By Bernie Becker | 04/18/2017 10:00 AM EDT
With help from Daniel Lippman and Aaron Lorenzo
YOU ARE OFFICIALLY (ALMOST) OUT OF TIME: Today's the day, everyone - you've had three extra days to file your taxes, and the gig is now up. (That is, unless the IRS owes you a refund. Then you have another three years. But why wait?)
WHAT DO THE PEOPLE KNOW? The tax filing deadline always brings with it a slew of new tax polls and statements. Case in point: NPR and Ipsos teamed up for a poll that found that large chunks of Americans really don't know which ways their tax system has been trending. For instance, about half of people thought the federal government gets around three-quarters of its revenue from the individual income tax. (It's actually around half.) And only around 1 in 5 knew that 45 percent of Americans don't pay any income tax - despite all the hullabaloo surrounding Mitt Romney and the 47 percent several years back.
To be fair, should average voters be expected to know all those answers? Or to put it another way: Do voters need to know that level of detail to potentially ratchet up the support for tax reform, or is merely the widespread, general discontent for the tax code enough?
ALONG THOSE LINES: Jeff Birnbaum, the former Wall Street Journal reporter who chronicled the 1986 overhaul of the tax code, told our Colin Wilhelm that the "wide distrust among the public" for the current system is similar to the environment that existed three decades ago. Birnbaum, now the president of BGR Public Relations and adviser to a tax reform coalition, still gives pretty decent odds to tax reform while also stressing "it's not going to be simple or quick."
OUT OVER HIS SKIS? Former President Barack Obama was known to use that phrase, and it also seems that Treasury Secretary Steven Mnuchin might have gotten a little ahead of himself on tax reform, as our Toby Eckert reports. Mnuchin, who rather quickly forecast that tax reform could get finished off by August, told The Financial Times on Monday that idea is "highly aggressive to not realistic at this point." The big reason for the delay has been the health care debate, Mnuchin added, while sticking with a prediction that tax reform can get signed into law this year.
WELCOME TO TUESDAY, where Morning Tax really does hope you all had a fairly painless tax-filing experience - a year free of health insurance interruptions, and full of easily answered tax questions.
It's also the 37th anniversary of the Republic of Zimbabwe, whose first president was Canaan Banana.
What's happening out there? Email: firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org. Twitter: @berniebecker3, @tobyeckert, @brian_faler, @colinwilhelm, @AaronELorenzo, @POLITICOPro and @Morning_Tax.
TAX REFORM'S STATUS ON TAX DAY: Can Republicans really keep themselves from trying to roll back the Obamacare taxes they so dislike in an overhaul of the code? Speaker Paul Ryan and House Ways and Means Chairman Kevin Brady have repeatedly said they want to keep the two separate, but senators haven't been quite as cut-and-dry on that front. And now this: Rep. Adrian Smith (R-Neb.), who's risen to become a subcommittee chairman at Ways and Means, told POLITICO's Brent Griffiths that he thinks the GOP could dip into the Obamacare cookie jar in tax reform. "Because Obamacare is so tax oriented, whether it is the enforcement mechanism that was placed in the jurisdiction of the IRS or ... tax increases that were adopted through Obamacare, it shows you how complicated all these things are as it relates to our tax code," Smith said, after a meeting with constituents in Scottsbluff, Neb.
Speaking of the House: The Urban-Brookings Tax Policy Center took another crack at projecting the GOP blueprint, and found it would cut taxes by $3.1 trillion in the first decade (or $3 trillion if scored dynamically). The caveat - there's still a lot of details to be filled in there.
The day in border adjustability: The American Made Coalition, the group backing the House GOP blueprint, has a new video illustrating that people with a wide variety of views on politics believe the current tax system is pretty screwed up. Bonus points for the (fairly risqué) cameo from Chevy Chase. The group also has a release listing five benefits from the House plan, including higher wages and more jobs. (Interestingly, the word "border" never appears in that release.)
From the anti-side: The free marketers at Club for Growth are targeting four House Republicans - Reps. Diane Black of Tennessee, John Culberson of Texas, Tom Rice of South Carolina and Martha Roby of Alabama - with a $500,000 ad buy urging them to oppose border adjustment. (Black and Rice are both Ways and Means members.) The spots have a little edge to them, too: Black's tarred with voting for "Obama's green energy programs," while Club for Growth hits Culberson for not being "shy about voting to raise his own pay seven times. But, he's strangely quiet about a trillion-dollar tax hike Congress is cooking up."
