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Tax reform implemented in a step forward – budget resolution is passed that incorporate a financial adjustment instruction. A step forward in the tax reform implemented, expected twists and turns

Tax reform implemented in a step forward - budget resolution is passed that incorporate a financial adjustment instruction. A step forward in the tax reform implemented, expected twists and turns

30 October 2017 | 4:24 am

Summary Although the new fiscal year in October has started, now it is followed by a situation that surpasses an interim budget for the period December 8 days. From the fact that the budget resolution to determine the budget of the outline on October 26, has been finally passed by both houses, the acceleration of the spending bill deliberation is expected in the future. For in the budget resolution be implemented by only Republican tax reform, which aims is Trump administration, fiscal adjustment instruction has been incorporated to enable the 1.5 trillion dollars of tax cuts over 10 years. On the other hand, in the unified framework of tax reform that Trump government announced in late September, policy, such as tax reduction and simplification of the tax individual and corporate customers has been shown. In addition, in this time presented reform plan has been controversial in the corporation tax system, the introduction of such cash flow taxation and border adjustment tax of destination principle was shelved. However, only been presented summary is a unified framework, the institutional design that are divided opinion even within the Republican Party has become a round-throwing has been looking to Congress. Currently, work is underway so as to be able to present a draft of the tax reform in early November in the center of the Republican House of Representatives. However, to avoid cuts in the wealthy, it is expected difficult, including adjustment of the various stakeholders to achieve the institutional design of the revenue neutral can be achieved. Now, in parallel with the 2006 budget in the center of the Congress deliberations of the tax reform proposals will be full-scale, the establishment of tax reform proposals before the end of the year, which aims is Trump administration would be difficult. In addition, for the next year also, because of the tax reform implementation, reduction of the tax cuts scale is seen as inevitable. Introduction 18 fiscal year from October 1, in the United States has started. From the fact that spending bill is not established in the year at the start, now it is followed by a situation that surpasses an interim budget for the period December 8 days. On the other hand, that passed a budget resolution that determines the outline of the 2006 budget finally to Jokain both, accelerated spending bill deliberation is expected in the future. The same budget resolution, and fiscal adjustment measures have been incorporated in order to achieve a tax reform that Trump regime aimed at only the ruling Republican Party, fiscal adjustment instruction has been incorporated to enable the 1.5 trillion dollars of tax cuts over 10 years. On the other hand, in the tax reform debate, in response to the fact that Trump administration has announced a unified framework of tax reform on September 27, with the aim of next month early announcement in the center of the Republican House of Representatives, the formulation of tax reform bill It is working. In addition to performing a commentary on trends in budgeting work and tax reform so far in this paper, it is discussed and future issues and tax reform realization of the prospect. Speaking from the conclusion, in addition to have come up with a dissonance in the already Republican in the system design stage of the tax reform, that the opposition Democratic Party is that a clear attitude against the tax reduction effect is large tax reform for the wealthy to increase the debt from, is expected twists and turns in the future of deliberations, in addition to the end of the year it established the aim is Trump administration difficult, the reduction of the tax reduction scale for even tax reform implemented next year something that would be unavoidable. ———- The exact name, “UNIFIED FRAMEWORK FOR FIXING OUR BROKEN TAX CODE” ———- Trends in budgeting ◆ although the budget deficit has expanded from 2004, debt is reduced 17 fiscal year budget performance ended September 30 days , the budget deficit is ▲ 6,657 one hundred million US dollars and, the previous year of ▲ 5,856 one hundred million US dollars ▲ 800 Oku from dollar deficit has expanded . Expenditures 3 trillion 980.6 one hundred million US dollars while increased compared to the previous year + 3.3%, GDP ratio was reduced ▲ 0.2% points. On the other hand, revenues from 3 trillion 3,149 billion dollars , well here that remained increased compared to the previous year + 1.5%, GDP ratio was reduced ▲ 0.4% points. Therefore, the expansion of the deficit is by decline in revenue