Detroit rental property over a $144 tax debt. The plaintiff argues the county violated the state constitution through a flawed  foreclosure notification process, excessive penalties, and the sale of the home for $108,000. Said the foundation’s attorney: “The United States should not be a place where you can lose your entire home, your life savings, your nest egg over a small debt.”

For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at dailydeduction@taxpolicycenter.org.

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