The Washington DC 100 - 100 word stories & 100 second videos on topics of intrigue

Gloria Story Dittus is the chairman of Story Partners.

One of the least understood aspects of government – and one of the most impactful to our lives – is taxes.

In this edition of The Washington DC 100, tax and policy experts will explore President Trump’s tax proposal. We won’t see a wish list, but an analysis of what the proposal means for corporations and Americans at all levels of the socioeconomic spectrum.

If history is any indicator, the path to reform won’t be easy. But with a committed president and compromise from both sides of the aisle, it just may be possible.

Learn more about the Unified Tax Reform Framework.

– Gloria Story Dittus, Chairman, Story Partners

Please share:

Tax Reform

Providing Meaningful Tax Relief Means Expanding the Child Tax Credit

Marco Rubio is a Republican senator from Florida.

Families are the fundamental building blocks of our society and economy. Sustainable economic and productivity growth simply cannot happen without stable families. Unsurprisingly, tax reform that delivers meaningful relief to middle-class families hinges on how much the child tax credit is increased.

It’s more costly than ever to raise a child, and tax reform should be grounded in the reality families face every day: a fixed budget, stretched paychecks and tough choices. Expanding the child tax credit will put more money in workers’ pockets and provide families with more flexibility to choose the best parenting arrangement for their situation.

– Senator Marco Rubio

Please share:

Tax Reform

An Unpalatable Tax Plan

Moody's Analytics provides economic research regarding risk, performance and financial modeling.

President Trump and Republican leadership argue their tax proposal will significantly increase economic growth, but not add to deficits and debt load. They are wrong on both counts.

Growth will initially come from deficit-financed tax cuts, given full employment, stronger inflation and higher interest rates will result. The benefit of lower tax rates on businesses are washed out by higher interest rates.

Their plan doesn’t pay for itself. Government borrowing increases, causing interest payments on accumulating debt to rise.

Tax reform is necessary, but to boost economic growth, it must be deficit-neutral. It’s difficult seeing it get done.

– Mark Zandi, Chief Economist, Moody’s Analytics

Please share:

Tax Reform

Avoiding Double Taxation

Pete Buttigieg is a Democrat and current mayor of South Bend, Indiana, serving since January 2012 – taking office as the youngest mayor of a U.S. city with at least 100,000 residents.

It appears that the proposed tax framework would eliminate the 104-year-old State and Local Tax deduction (SALT). This deduction allows families to deduct the amount they pay in state and local taxes from their federal tax burden; removing it would create a “double taxation” that would increase the burden on families and local businesses they visit.

The money goes to Washington, but comes out of families’ pockets – or, if local governments offset this with tax cuts, out of local revenue. Either way, it ultimately means less is available for critical services like public safety, education, healthcare and housing.

– Pete Buttigieg, Mayor, South Bend, Indiana

Please share:

Tax Reform

Mortgage Interest Deduction

Redfin is a residential real estate company that provides web-based real estate database and brokerage services.

It’s time to renovate the mortgage interest deduction. Homeowners who itemize their deductions receive this benefit. Under the proposed GOP plan, fewer households will find it worthwhile to itemize. Households making over $100,000 annually receive 77% of the subsidies.

The MID distorts the market, subsidizing folks who buy one or more homes and rewarding size and sprawl. The more expensive the house, the greater the subsidy. The added demand incentivized by the MID pushes up home prices and soaks up much needed supply.

MID should be restructured to help working class families become homeowners, instead of subsidizing the wealthiest.

– Nela Richardson, Ph.D., Chief Economist, Redfin

Please share:

Tax Reform

How to Evaluate the Big 6 Tax Framework

The American Action Forum injects forward-thinking ideas into public policy economic debates.

On September 27, the administration and congressional tax-writers (The Big 6) released the Unified Framework for Tax Reform.

The best way to evaluate the Framework is to acknowledge its limitations. It’s incomplete – it’s not a tax plan. Any analysis that fails to acknowledge this fact is no analysis at all. Policy observers should discount these exercises in fiction accordingly, and dismiss entirely the musings of partisans who rely upon them for their critiques.

The Framework telegraphs the direction in which the tax-writing committee is heading – a more modern, competitive and simpler tax regime – but hardly the final destination.

– Gordon Gray, Director of Fiscal Policy, American Action Forum

Please share:

Tax Reform

State and Local Tax Deduction (SALT)

Steve Benjamin is a Democrat and current mayor of Columbia, SC, serving since 2010.

Since the establishment of the federal income tax in 1913, taxpayers can claim the state and local tax deduction, SALT, to avoid double taxation. If eliminated, millions will pay taxes a second time on the same income. Every local tax dollar for schools, public safety and infrastructure would additionally be taxed by the federal government.

The threat could devastate communities. SALT’s not a subsidy to local governments; 39% of taxpayers with earnings between $50,000 to $75,000 and 70% of taxpayers with earnings between $100,000 and $200,000 use the deduction.

Efforts to repeal SALT should be rejected.

– Steve Benjamin, Mayor, Columbia, S.C.

Please share:

Tax Reform

A Simpler Tax Code

The Association of Equipment Manufacturers represents companies that manufacture equipment for industries including agriculture, construction, mining and utility.

This year we asked our member company executives to identify their top priorities for tax reform, and the answers were very clear.

