Tolls considered for I-83 bridge in Harrisburg; opponents call it ‘a new tax’

By: Jan Murphy

Crossing theI-83 South Bridge in Harrisburg could begin to cost motorists around a dollar or two in each direction, unless they choose to find another way to cross the Susquehanna River.

That 61-year-old bridge, sometimes referred to as the John Harris Bridge, is on the list of nine spans that the state Department of Transportation has identified as candidates to impose new tolls. The goal is to pay for their improvements and finance other road and bridge projects.

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800 taxpayers affected by glitch in Pa’s collection of back state taxes

By: Jan Murphy

Roughly 800 taxpayers who are on payment plans to pay back personal income taxes owed to the commonwealth saw double payments withdrawn from their bank accounts last week due to a glitch in a Pennsylvania Department of Revenue system.

Revenue spokesman Jeff Johnson said instead of initiating one electronic transfer of funds from those taxpayers’ accounts, the department’s tax system double dipped.

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Promises made, questions left unanswered by GOP tax plan

The Trump administration and Congressional Republican leaderships this week released their “Unified Framework for Fixing our Broken Tax Cod,” a nine-page manifesto birthed from months of closed-door meetings on tax reform by the so-called Big Six: Treasury Secretary Steve Mnuchin, National Economic Council Director Gary Cohn, House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, House Ways and Means Committee Chairman Kevin Brady, and Senate Finance Committee Chairman Orrin Hatch.

The goal of the framework is to move the tax reform process forward, in particular to build support for a budget resolution that will permit the House and Senate to pass tax reform legislation by a simple majority vote.

With that goal in mind, the framework answers several important questions regarding tax reform, but it leaves far more either unanswered or with too brief or too vague of a description to evaluate.  Because it is an advocacy piece, the framework is light on details.  And, when it has details, they generally focus on the good news (i.e., taxpayer-favorable provisions that are being added or expanded) rather than the bad news (i.e., provisions being eliminated or reduced).   Further, in many cases, the framework uses guarded language or caveats when discussing politically sensitive areas.  For example, the framework “aims” to consolidate the tax rates for individuals, “envisions” changing inflation adjustments and repealing provisions to make the tax code simpler, and “contemplates” preventing wealthy individuals from avoiding the top personal tax rate.  Areas that are still unsettled or where further work is required are left to the Ways and Means Committee and Finance Committee (the “committees”) to work through and resolve.

What the Framework Says

Rates

Individuals

The framework “aims” to consolidate the current seven tax brackets into three brackets of 12%, 25% and 35%, although it warns ominously that “an additional top rate may apply to the highest-income taxpayers to ensure that the reformed tax code is at least as progressive as the existing tax code and does not shift the tax burden from high-income to lower- and middle-income taxpayers.” The framework also calls for use of a more accurate (i.e., less taxpayer-favorable) measure of inflation for purposes of indexing the tax brackets and other tax parameters.

Businesses

For corporations, the framework would reduce the top tax rate to 20%. It notes that “the committees also may consider methods to reduce the double taxation of corporate earnings,” leaving open the possibility of a corporate integration proposal.

For pass-through entities, the framework would “limit the maximum tax rate applied to the business income of small and family-owned businesses conducted as sole proprietorships, partnerships and S corporations to 25%.” Nonetheless, the framework “contemplates that the committees will adopt measures to prevent the recharacterization of personal income into business income to prevent wealthy individuals from avoiding the top personal tax rate. ”

Deductions, Exclusions and Exemptions

Individuals

The framework would:

  • combine the existing standard deduction and the personal exemptions for taxpayer and spouse and increase it to $24,000 for married taxpayers filing jointly and $12,000 for single filers;
  • convert existing personal exemptions for dependents into an enhanced child tax credit or a non-refundable $500 credit for non-child dependents;
  • eliminate “most” itemized deductions, but “retain tax incentives for home mortgage interest and charitable contributions, and
  • retain “tax benefits that encourage work, higher education and retirement security,” although the committees are encouraged to simplify them “to improve their efficiency and effectiveness.”

Punted to the committees:

  • “work on additional measures to meaningfully reduce the tax burden on the middle-class;”
  • repeal of many of the “numerous” exemptions, deductions and credits for individuals that “riddle the tax code” in order to “make the system simpler and fairer;” and
  • the appropriate treatment of interest paid by non-corporate taxpayers.

Businesses

The framework:

  • would provide immediate expensing, for at least a five-year period, for all depreciable assets– other than structures–acquired after September 27, 2017.
  • states that the deduction for net interest expense incurred by C corporations will be partially limited.
  • specifically calls for the repeal of the section 199 manufacturing deduction, and states that “numerous other special exclusions and deductions will be repealed or restricted.” There are two explicit exceptions–the R&D tax credit and the low-income housing tax credit–although “the committees may decide to retain some other business credits to the extent budgetary limitations allow.”
  • would “modernize” the tax rules affecting specific industries “to ensure that the tax code better reflects economic reality and that such rules provide little opportunity for tax avoidance.”

