GOP tax law a one-two punch to charities — and American giving

Back in 2011, when Republicans still talked about deficits, a bipartisan budget commission proposed to save tens of billions a year by revamping the charitable deduction for federal income taxes.

The plan was to substitute a 12 percent tax credit available only to those who gave more than 2 percent of their adjusted gross income. The precise numbers were subject to fine-tuning, but the framework set three goals: lower the deficit, put middle-class donors on more equal footing with the wealthy and establish some minimum standard for generosity to qualify for a tax benefit.

This being Washington, the idea went nowhere. But what’s surprising now is how far Republicans are taking the country in the very opposite direction.

For the first time in their lives, millions of middle-class donors will be effectively shut out from claiming any charitable deduction under the GOP’s new tax law. At the same time, the Continue reading “GOP tax law a one-two punch to charities — and American giving”

Tax reform flaws build the case for a new consumption tax

Is the real lesson from tax reform that Americans rely too much on the income tax to fund their government?

Time and again, that box has proven too small a revenue pot to do all that it’s asked by tax writers. And this leads to decisions, however well-intentioned, that contribute to distortions down the road.

Most other industrial nations lighten the load on their income tax by combining it with some form of consumption taxes — a hard sell in today’s Washington. But given the partisan carnage of this latest tax fight, the uncertain result, and very real debt crisis facing the nation, is it time for both parties to start looking at other options?

“Everybody else has managed to lower their corporate rates but they have done so by relying on consumption taxes which are less harmful to economic growth than income taxes,” said Michael Graetz, a former Treasury Continue reading “Tax reform flaws build the case for a new consumption tax”

Trump budget: Long on wishful thinking, short on shared sacrifice

President Donald Trump’s new balanced budget plan is a little like his famous hungering for a Purple Heart.

As a candidate last summer, Trump allowed that he had always coveted the military decoration for those wounded in combat. But when given his chance to earn one as a young man, Trump avoided the draft in the Vietnam War.

The pattern repeats itself now in the president’s budget, where he again takes the path of wishful thinking without showing much commitment to shared sacrifice.

For example, fully $2 trillion of Trump’s deficit reduction plan rests in large part on what many contend are overly optimistic economic assumptions. At the same time, the president doesn’t hesitate to demand very large savings from programs for the poor and disabled — all ahead of the policy debate over how to actually reform these benefits.

To understand the stakes, one good starting point is to Continue reading “Trump budget: Long on wishful thinking, short on shared sacrifice”

The GOP’s responsible taxman

As a former White House budget director, Sen. Rob Portman still cares about deficits. But as a pro-trade Ohio Republican, he’s every bit as anxious to enact long-sought corporate tax reforms to spur industrial investment back home and lift worker wages.

Where to draw the line is the big question. And amid all the crosscurrents among Republicans these days on rewriting the tax code, Portman best captures the search for a path that gives tax writers flexibility without abandoning all deficit discipline.

Toward this end, Portman has worked for months behind the scenes with staff from the Senate Finance and Joint Taxation Committees. He hopes to have something to show by June or early summer but cautions that his goal even then is to outline the potential for consensus — not to exclude competing options.

“We’re not trying to do our own thing,” he said in an interview. “It’s not Continue reading “The GOP’s responsible taxman”

Trump follows Ryan into same dangerous budget trap

For all the tough talk, Donald Trump’s new budget could be dubbed Ryan-Lite. And if Republicans seem queasy in Congress, it’s because they lived through this movie not long ago and it didn’t end well.

Indeed, just four years ago Speaker Paul Ryan, then chairman of the House Budget Committee, proposed almost exactly what Trump wants now: big increases for the military combined with tens of billions in cuts to non-defense programs. The House went along, and within months the whole appropriations process collapsed, setting the stage for a costly government shutdown in the fall of 2013.

Now Trump wants the GOP to try again — only this time he openly substitutes his own ideology for deficit reduction.

With Ryan, the appropriations cuts were always a way to pressure President Barack Obama to make changes Republicans wanted to achieve savings from entitlement programs like Medicare. But Obama’s not around to Continue reading “Trump follows Ryan into same dangerous budget trap”

Ex-GOP leader Bob Michel, face of decency and public service, dies

Former House Republican Leader Bob Michel, who helped shepherd Ronald Reagan’s agenda through Congress only to be pushed aside by the rise of Newt Gingrich a decade later, has died at the age of 93.

Elected first in 1956, the Illinois lawmaker spent 38 years in Congress — more than half in his party’s leadership. No House Republican has held the Republican leadership post longer, and Michel’s death is sure to trigger a host of memories, all the more relevant because of what Washington has become in the years since.

Indeed, it’s difficult to overstate how much the transition from Michel to Gingrich in 1994 impacted first House Republicans and then all of Congress as the fabric of civility soon fell apart and both political parties became more polarized.

"It’s day and night," said Thomas Mann, a political scientist and long time student of Congress. "I see that transition — Continue reading “Ex-GOP leader Bob Michel, face of decency and public service, dies”

Child migrants lose major case in federal court

Child migrants suffered a major setback in the federal courts on Tuesday, but Congress and the White House also found themselves lectured to from the bench for failing to do more to help the juveniles, thousands of whom have been thrown into deportation hearings without defense counsel.

At one level, the ruling by a three-judge panel on the U.S. 9th Circuit Court of Appeals is a clear victory for the Justice Department. It effectively dooms a long-awaited federal district court trial, scheduled to begin in November in Seattle, on the children’s right to counsel.

But at a second level, Justice’s win had a hollow ring, as two of the three judges wrote a concurring opinion that repeatedly invoked the words of former Attorney General Eric Holder that the government has a “moral obligation to insure the presence of counsel” for the children.

“What is missing here. Money and resolve Continue reading “Child migrants lose major case in federal court”