compared to the expenditure is increased. In the revenue side, it seems that such was the influence that became more than 1% of the decrease in remittances from the Fed with the rise in short-term interest rates ▲ 340 Oku dollars and the amount of revenue. As a result, debt despite a 4,980 one hundred million US dollars increased from 17 year-end 14 trillion 6,670 billion dollars the previous year, of GDP decreased while slightly and ▲ 0.4% points. However, debt is compared to the 30% stand before the financial crisis, a high level of more than twice. ———- Joint Statement of the Ministry of Finance and the Office of Management and Budget Https://Www.Treasury.Gov/press-center/press-releases/Pages/sm0184.Aspx ———- ◆ recorded a disaster measures cost 15.3 billion US dollars as a 17 year budget worth In 2006 provisional budget for the December 8, which was established on September 8, the date , while the match in the expenditure, except for the disaster measures cost 17 fiscal year budget , August and it recorded a disaster measures cost 15.3 billion US dollars related to the hurricane “Herbie” that hit the United States in late . In addition, disaster recovery costs was included in the form of retroactive to 2005 budget On the other hand, in the interim budget was also incorporated not to apply the debt ceiling of the federal government until December 8, is the same budget deadline. For this reason, the United States debt default risks associated with the upper limit conflicts of some closure and federal government debt of the federal government have been resolved for the time being. However, only deliberation number of days is not left about real 20 days until the deadline of the interim budget, in conjunction with the tax reform debate, which is expected to full-scale in the future, although the time left to the process of spending bill is limited Ocean. ———- Public Law Nanba115-56 Https://Www.Congress.Gov/bill/115th-congress/house-bill/601 ———- ◆ a step forward towards the tax reform implementation Originally, the US budget is, after having been a budget request to the Congress from the President at the beginning of the year, Congress established the budget resolution, become a flow to develop a spending bill that would then allocate the budget to the ministries are . However, budgeting work, not many may not proceed to the original process Street, the budget resolution in the current 10 fiscal year from the budgeting process By now, the 1976 fiscal year up to 2005 passed . For this reason, the budget resolution is not required for the spending bill formulated. However, in order to achieve only the ruling Republican Party has a majority of the tax reform that Trump President aim in both houses, it is effective to take advantage of the mechanism of fiscal adjustment measures , fiscal adjustment instruction it has been a need to pass a budget resolution that incorporates the . In the deliberation of the 2006 budget resolution, the Senate of the budget to 1.5 Senate budget resolution that incorporates the fiscal adjustment instruction that allows the trillion dollars of tax cuts are passed on October 19, the House of Representatives also October 26 in the next 10 years It was passed in the form to accept the resolution. In the same budget resolution, compared to the baseline budget 6 that the Congressional Budget Office was announced in June 2005, out of discretionary spending, in addition to reducing the non-defense-related significantly, Medicare and Medicaid is a medical benefit plans the was also included be significantly reduced . On the other hand, the budget of the infrastructure-related investments Trump President had requested the Congress was postponed. In the same budget resolution, and fiscal deficit reduction $ 1 billion over the next 10 years for the Senate Energy and Resources Committee as a financial adjustment instruction, to the Senate Finance Committee and the House Ways and Means Committee, to develop a tax reform proposal an increase in the budget deficit above is specified that does not exceed the 1.5 trillion dollars in the next 10 years. The House so far, because it was considered the budget resolution that the budget deficit is not increased also by tax reform, is that you have to accept the Senate bill discard the traditional House of Representatives bill, was largely policy change for tax reform implementation It is said. On the other hand, fiscal balance outlook based on the same budget resolution, although revenue is reduced as compared to the baseline forecast, because the effect of the spending cuts is large, base deficit of 27 fiscal year from ▲ 1 trillion 112 billion dollars line, and it is expected to be reduced to the same ▲ 780 billion dollars . In addition, the Senate Budget Committee is a 275 billion dollar fiscal balance improvement effect due to the growth accelerated, while indicating the prospect that it is possible to realize a budget surplus of 197 billion dollars in 2015 if taken into account, in this