Patience Is A Virtue?

Taxes

Additional coronavirus relief will wait, apparently. During an event in his home state of Kentucky, Senate Majority Leader Mitch McConnell said “I wish I could tell you we were going to get another package but it doesn’t look that good right now.” After McConnell failed last week to win Senate passage of his scaled-down relief bill, several GOP senators predicted Congress would be unable to reach a deal before the November election. 

The federal budget deficit will top $3 trillion by the end of the month. Treasury announced that the deficit exceeded $3 trillion through August and would reach $3.3 trillion by the end of the fiscal year on September 30. That would make it the largest in nominal dollars in the nation’s history and the biggest as a share of the economy since World War II. The federal government has spent over $6 trillion so far this year, in part due to emergency coronavirus relief efforts. It spent $4.4 trillion in fiscal year 2019. Revenues have remained largely unchanged. 

Rep. Brady introduces payroll tax holiday legislation. The top Republican on the House Ways & Means Committee introduced legislation last week to turn President Trump’s plan to defer payroll taxes for the remainder of this year into a temporary payroll tax cut. He’d repeal the 6.2-percent Social Security tax paid by employees through Dec. 31. Self-employed people would receive a similar tax cut. To offset the reduced contributions to the Social Security trust fund, the bill would transfer money from the general fund. The Joint Committee on Taxation estimates that the bill would result in a revenue loss of $137 billion.

Governor Newsom backs Proposition 15, a tax increase on California’s commercial property owners. The November ballot measure would establish separate tax rules for commercial and residential property. Proposition 13, passed in 1978, caps the tax rate for all property at 1 percent of the purchase price with annual tax increases of no more than 2 percent. Proposition 15 would require commercial and industrial properties to be taxed at current market value. Sixty percent of its revenues would go to local governments and 40 percent to K-12 schools and community colleges.

What do people think about taxes? TPC’s Howard Gleckman reviews a new study by Harvard’s Stefanie Stantcheva. Her extensive survey of public views on taxes finds that people are partisan and confused. Their perceptions of how government spends revenue may have a powerful effect on their views of the tax code. The conclusion: Partisanship defines not only what people think about taxes, but how they think about taxes.

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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