Repealed

The framework would repeal:

  • The individual alternative minimum tax (“AMT”);
  • the corporate AMT (or at least “aim to”); and
  • the estate tax and generation-skipping transfer tax.

International Tax Reform

The framework:

  • Calls for adoption of a new “territorial” tax system with a 100% exemption for dividends from foreign companies in which the US parent owns 10% or more of the shares. However, this dividend exemption comes at price: “to prevent companies from shifting profits to tax havens, the framework includes rules to protect the U.S. tax base by taxing at a reduced rate and on a global basis the foreign profits of U.S. multinational corporations.”
  • Would impose a “deemed repatriation” tax on US multinationals with offshore earnings. Different rates would apply to earnings held in liquid and illiquid form, although neither the rates nor the period over which the payments must be made is specified.
  • States that the committees will incorporate rules to level the playing field between U.S.-headquartered parent companies and foreign-headquartered parent companies.

What the Framework Doesn’t Address

  • Effective dates (other than for expensing)
  • Phase-ins and transition rules
  • How the international tax rules would apply to individuals
  • How it plans to comply with the budget rules

Next Steps

The House and Senate have to agree on a budget resolution that provides for a tax reform package in line with the framework. Once that is agreed to, the Ways and Means Committee and Finance Committee can proceed to marking up tax reform legislation and filling in the blanks.

Trump's first 100 days: Obamacare, taxes, crime, and trade

President-elect Donald Trump released last week his “Contract with the American Voter,” a set of 18 specific policy objectives aimed at “restoring honesty and accountability, and bringing change to Washington.”

The manifesto includes some ten legislative measures spanning taxes, the repeal and replacement of the Affordable Care Act, immigration and crime. The plan, a revival of Republicans' 1994 “Contract with America,” brings new clarity to the broad legislative and regulatory pledges the incoming president made in the course of the last 16 months, including:

  • Proposals to modify federal lobbying and campaign finance law, including term-limiting members of Congress, an extended five-year “cooling off” period for White House and Congressional officials transitioning to work as lobbyists, a lifetime ban on White House officials lobbying on behalf of the foreign government and a ban on foreign lobbyists fundraising for American elections;
  • Regulatory reform proposals, including a requirement that two existing regulations be eliminated for every new federal regulation, lifting restrictions on oil and natural gas production on public lands, jump-starting stalled energy infrastructure projects such as the Keystone XL Pipeline, and cancelling US payments to the UN Green Climate Fund and redirecting the funds to domestic water and environmental infrastructure;
  • Renegotiating or withdrawing from existing trade deals, such as NAFTA and the proposed Trans-Pacific Partnership, as well as directing the Secretary of the Treasury to label China a currency manipulator; and
  • New immigration and public safety-related measures, such as cancelling federal funding to sanctuary cities, suspending immigration from terror-prone regions without adequate vetting procedures and deporting criminal illegal immigrants.

Mr. Trump's 100-day plan includes the following legislative measures that he expects to pursue in Congress to accomplish these objectives, including:

  • Middle Class Tax Relief and Simplification Act: Features broad tax reduction and tax code simplification, condensing the number of tax brackets and lowering the top business tax rate to 15%.
  • End the Offshoring Act: Establishes tariffs to discourage companies from relocating overseas.
  • American Energy and Infrastructure Act: Leverages public-private partnerships and private investments through tax incentives to spur infrastructure investment.
    School Choice and Education Opportunity Act: Redirects education dollars to increase school choice, ends Common Core, expands vocational and technical education, and brings greater local control to education.
  • Repeal and Replace Obamacare Act: Fully repeals the Affordable Care Act and replaces it with health savings accounts (HSAs), removes restrictions on purchasing health insurance across state lines, lets states manage Medicaid funds, and speeds up drug-approval times at the FDA.
  • Affordable Childcare and Eldercare Act: Allows tax deductions for childcare and eldercare, incentivizes employers to provide on-site childcare services, and creates tax-sheltered dependent care savings accounts for young and elderly dependents, with matching contributions for low-income families.
  • End Illegal Immigration Act: Funds the construction of a wall on the Mexican border “with the full understanding that the country of Mexico will be reimbursing the United States for the full cost of such wall,” as well as increases sentences for illegal immigrants with criminal convictions or previous deportations.
  • Restoring Community Safety Act: Creates a task force on violent crime and increases funding for programs to train and assist local police, and increases resources for federal law enforcement agencies and federal prosecutors.
  • Restoring National Security Act: Eliminates the defense sequester and expands military investment, increases options for veterans seeking privately-offered healthcare outside of the VA, establishes new screening procedures for immigration and new programs for protecting infrastructure from cyber-attacks.
  • Clean Up Corruption In Washington Act: Enacts new ethics and campaign finance reforms to reduce the influence of special interests.

The plan can be read in its entirety here.