Hitting a Wall and Reimagining Revenue

Taxes

Senate Appropriation negotiations are off to a rocky start. After clashing over abortion and President Trump’s efforts to fund the southern border wall,  a Senate Appropriations subcommittee canceled its mark up of the money bill for the departments of Labor, Health and Human Services, and Education. The full committee may try to draft the bill later this week.  

Reimagine Chicago” with $4.5 billion in new revenues? Community groups and labor organizations propose a long list of new taxes including a 3.5 percent city income tax on Chicagoans and suburbanites earning more than $100,000 annually, a financial transaction tax, a 66 percent increase in its hotel tax, an employee head tax, and new taxes on office and industrial leases. And that’s on top of a real estate transfer tax on $1 million homes and a sales tax on luxury goods and services. If the groups got it all, the city could close its budget gap, cover its public pension payments, and invest $1.9 billion in new city services. If wishes were horses…

In Milwaukee County, Wisconsin, a (more modest) reimagining… A coalition of 19 local  leaders proposed a 1 percentage point increase to the county’s 0.5 percent sales tax. The $160 million in additional revenue would pay for building maintenance and other services and fund property tax relief. Wisconsin’s state legislature must approve the plan before it could take effect. 

Alaskan voters may decide next year how to share their oil wealth. The Fair Share Act is a proposed ballot initiative to repeal some oil producer tax breaks passed in 2013. Had the measure  been in effect in 2018, it would have generated an additional $1.1 billion in tax revenue. Lt. Governor Kevin Meyer has two months to consider the ballot initiative application. Should he approve, proponents will need to start collecting signatures across 30 separate house districts. 

How did investors respond to capital gains taxes during the Great Recession?  A new report by TPC’s Robert McClelland and the Joint Committee on Taxation’s Timothy Dowd and Jacob Mortenson finds that even during the financial collapse a decade ago, investors were willing to hold on to shares long enough to benefit from the lower rate on long-term capital gains. Indeed, they may even have been more responsive to tax rates during the financial panic than at other times. 

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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