Tax and Spend Tuesday: What’s in Store for YOUR Wallet?

Tax and Spend Tuesday: October 20, 2020

Welcome to the inaugural edition of Tax and Spend Tuesday, a roundup of news, views and policy proposals affecting your paycheck and pocketbook!

The candidates: Our friends at the Tax Foundation have analyzed the tax plans of the presidential candidates.

Democrat Joe Biden promises to cut taxes for Americans earning less than $400,000. Those making more, however will face double-digit tax increases, including higher taxes on individual income, capital gains and payroll. He would also raise the 21% corporate income tax rate to 28% and increase the minimum tax for corporations earning profits of at least $100 million. The Tax Foundation found Biden’s proposals would raise federal tax revenue by $3.05 trillion over the next decade but reduce the GDP by 1.47% over the long term.  According to the Washington Times, top earners in places such as California could face a state and federal tax rate of as much as 62.6%. In New Jersey, the combined rates could be just over 60%, while in New York state they could reach 58.2%, CNBC reported. In New York City, the combined city, state and federal income tax rate would be just over 62%, the report said.

President Trump, the Tax Foundation says, is less specific with his plan, although he promises further tax cuts to follow up on his 2017 Tax Cuts and Jobs Act: “Without further details or clarification, it is difficult to fully analyze President Trump’s second term tax policy agenda. Broad themes of the president’s agenda include providing tax relief to individuals and tax credits to businesses that engage in desired activities, while the status of expiring TCJA provisions and tariffs seems uncertain.”

Timely reminder: Ronald Reagan famously said, “You can’t tax business. Business doesn’t pay taxes. It collects taxes.” When businesses are taxed higher, they adjust their cost of doing business. So employees see lower paychecks, prices of goods and services climb, fewer jobs are created, jobs may be cut,  and services to customers may be “streamlined” – for example, no more free car washes with that oil change. One supporter of President is reported to have upset some of his employees after he included a letter in paystub envelopes that said some might lose their jobs if President Trump is not re-elected. George Daniels, the president of Orlando-based Daniels Manufacturing Corporation, has donated hundreds of thousands of dollars to Trumps campaign and the political action committees supporting him, WESH 2 News in Orlando reported.

Telecommute tax: New Hampshire Gov. Chris Sununu is suing Massachusetts in the U.S. Supreme Court for what he called a direct attack on the “New Hampshire Advantage,” by taxing the income of New Hampshire residents who no longer commute to Massachusetts for work due to the coronavirus pandemic. New Hampshire does not impose a sales or income tax on its residents. “Massachusetts cannot balance its budget on the backs of our citizens, punish our workers for making the decision to work from home and keep themselves and their families and those around them safe. New Hampshire has no choice but to seek relief in our nation’s highest court,” Sununu said. “We’re going to fight this unconstitutional attempt to tax our citizens every step of the way.”

Notable Quote: “Nothing so undermines your financial judgment as the sight of your neighbor getting rich.” – J.P. Morgan

Compiled by Benita M Dodd, vice president of the the Georgia Public Policy Foundation.

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