Why Millionaires In France Can Breathe Easier
Washington Governor Jay Inslee proposes a statewide cap and trade program. The Democrat released details of his carbon pollution market program that would give the state's Department of Ecology authority to set annual goals aimed at reducing emissions to half of 1990 levels. Inslee would extend the state's sales tax exemption for alternative fuel vehicles, and replace a sales tax exemption for solar equipment, with to-be-designed incentives. The measure faces a tough road in the state legislature, which rejected a similar plan in 2009. Washington would be the second state to approve a carbon reduction plan after California.
California has welcomed the new year with a cap and trade surcharge on gasoline. Starting January 1, gasoline and diesel industries began to pay fees based on the amount of carbon pollution their products produce. California's Air Resources Board figures this will translate into an increase of perhaps 10 cents per gallon this year. California's Legislative Analyst's Office estimates the increase would likely be 13 cents to 20 cents per gallon by 2020, but could exceed 50 cents per gallon.
As for a federal gasoline tax increase to support the Federal Highway Trust Fund, the odds are still long. The New York Times examines the political landscape in Washington: It's rocky. Republican Senator Bob Corker and Democrat Chris Murphy have a plan raise the gas tax by 12 cents a gallon over the next two years and then index future increases to inflation. Corker notes while the Senate leadership will want to focus on broader tax reform, when it comes to the gasoline tax, “The one thing I'm going to rail against is to kick the can down the road.”
More on dynamic scoring: “It's a ruse to make tax cuts look good.” That's University of Southern California professor Edward Kleinbard's conclusion in his New York Times op ed. Kleinbard, former chief of staff of the Joint Committee on Taxation, says, “In practice, [dynamic scoring] models are political statements. They show the biggest economic effects by assuming that tax cuts are financed by unspecified future spending cuts. The smaller size of government, not the tax cuts by themselves, largely drives the models' results.”
December 31: A silly deadline for charitable giving and ACA enrollment. TPC's Howard Gleckman thinks “we have gotten so used to this year-end scramble that we think it is natural. But step back a bit and you see how dumb it really is.” Charitable giving requires cash, time, and attention—all of which are in shorter supply during the holidays than during tax filing season. Purchasing health insurance under the Affordable Care Act requires attention and a feeling of affordability. At filing time, many people learn they are about to get a refund. Plus subsidies and penalties are most salient when they, or their preparers, fill out their 1040s.
Millionaires in France can breathe a little easier: A tax is dropped. The government of Francoise Hollande would have imposed a tax rate of 75 percent on incomes over one million euros, or $1.22 million, but the levy has been overturned by France's highest court and replaced by a 50 percent tax paid by employers. Even Thomas Piketty called it “a millstone around the neck” of Hollande's government. In 2014, France's stalling economy and rising unemployment prompted the government to cut payroll taxes by up to 40 billion euros ($49 billion) over three years.
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