estimate It is often skepticism. ———- For more information about the budget process, Weekly Economist letter – Please refer to the “US budget deliberations kick-off budget deliberations, which twists and turns are expected”. http://www.nli-research.co.jp/report/detail/id=42234?site=nli of the data is from 1974 to 2016 fiscal year, Congressional Research Service “Deeming Resolution: Budget Enforcement in the Absence of a Budget Resolution” Https://Www.Budget.Senate.Gov/imo/media/ doc / R44296 [1] .pdf 6 2005 Budget Act, which has been established in June point estimate of when it is assumed to continue in the future. ———- Trend of tax reform ◆ : income tax rate aggregate division, doubling the basic exemption In the unified framework of tax reform, which was announced on September 27, the personal income tax rate and aggregated into three categories from the current 7 classification, policy of lowering the highest tax rate to 35 percent from 39.6 percent it was shown. Also, in addition to doubling the basic exemption amount from the current 12,700 dollars in two-income households to $ 24,000, the abolition of the estate tax and generation skipping transfer tax was included . On the other hand, the mortgage interest deduction for the tax credit, donation deduction, it is expected to be abolished, except for the part, such as child tax credit. This is a mechanism that can be deducted state and local tax payment amount from the federal income tax is also included. Marunage However, in a unified framework and income levels that apply to the division income tax rate, such as such as obsolete as tax credits is not specifically shown, to be included in a detailed system design brew likely part of the controversial parliament It has become a has been dressed. Currently, system design and bill development work of the tax reform is being carried out in the center of the Republican House of Representatives, already is large tax cuts to the wealthy, established have been reported in the abolition or part of the state and local tax deduction contribution pension plan and out criticism against such cuts observation of the deduction for the , system design seems to have difficulties. ◆ cut corporate income tax and, the highest tax rate on partnership In the corporate tax reform, in addition to the highest tax rate for the pass-through entities, such as corporate income tax and partnerships is pulled down, such as the alternative minimum tax that had to be calculated in a different way normal tax calculation will be abolished, the tax system simplified policy, such as has been shown . In addition, while acknowledging some immediate depreciation in a timed with for capital investment, it was also shown policy to limit the interest expense deduction. In this presented reform proposals, and the destination principle cash flow taxation that are controversial since last year, the introduction of a border adjustment tax is postponed, to the withholding principle, which has been widely adopted outside of the United States tax base changes have been shown. Was also shown to be appreciated that applying a low rate of one-time the benefits that staying abroad in this context. On the other hand, including the tax incentives that have been applied so far to certain conditions are met domestic manufacturing industry , etc. Other deductions is expected to be abolished. However, system design in corporation tax reform seems to have difficulties. The highest tax rate for the pass-through entity, which brew be pulled lower than the personal income tax rate 25% of the controversy from the income tax rate and the same level of the past. It’s in the center of the wealthy, in order to avoid high personal income tax rate, because the tax fled to ensure that established a such partnership tax rate of pass-through entities are applied are expected to occur. For this reason, it seems to have been discussed what to do with the conditions of the entities tax rate of pass-through entities are applied. As we have seen so far, unpredictable or from items that you do not go and not packed, including some areas that are controversial in terms of the institutional design of the tax reform is large, the can show in the early stages of November, which aims Republicans the House of Representatives it is the situation. ———- destination principle cash flow taxation and, for more information about border adjustment tax, Weekly Economist letter “Income tax reform debate is full swing – the whereabouts of the border adjustment tax of interest Please refer to the “. http://www.nli-research.co.jp/report/detail/id=55098?site=nli ———- ◆ 8 percent of the concentration of tax cuts worth to income hierarchy top 1% On the other hand, tax reform proposals that have been presented so far there is a growing criticism of the wealthy preferential treatment. Although the detailed system design remains opaque part because that is not is, the US think tank of tax Policy Center is a unified framework and last year