Tax week overshadowed – POLITICO

 In Politics

With help from Toby Eckert and Aaron Lorenzo

TRYING TO BREAK THROUGH: So much for tax week.

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House Republicans wanted to use this week to focus on the tax cut the GOP passed last year — that’s why, among other things, there are hearings planned in unfamiliar settings like the Financial Services and Energy and Commerce panels.

This is far from the first time that certain pockets of the GOP have sought to more fervently sell the tax law ahead of November’s midterms. But it’s also far from the first time that other developments in the Donald Trump presidency have impeded those efforts. And this week’s example is a pretty big one, as Burgess Everett, John Bresnahan and Rachael Bade report: “Republicans want to talk about tax cuts. Instead, they’re talking about kids in cages.”

In fact, Republicans are grasping about for a strategy on immigration this week. Which means: “In the latest sign that the GOP is losing control of the narrative, House Republicans are expected to tout the six-month anniversary of their tax reform package this week. It’s doubtful that the news conference, headed by Ways and Means Committee Chairman Kevin Brady and Speaker Paul Ryan, will break through a news cycle focused on immigration.”

Fair question: How much would Republicans actually gain from a concerted push on taxes out of D.C. this week? It’s probably on the margins — an opportunity to use hearings to tie the tax law, H.R. 1 (115), to certain industries, for instance, as one tax observer noted.

They’re not alone! Democrats are also more than eager to talk about the tax law’s first half-a-year, with a special focus on the measure’s impact on health care. They will start that today, with the unveiling of a new report from the Center for American Progress that maintains that the tax cut and its repeal of the individual mandate will spur premium hikes around the country. Also on tap this week: A focus on the new framework coming out of House Budget today, and the new GOP lawsuit — blessed by the Trump administration — that seeks to gut Obamacare and how it would affect people with pre-existing conditions.

The climate: The public’s support of the Tax Cuts and Jobs Act is eroding, a new Monmouth University poll found. Just around a third of Americans back the law now, Pro Tax’s Aaron Lorenzo notes, down from two in five back in April. Another interesting nugget: The number of people who didn’t know whether they liked the law jumped pretty significantly, up from 16 percent to 24 percent. “Public opinion on the Republican lawmakers’ signature accomplishment has never been positive, but potentially growing uncertainty about how American taxpayers will be affected does not seem to be helping the GOP’s prospects for November,” said Patrick Murray, the director of the Monmouth University Polling Institute.

The Wall Street Journal also lays out a dozen markers for one of the biggest issues with grading the effectiveness of the tax law — just how much credit should the tax cut get for the current solid state of the economy? (And how much of the blame should it get for the smaller number of areas that aren’t going as well?) The areas to watch include capital spending, corporate profits, disposable income and retail sales.

WELCOME TO TUESDAY’S MORNING TAX — where, as one does in Washington, we thank Barry Trotz for his service.

Did you know that the first Father’s Day as Americans currently celebrate it was held in Spokane, Wash.? That would have been 108 years ago today, at the Spokane YMCA and the brainchild of Sonora Smart Dodd. (Spokane also inspired a whole movie about tag, in case you were wondering.)

What’s going on out there? Email: [email protected], [email protected], [email protected], [email protected] Twitter: @berniebecker3, @tobyeckert, @brian_faler, @AaronELorenzo, @POLITICOPro and @Morning_Tax.

** Presented by NFIB: Small business owners say the Tax Cuts and Jobs Act is working and is having a positive effect on their businesses. Sales are strong, and profits are increasing. With the tax savings, small business owners are planning to invest in hiring and to raise employee compensation. Learn more at NFIB.com **

IS IT A TRADE WAR? Trump on Monday upped the ante once more in the trade back-and-forth with Beijing, ordering a new round of 10 percent tariffs on some $200 billion worth of Chinese goods, Doug Palmer reports. That’s in effect the third salvo in the recent trade fight, after China matched the U.S.’s original 25 percent tariffs on $50 billion worth of items. Trump also said he wouldn’t stop imposing tariffs on Chinese goods if need be, saying that “he would pursue additional tariffs on another $200 billion worth of goods, for a grand total of $450 billion. That would encompass roughly 90 percent of the $505 billion worth of goods that China exported to the United States in 2017.” China, on the other hand, only imported around $130 billion worth of goods from the U.S. last year.

WHAT ABOUT THE NONPROFITS? The charitable sector was a little queasy about the TCJA, believing that fewer taxpayers itemizing because of the more robust standard deduction would depress donations.

A new report from the conservative American Enterprise Institute’s Alex Brill and Derrick Choe gives some credence to that idea, estimating that the new law will reduce charitable giving by more than $17 billion (or 4 percent) this year and that around 80 percent of that drop is due to the standard deduction changes. Brill and Choe also float a couple new policy ideas to give a jolt to donations — an “above the line” deduction that would give non-itemizers a tax incentive for charitable giving, and using a tax credit instead of a deduction.

Another study, for good measure: The Tax Foundation is out this morning with a new study on taxes on sugary drinks, including using Nielsen consumption data to examine who would bear the brunt of the burden if that became a federal policy. “If a nationwide tax were levied on sugar-sweetened beverages, about two thirds of the revenues would be derived from middle-income households between $20,000 and $100,000, assuming these income groups would have similar behavioral adjustments to such a tax,” wrote Justin Ross and Felipe Lozano-Rojas, both from Indiana University, adding that households making less than $100,000 a year would provide about four-fifths of the revenue in a per fluid ounce tax.

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