Meanwhile, Americans for Affordable Products, the coalition opposing the House plan, has a Tax Day release pounding one of their favorite drums - that companies in the American Made Coalition already pay comparatively low effective rates. Pro-border adjustment companies, the opposing coalition says, pay an average effective tax rate of 16.6 percent, far below the statutory 35 percent.
The commercial real estate perspective: Stephen Breitstone of Meltzer, Lippe, Goldstein & Breitstone lays out the problems with what he called the "misguided" changes that the House blueprint would make to commercial real estate deals. Among the issues, according to Breitstone: allowing investors to immediately write off new buildings, but not land, would create "an immediate tax shelter of unprecedented proportions."
** A message from H&R Block Policy Perspectives: H&R Block has long supported streamlining the tax code. And while the debate on how best to accomplish that simplification continues, there is much to learn as the 2017 tax season ends. Read more about what we expect to learn: http://bit.ly/2oyhKGg **
THE MORE THAN 30,000-FOOT VIEW: Another fun aspect of the tax reform debate - trying to nail down what exactly President Donald Trump thinks about border adjustability. Bloomberg's Lynnley Browning examined Trump's latest somewhat ambiguous comments - calling for a "reciprocal tax," not a border adjustment - and finds some experts thinking that the president is referring to import tariffs, and others warning not to read his words as a rebranding of a border adjustment.
The New York Times lays out the case for how Trump's tax return stance is hurting the tax reform campaign. "While Mr. Trump signaled that he would like to reach a bipartisan tax deal, potentially including an infrastructure plan, the focus on his tax returns suggests that any legislation will happen along party lines. That would mean that a more limited bill, requiring a simple majority, would need to pass the Senate through complicated budget rules that create a new set of problems," Alan Rappeport wrote.
INTERNATIONAL UPDATE -
WHAT'S GOING ON, PARAGUAY? President Horacio Cartes won't seek a second five-year term, even as lawmakers in Paraguay were exploring whether to allow him to run again. As Reuters reports, that could have some impact on tax policy in the landlocked South American country. "Investors favor Cartes' low-tax policies and credit him with spurring one of the fastest economic growth rates in Latin America, but business groups had urged him not to seek another term in order to avoid more riots in the world's No. 4 soy exporter."
STATE NEWS -
DUST IN THE WIND: Republican Oklahoma Gov. Mary Fallin signed a measure Monday that cuts off a tax incentive for energy created without emissions, a credit that helped boost the state to the third-highest capacity for wind energy among U.S. states. Fallin gave credit to the tax break for Oklahoma's status among wind energy producers, but lawmakers are also searching for ways to close a budget shortfall. The catch here, via The Associated Press : "Closing the window of eligibility will have no short-term impact on state tax collections, according to fiscal analysts. The first tax year that the change will be fully in effect is 2027."
- Trump isn't likely to let the IRS confirm that he's being audited, as is customary for presidents.
- National Taxpayer Advocate Nina Olson hits the WSJ op-ed page to plead for a simpler tax code.
- Speaking of the WSJ op-ed page: Mercatus and Cato team up to bash the BAT.
- Your (quasi-)celebrity tax headline of the day: "'The Situation' pleads not guilty in latest tax fraud case."
- If only there were a Tax Hall of Fame: Minnesota volunteer has completed some 50,000 tax returns over the years.
- Saudi Arabia expects a new tax on tobacco and sugary drinks to raise up to $2.7 billion a year.
DID YOU KNOW?
Paraguay's flag has different seals on its two sides - one showing the national coat of arms, the other the seal of the treasury.
** A message from H&R Block Policy Perspectives: H&R Block has long supported streamlining the tax code to make it easier for all taxpayers to win. H&R Block supports tax reform that addresses three critical areas: streamlining individual taxes, decreasing burdens on small businesses and reforming corporate taxes. While the debate on how best to accomplish this simplification continues, there is much to learn as the 2017 tax season ends.
When we opened our doors in 1955, the tax code looked a lot different than it does today, and our clients looked to us for expert advice. Regardless of the tax reform changes to come, we know people will continue to want expert help and the assurance that they are getting the most money back.
Read more about H&R Block's perspective on tax reform and an analysis on the 2017 tax season on the Policy Perspectives blog: http://bit.ly/2oyhKGg **
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