Blog Posts Tagged With Budget

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The Latest from the JCT

The Joint Committee on Taxation (“JCT”) released two documents over the weekend comparing the House and Senate Bills – one describing the differences and similarities between the two bills, and a second focusing on the effect that those differences have on the revenue generated by each bill on a static basis.  The JCT’s revenue comparison finds that both bills cost roughly the same amount before factoring in economic growth – with the House Bill clocking in at $1.4455 trillion over ten years with the Senate Bill at $1.4468 trillion.

The JCT also released its dynamic score of the final House Bill yesterday, estimating that the House Bill would increase the level of real GDP relative to the baseline forecast by 0.7% on average throughout the 10-year budget window.
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CBO Scores Initial Chairman’s Mark of the House Tax Bill

Today the Congressional Budget Office released revised estimates of the deficit and debt effects of the House tax bill as amended by Chairman Kevin Brady’s (R-TX) mark from last week.  Under the CBO’s analysis, the initial Chairman’s Mark of the tax bill would increase the deficit by $1.7 trillion during the ten-year budget window, greater than the $1.5 trillion increase authorized by the Joint Budget Resolution (see our prior post on the Senate’s passage of the resolution here).  These estimates do not reflect the revisions made by the Chairman’s amendments adopted on Monday, which reportedly further decrease expected revenues.
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What is in a Baseline? Current Law vs. Current Policy

Revenue neutrality has traditionally been among the stated goals of Congressional Republicans with respect to tax reform. This goal generally requires that any rate reduction, new tax incentives, or policy changes (e.g., territoriality) be funded with new revenues from elsewhere in the system. Recently, though, some lawmakers have started asking how to properly define “revenue-neutrality” (and whether it can be defined in a way that requires less new revenue to offset the revenue lost as a result of tax reform).  (Others are now questioning whether revenue neutrality is a worthwhile goal at all.)

At issue is how the status quo or “baseline” is defined for purposes of comparing proposed reforms. 
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An Update on the DBCFT: A Hearing in the House and Trump’s Budget

In advance of yesterday’s House Ways and Means Committee hearing on tax reform, the Joint Committee on Taxation released its own comprehensive report on destination-based taxation and border adjustments. The report gives an overview of the current state of U.S. international taxation and then delves into the economics of border adjustments, including a summary of the academic literature on associated exchange rate (or other wage or price) adjustments such that exporters would not be advantaged and importers would not be disadvantaged (defined as “trade neutrality,” which we’ve previously explored here and here). Although the JCT ultimately does not take a view on whether the proposed destination-based cash flow tax would achieve this “trade neutrality,” the report does suggest that any currency adjustments would not happen quickly or, perhaps, evenly among importers and exporters, citing empirical studies that conclude that changes in consumer prices affected by exchange rate adjustments happen asymmetrically.
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Updates on Tax Reform and the Tax-Exempt Sector

President Trump and Congress have recently undertaken measures to preserve the ability of tax-exempt organizations to engage in limited forms of political speech, and efforts in Congress may signal a willingness to provide further relief to tax-exempt organizations.

The Presidential Executive Order.  On May 4, 2017, President Trump signed an executive order entitled “Promoting Free Speech and Religious Liberty” that directs the executive branch “to vigorously enforce Federal law’s robust protections for religious freedom.”  The executive order further instructs the Treasury Department, to the extent permitted by law, not to “take any adverse action against any individual, house of worship, or other religious organization” that discusses moral or political issues from a religious perspective, but only where such speech has not ordinarily been treated by the Treasury Department as the endorsement of or opposition to political candidates. 
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Tax Items in the Budget Bill

Late Sunday night Congress reached a budget deal that will keep the Federal government funded through the end of the fiscal year in September. The House and Senate are expected to vote on the package today or tomorrow (the House vote is scheduled for this afternoon) to ready it for President Trump’s signature before the end of the day on Friday to avert a government shutdown. The bill totals 1,600 pages (you can read the whole thing here.)

Here is a summary of the tax-related items:

  • The bill allocates a total amount of $11.2 billion to the IRS to fund various activities and operations.

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