Budget & Taxes

Rush to Prepay Taxes Turns to Confusion and Anger

New York Times: “The new tax bill, and its $10,000 cap on all local and state tax deductions, has generated a variety of strong emotions — including anxiety and frustration — in places like Hempstead.”

“By Thursday, however, that stew of emotions had been replaced by utter confusion, as well as rage, including among people who had shelled out money only to discover that they might not get any benefit.”

Trump Tells Friends They ‘All Got a Lot Richer’

President Trump kicked off his holiday weekend at Mar-a-Lago at a dinner where he told friends, “You all just got a lot richer,” referencing the sweeping tax overhaul he signed into law hours, CBS News reports.

“Mr. Trump directed those comments to friends dining nearby at the exclusive club — including to two friends at a table near the president’s who described the remark to CBS News — as he began his final days of his first year in office in what has become known as the Winter White House.”

Tax Bill May Cause Charitable Giving to Dry Up

“Many U.S. charities are worried the tax overhaul bill signed by President Trump on Friday could spur a landmark shift in philanthropy, speeding along the decline of middle-class donors and transforming charitable gift-giving into a pursuit largely left to the wealthy,” the Washington Post reports.

“The source of concern is how the tax bill is expected to sharply reduce the number of taxpayers who qualify for the charitable tax deduction — a big driver of gifts to nonprofits. One study predicts that donations will fall by at least $13 billion, about 4.5 percent, next year. That decline is expected to be concentrated among gifts from the middle of the income scale. The richest Americans will mostly keep their ability to take the tax break.”

GOP Groups Plan Big Marketing Push to Sell Tax Plan

Politico: “Conservative groups are planning a multimillion-dollar effort to sell the GOP’s tax cut law, hoping the American electorate can learn to love the party’s signature — but massively unpopular — legislative achievement. … The Koch Network will launch a multimillion-dollar push next year to sell the bill, with paid advertising and town halls to educate voters. A major GOP super PAC is planning to spend $10 million to protect House members.”

GOP Hopes Tax Bill Will Stem Midterm Losses

“The sweeping tax overhaul approved by Congress this week hands Republicans a long-sought achievement they believe will bolster their defenses in next year’s midterm campaign, but party officials concede the measure may only mitigate their losses in what is shaping up to be a punishing election year,” the New York Times reports.

“While the tax legislation is broadly unpopular as it reaches President Trump’s desk, the bill offers Republicans the sort of signature accomplishment they have been lacking to galvanize their demoralized donors and many of their voters.”

Ryan Pushes Welfare Overhaul Next

“Republicans want to channel momentum from the GOP’s victory on taxes into a push to overhaul the nation’s welfare programs, though some of President Donald Trump’s advisers prefer a less controversial infrastructure plan at the top of his agenda,” Bloomberg reports.

“House Speaker Paul Ryan regards 2018 as a chance to fulfill the ambitions he brought to Congress 20 years ago: reshaping the social safety net for the poor and disabled, as well as programs including food stamps and Medicaid.”

Trump Will Wait Until January to Sign Tax Bill

President Trump “plans to sign the tax bill on Jan. 3 to ensure automatic spending cuts to Medicare and other programs don’t take effect,” Bloomberg reports.

“The White House informed House GOP members of the timetable, following the likely decision by House Republicans to leave the so-called PAYGO provision out of a year-end spending deal to avoid a government shut down before Friday.”

House Will Try to Pass Short Term Funding Bill

“Speaker Paul Ryan and his top lieutenants plan to bring a short-term government funding bill to the House floor on Thursday despite internal resistance — in the hopes of averting a shutdown and then leaving town for the holidays,” Politico reports.

“GOP leaders are betting that their conference doesn’t want to trample on their tax victory by shuttering federal agencies. They plan to call up the bill, along with a separate $81 billion disaster package for hurricane relief. If the House passes the funding patch Thursday, the Senate will move on it as quickly as possible.”

History Suggests Tax Celebration Will Be Short-Lived

Patrick Murray: “Bookmark that photo of Republican lawmakers gathering at the White House today to celebrate their first major legislative victory of the Trump era. If history is any guide, many of them may be on their way out this time next year.”

“Importantly, fully half of the American public believes that their own federal taxes will increase because of this new tax reform package. Only 14% expect that their taxes will go down. In reality, many more than 1-in-7 taxpayers will see at least a nominal decrease. This reality is what GOP lawmakers are banking on when they face the voters next year.”

“But politics – and voters’ decision-making process – isn’t always based on reality. It is, however, always based on perception. And based on historical perception metrics, the short-term future doesn’t look quite so bright for the bill’s proponents.”

Puerto Rico May Be Big Loser from New Tax Law

“Puerto Rico’s governor is warning that the sweeping tax plan passed by congressional Republicans on Wednesday could deliver a ‘crippling blow’ to the island’s already-fragile economy, still reeling from the effects of major hurricanes,” the Washington Post reports.

“The tax bill passed overwhelmingly in the House on Wednesday includes a new 12.5 percent tax on profits derived from intellectual property held by foreign companies — a move designed to compel those companies to move back to the United States. Puerto Rico is considered part of the United States in all realms except taxes — meaning that island residents don’t pay federal income taxes but do pay into Social Security. Companies based on the island are treated as if they were located in other Caribbean tax havens not under an American flag.”

Most Won’t Know Tax Bill Impact Until After Midterms

Washington Post: “Republicans in Congress celebrated the passage of the biggest rewrite of the U.S. tax code in decades Wednesday, with President Trump calling it a ‘Christmas gift for hard-working Americans.’ Workers will see the first glimpse of a tax cut in February at the earliest, but it won’t be until 2019 — when people file their taxes for next year — that most will know whether they will pay more or less to the federal government.”

Trump Falsely Claims He Repealed Obamacare

“The Republican tax-overhaul bill may have only ended the individual mandate aspect of Obamacare, but that won’t stop President Trump from gloating to his base that he ‘repealed’ his predecessor’s signature legislation,” the Daily Beast reports.

Said Trump: “When the individual mandate is being repealed, that means Obamacare is being repealed. Obamacare has been repealed in this bill.”

“Contrary to his claim, however, the Affordable Care Act is still largely intact—from its Medicaid expansion to the insurance exchanges it set up to regulations on insurance companies, including those mandating coverage for pre-existing conditions.”

Northeast Republicans Lose Big Time

New York Times: “Amid the cheers and gavel-pounding among Republicans on Tuesday at the passage of the tax bill in the House, there was a Northeastern accent to the party’s dissenters, with nine lawmakers from New York and New Jersey bucking the consensus to vote no. And in almost every case, the reason for that cross-Hudson opposition came down to the assertion that their two states were basically being used to pay for tax cuts in the other 48.”