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Category: Tax & Finance

Two Budgets Next Year

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Congress will do two budget resolutions next year. The first will be aimed at the ACA early in the Congress and the second effort at reconciliation will be aimed at tax reform, which should be in the Spring.

The first budget that House and Senate Republicans will unveil early next year will include reconciliation instructions to fast track repeal of the 2010 health law, but is otherwise expected to be relatively bare-bones. the budget resolution is likely to abide by the $1.070 trillion discretionary spending cap that Republican conservatives opposed earlier this year. However, Republican leadership is touting the figure as a placeholder and not to be taken seriously — the real policy choices will be made in the FY2018 budget resolution to be drafted in the spring.

Both House and Senate GOP leaders have signaled that reconciliation, which can not be filibustered in the Senate, is the best path for tax reform. Speaker Paul Ryan is proceeding as if reconciliation would be necessary. This choice means that any tax reform plan would have to be deficit-neutral and would come with an expiration date.

Democrats have said they would be willing to talk about a narrower tax-and-infrastructure deal. But it also seems like it would be difficult for the more comprehensive tax reform approach that McConnell and Ryan talked up to get 60 votes in the Senate.

Trump First Day Agenda

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President-elect Trump posted a 2 minute 37 second video on You Tube, which is the first time he’s addressed the American people directly since the election.

Mr. Trump’s video included six calls for action on trade, immigration, energy, regulatory curbs, national security (specifically cyber infrastructure), and lobbying ethics changes, most of which have already been announced either during the campaign or the transition period.

Of note, Trump did not mention action on the Affordable Care Act, his proposed wall along the southern border, the tax code, or the Iran nuclear deal, all of which were central arguments for his election.

See the video here or below.

House Oversight to Hold Hearing on Endowments

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The House Ways & Means Subcommittee on Oversight will hold a hearing on university endowments tomorrow, Tuesday, September 13th at 10 AM/ET. Titled, “Back to School: A Review of Tax-Exempt College and University Endowments,” the hearing is following up on an October 2015 hearing on, “The Rising Costs of Higher Education and Tax Policy.” The committee will hear from representatives from the Cato Institute, Washington College, the Urban Institute, and more.

Endowments Fall 2.4%

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Colleges saw significantly lower returns on their endowments in the 2015 fiscal year. The annual NACUBO-Commonfund Study of Endowments found that 812 colleges returned an average of just 2.4 percent after fees, down from 15.5 percent in 2014 and the lowest return since the -0.3 percent reported for 2012. The long-term return was well below the median 7.5 percent most endowments report they need to earn to maintain purchasing power after spending, inflation and investment management costs, the report notes. Yet 78 percent of participating institutions spent more from their endowments this year, with a median increase of “a substantial 8.8 percent, well above inflation.”

Here is Inside Higher Ed’s take. 

Here is the study. 

House Passes Tax Extenders

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Today, the House passed a $622 billion tax package that permanently renews a number of tax provisions following years of short-term extensions. Seventy-seven Democrats joined 241 Republicans to pass the measure in a 318 to 109 vote. Several tax breaks created under President Obama’s stimulus package are made permanent, including the American Opportunity Tax Credit, the child tax credit, and the earned income tax credit. For more in-depth information on the measure, please see this post on our blog.