estimated on the basis of the tax reform proposals 8 which has been announced by the Republican House of Representatives as a result, when compared before and after tax reform the post-tax income 2015, while the total the increase of + 1.7%, by income group in income upper 20% of the increase rate + 3.0% and it has been shown to significantly greater than the other layers . In addition, it seems to be if + 8.7% and remarkable growth Come only to income top 1%. In addition, tax cuts share for the entire tax amount, 80% to the top 1% has been estimated to be concentrated. This playing cards President “tax reform not benefit the wealthy, there is a benefit to the middle class” is a result that is inconsistent with the description of the. On the other hand, according to the Pew Research Center, in the opinion polls for the federal tax system of the Americans, but by the support to political parties divergence is, the strong dissatisfaction with respect to that part of the companies and the wealthy is not a fair share of the burden such reply indicating exceeds 60%, high it can be seen . This is the tax burden of its own and higher than the dissatisfaction with the tax burden of the poor . Therefore, Rep tax effect tax reform when the view that focus on large enterprises and wealthy stronger is located the support is is difficult to obtain potential for tax reform, in which case, to be elected next year’s elections it will is faced with difficult choices. ———- A BETTER WAY own taxes resulting from participation REFORM Https://Abetterway.Speaker.Gov/?Page=tax-reform ———- Future prospect By FY 2006 budget resolution has been passed, Congress Republican Fumidase one step towards tax reform. However, the future of tax reform discussion that aims to bill the establishment of the rest of the year twists and turns are expected. Although the Congress accepted the expansion of fiscal deficits of $ 1.5 trillion, the estimates of private think tank, revenue decline due to the tax reform has been shown prospect of a $ 2 trillion more than, may not fit in the $ 1.5 trillion high . In addition, the abolition of the state and local tax credits that are currently controversial is viewed from that revenue effect is very large and 1.3 trillion to 1.6 trillion dollars, if these deductions is reduced, and the drop in revenue is further increased It is. Without decreasing the revenue, it would be difficult to carry out the interest adjustment related to the handling of such deduction. On the other hand, the opposition Democratic is clearly shown opposite orientation relative benefit is greater tax reform tax wealthy in the form of increasing the future liability, at present bipartisan agreement has become difficult. In addition, the Republican Congress through the budget resolution also not be said to be monolithic. Among Republicans, still many members of idea that should be a tax reform in a way that does not reduce the overall revenue. In fact, although the vote of the House budget resolution passed at 4 votes difference opposite 212 relative to favor 216, 20 Republicans is revealed that opposed. In addition, even in only the Senate is higher than just two people the majority, such as Bob Coker lawmakers express their opposition to tax reform with increased debt, since a plurality of members indicates a skeptical attitude to the tax reform proposals , it has raised the voice of concern or can secure a majority in the Senate. In the real deliberation number of days of the year are limited including the processing of the provisional budget as described above, the possibility of policy coordination, including the Republicans in and the opposition Democratic Party would be low. Realization of the tax reform is expected to be in since the beginning of the earliest in the next year, but the reduction of the tax reduction scale in order to obtain the support of a majority of the parliament Republicans would be inevitable. data of the journal described are those which were obtained and processed from a variety of sources of information, it does not guarantee its accuracy and safety. In addition, this magazine is the information provided by the purpose, of opinions and predictions described, not intended to solicit the engagement or termination of any contract. Hiroshi Kubotani NLI Research Institute Economic Research Department , Senior Researcher [Than Articles NLI Research Institute] – US budget deliberations kick-off – budget deliberations, which twists and turns are expected – corporation tax reform debate is full swing – the whereabouts of the border adjustment tax of interest – US economic outlook – even economic recovery duration of the consumption-led, the influence of immediate hurricane, like the United States in the political situation economy is in flux – [7 – September quarter US GDP] year-on-year annual rate of + 3.0%, despite the impact of hurricanes, maintain the strong growth – Medium-term Economic Outlook

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