Equipment manufacturers want a simpler tax code that lowers rates for both corporations as well as family businesses whose earnings are treated as personal income. They want a far simpler tax code. A comprehensive and permanent overhaul of the U.S. tax code will go a long way toward shoring up the competitiveness of equipment manufacturing in America.

That is why AEM is encouraging Congress to “Drive for 25” and reduce corporate taxes to that rate or lower.

– Kip Eideberg, Vice President, Public Affairs, Association of Equipment Manufacturers

Please share:

Tax Reform

Job Creators Network

Job Creators Network supports tax reform and is supported by dozens of U.S. and state-based business organizations.

The Trump administration’s tax framework makes tremendous strides towards fixing our broken tax system for the country’s entrepreneurs and middle class. The 40% tax reduction for pass-through small businesses will be a game changer – fostering a climate of broad economic expansion rooted in job creation and wage increases.

Tax reform should not be a partisan issue. There are Republican and Democrat small business owners and they all deserve a tax break. If Congress does not get this right, they will be sure to hear from the 29 million small businesses at the ballot box during the 2018 midterm elections.

– Alfredo Ortiz, President and CEO, Job Creators Network

Please share:

Tax Reform

Corporate Tax Rates

Robert Willens is an expert in interpreting tax and accounting issues and their effects on corporations.

The reduction in corporate tax rates will provide an earnings boost to corporations with net deferred tax liabilities (AT&T) and penalize corporations with net deferred tax assets (Citigroup).

When rates change, accounting rules mandate a company’s deferred tax assets and liabilities be adjusted to reflect the new rates at which those assets and liabilities will be “realized” or “settled.” The reduction of a liability increases earnings and boosts shareholders’ equity. The truncation of an asset, however, engenders a charge to earnings and diminution of shareholders’ equity. While most benefit, financial companies, which often have copious deferred tax assets, suffer.

– Robert Willens, President, Robert Willens LLC

Please share:

Tax Reform

The Republican Tax Proposal

The Center for Economic and Policy Research promotes democratic debate on economic and social issues.

Republicans in Congress propose corporate and individual income taxes cuts. The plan lowers the top marginal tax rate, paid on incomes over $450,000, from 39.6% to 35%. Middle and moderate-income people would see little change in tax rates, but are likely to have slightly lower taxes as a result of the larger exempt amount. The corporate tax rate would fall from 35% to 20%.

Many specifics are not final, but according to independent analyses the richest 1% would get almost 80% of the gains. The plan also raises the deficit $2.4 trillion over the next decade.

– Dean Baker, Co-Director, Center for Economic and Policy Research

Please share:

Tax Reform

Tax Plan Must Boost Incomes

Tax reform must boost demand.

Any tax reform that doesn’t focus primarily on boosting overall demand will be more symbolic than effective.

Capitalism runs from the bottom up, not the top down, and the deterioration of the middle class is such an obvious problem that both parties referenced it during the campaign. Unfortunately, very little of the (admittedly incomplete) current plan truly addresses this.

Entrepreneurs need more customers, not more tax cuts, and no amount of the latter will bring jobs back so long as foreign labor costs a fraction of ours. Give poor and middle-class households more money, and they will spend it.

– John Harvey, Professor of Economics, Texas Christian University and Contributor, Forbes

Please share:

Tax Reform

The Changes to Come

The specifics of President Trump's tax plan include changes to tax brackets, deductions, corporate tax rate and more.

Individual

The seven tax brackets – ranging from 10% to 39.6% – would be consolidated into three: 12%, 25%, 35%. The standard deduction would nearly double. All itemized deductions other than mortgage interest and charitable contributions would be eliminated. Personal exemptions would be eliminated, but potentially rolled into an additional child tax credit. The alternative minimum tax and estate tax would be eliminated.

Business

The proposal reduces the corporate tax rate to 20%. Income of S corporations and partnerships, which are taxed at the owner level rates as high as 39.6%, would be subject to a top rate of 25%.

– Tony Nitti, Partner, WithumSmith+Brown and Contributor, Forbes

Please share:

Tax Reform

Republican Tax Plan Is a Giveaway to the Richest Americans

The Economic Policy Institute conducts economic research and analyzes the economic impact of policies and proposals.

Republicans advertise their tax plan as a “middle-class” tax cut. The evidence says this is false: 80% of benefits would go to just the top 1% of earners, while taxes would increase for tens of millions of middle-class families. The bottom 20% of Americans would receive just $50 in tax cuts.

Republicans also claim benefits from cutting corporations’ taxes will trickle down as higher wages. Again, the evidence says this is false. When combined with budget cuts needed to finance these tax cuts for the rich, economic growth and middle-class economic security will be damaged, not helped.

– Hunter Blair, Budget Analyst, Economic Policy Institute

Please share:

Tax Reform

Encourage Federal Tax Reform This Year

According to the Main Street Growth and Opportunity Coalition, federal tax reform will help states and territories affected by recent hurricanes to rebuild and recover.

As we know, hurricane recovery takes more than a few months. In fact, the economic recovery after severe storms takes multiple years. That’s why the Main Street Growth and Opportunity Coalition is promoting tax reform to update our 30-year-old code.

Tax reform offers significant benefits for Florida, Texas and Puerto Rico. By simplifying the tax code, we put more money in the pockets of small business owners that they can then reinvest in their families, homes and the economy.

Encourage your elected officials in D.C. to pass tax reform now. Short and long-term relief is needed.

– Carrie Patrick, The Tallahassee 100

Please share: