Bye-Bye, Trump Tax Cuts?

Plus, Joe Biden's $1.7 trillion climate plan

Biden Proposes $1.7 Trillion Climate Plan

Democratic presidential candidate Joe Biden unveiled a climate plan Tuesday that takes its cues from progressive demands for a dramatic change in environmental policy in the U.S. and promises to go “well beyond” the Obama administration.

Like Rep. Alexandria Ocasio-Cortez’s proposal for a Green New Deal, the former vice president’s plan calls for the elimination of polluting emissions and the creation of millions of new clean-energy jobs.

“Biden believes the Green New Deal is a crucial framework for meeting the climate challenges we face,” the candidate’s proposal says. “It powerfully captures two basic truths, which are at the core of his plan: (1) the United States urgently needs to embrace greater ambition on an epic scale to meet the scope of this challenge, and (2) our environment and our economy are completely and totally connected.”

Some highlights from the proposal:

  • Sets a goal of a 100% clean-energy economy with net-zero emissions by 2050, compared with the Green New Deal’s call for net zero emissions by 2030.
  • Calls for $1.7 trillion in new federal spending over 10 years, designed to leverage private sector and state and local investments that would bring the total to $5 trillion.
  • Proposes to pay for those new costs “by reversing the excesses of the Trump tax cuts for corporations,” closing loopholes and ending fossil fuel subsidies.
  • Calls for rejoining the Paris climate agreement.
  • Seeks to rebuild infrastructure to withstand the effects of climate change.

Many important details were left open-ended, including the enforcement mechanisms for reducing emissions, The Washington Post’s Jeff Stein said. And it’s not clear that Biden’s proposed funding sources can cover the projected cost. Marc Goldwein of the Committee for a Responsible Federal Budget told Stein that raising the corporate tax rate to 27 or 28 percent from its current 21 percent, as many Democrats have called for, would raise only $700 million over 10 years.

Trump Tariffs Could Wipe Out Tax Cuts for Most Americans: Report

The import tariffs proposed by President Trump could wipe out the income gains provided by the Republican tax cuts for low- and middle-income earners, Jim Tankersley of The New York Times reported Monday.

The Trump administration has already imposed or increased numerous tariffs on imports, including a 25% levy that went into effect in May on $200 billion worth of consumer and manufacturing goods from China. If those tariffs remain in effect, they will cost the average household about $831, according to analysts at the New York Federal Reserve Bank.

The president also has threatened to impose tariffs of up to 25% on all Mexican imports and to impose new tariffs on another $300 billion worth of imported Chinese goods. He is also weighing tariffs on autos from Europe and Japan.

A new tax on American consumers: An analysis of the existing and threatened tariffs by the Tax Foundation found that higher prices on consumer goods would not only wipe out income gains from the 2017 GOP tax cuts for the majority of U.S. households, but would in effect impose a new tax that would leave most people worse off.

The bottom 20% of taxpayers would see an effective tax increase of 1.1%, the analysis found, while those in the middle fifth would see an effective tax increase of about 0.3%. The top 10% of households would still be better off, though their gains from the tax cuts would be eroded (see the chart below).

“Once you start adding in the tariffs and start talking about what Trump wants to do at the end of the day, it gets harder and harder for Trump and Republicans to claim that they are cutting taxes for the middle class,” said Kyle Pomerleau, the Tax Foundation’s chief economist.

Low-income earners hit the hardest: Saying that the tariffs could “boomerang on U.S. consumers and companies,” Josh Boak and Jonathan J. Cooper of the Associated Press emphasized Tuesday that low-income Americans would get hurt more than anyone else as dollar-store chains and Walmart raise their prices due to increased costs from the tariffs. Poorer Americans spend a higher percentage of their incomes overall, and more of it goes toward basics that are exposed to tariffs.

“The people likely to pay the steepest price for Trump’s attempts to bend Mexico and China to his will are poor Americans, who already live close to the financial edge and could have to pay more for everyday purchases,” Boak and Cooper said.

The Tax Foundation’s Pomerleau agreed, saying that if the tariffs remain in place, the bottom fifth of households could end up worse off under Trump’s presidency. “You’re looking at an administration that may have raised taxes on the bottom 20% and cut taxes for the top 1%,” Pomerleau said.

House Finally Passes Long-Delayed $19.1 Billion Disaster Aid Bill

The House on Monday evening approved a $19.1 billion disaster aid package, sending the long-delayed legislation to President Trump’s desk after earlier objections from Republicans delayed the legislation and forced a recorded vote. The package was approved 354-58, with the only no votes coming from GOP members.

The president celebrated the bill's passage Monday night, writing in a tweet that has since been deleted that “Farmers, Puerto Rico and all will be very happy.” But he erroneously stated that the package still needed to go through the Senate.

The legislation had been stalled in that chamber for months as lawmakers fought over a number of complicating factors, including Trump’s initial opposition to providing additional funds for Puerto Rico and, later, over the White House’s desire to include additional border money in the package. The final legislation includes $900 million for Puerto Rico hurricane recovery, including $300 million in Department of Housing and Urban Development grants and $600 million for the supplemental nutritional program on the island. It does not include the $4.5 billion in border money the administration had sought. The package passed the Senate, 85-8, on May 23.

The bill, according to The New York Times, also extends the National Flood Insurance Program and provides more than $3 billion to rebuild military bases and Coast Guard facilities. And it includes $2.4 billion for community development block grants and $3.25 billion for the Army Corps of Engineers to repair damaged infrastructure and prepare for future storms.

A Discussion on the Dangers of Our National Debt

The conservative Heritage Foundation held an hour-long panel discussion on Tuesday on “Confronting the National Debt.” The conversation touched on whether the debt matters, why lawmakers have failed to address the debt and why it might be too late for another “grand bargain” — and that’s all just in the first 10 minutes or so. You can watch the whole discussion here.

The Poor Are Now Being Audited by the IRS Nearly as Much as the Top 1%: ProPublica

Last year, millionaires were about 80% less likely to be audited by the Internal Revenue Service than they were in 2011, ProPublica’s Paul Kiel reported recently, based on government data. Meanwhile, audits of the poor — specifically, Americans who receive the earned income tax credit (EITC), who typically have annual income under $20,000 — have held steady. The result is that audit rates for EITC recipients and the top 1% of earners are converging, as shown in the ProPublica chart below.

“Part of the reason is ease,” Kiel writes. “Audits of EITC recipients are largely automated and far less complicated.” The EITC audits carry a secondary effect, too, he explains: “They’ve discouraged hundreds of thousands of families who might qualify for the credit from claiming it in future years.”

Read the full ProPublica report.

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