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February 6, 2018

On Saturday, House Speaker Paul Ryan (R-Wis.) tweeted an Associated Press article about workers finding modest bumps in their paychecks due to the new tax law he championed, and he highlighted the story of a Pennsylvania high school secretary who discovered an extra $1.50 in each paycheck, or $78 a year. Since that's considerably less than what the wealthy (not to mention corporations) get in the tax bill, critics pounced and Ryan pretty quickly deleted the tweet, which had already been screengrabbed and gone viral. CBS News' David Begnaud tracked down the secretary, Julia Ketchum, and asked her about her newfound notoriety.

"The paragraph above me, my quote, and the paragraph below my quote — those people got hundreds more and I got a $1.50 per paycheck more," Ketchum said, en route to a field trip. "So it shows me he may not have read the whole article."

Ketchum took the whole episode in stride, though, and said that while she was "really surprised" Ryan highlighted her comment, she wasn't opposed to the extra cash. "A dollar-fifty's a dollar-fifty, I'm not going to — I noticed it," she told Begnaud. "I watch my finances and I noticed it, so that was good. I was pleasantly surprised because it went up, it did not go down." Peter Weber

February 5, 2018
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Starting in 2019, for the first time in 77 years, alimony won't be deductible for U.S. taxpayers, thanks to the Republican tax overhaul passed in December. That means that the new tax law "could soon lead to a surge in married couples calling it quits," Politico reports, citing divorce lawyers. "Now's not the time to wait," said Mary Vidas, former chairwoman of the American Bar Association's family law section. "If you're going to get a divorce, get it now."

For wealthy divorcés, especially, the deduction meant they could pay roughly 60 cents for every dollar of alimony. Divorce lawyers say the change in the tax law could lead to more contentious divorce cases and lower alimony payments when it kicks in, disproportionally hurting women. But ending the deduction is also projected to raise $6.9 billion over 10 years, helping defray the $1 trillion-plus cost of the tax bill. "This is one of the many provisions of the law that removes special rules applicable only in certain circumstances in order to help simplify the code and reduce tax rates for all Americans," said a spokesman for House Ways and Means Chairman Kevin Brady (R-Texas), who put together much of the tax legislation.

Couples have all of 2018 to "use the alimony deduction as a bargaining chip in their negotiations with estranged spouses," Politico says, but in some states, the clock starts running down fast, thanks to cooling-off periods of up to six months. "You can't just file for a divorce today, and expect that you're going to be divorced tomorrow," said Los Angeles lawyer Ed Lyman. You can read more about the ramifications for divorce settlements at Politico. Peter Weber

February 1, 2018
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Congress will have to the raise the debt ceiling in the first half of March, weeks earlier than forecast, or the federal government will run out of cash, the Congressional Budget Office said Wednesday. The CBO attributed the shortened deadline to the tax overhaul Republicans passed in late 2017, which will lower tax receipts by $10 billion to $15 billion a month starting in February. In all, the U.S. will take in $136 billion less tax revenue in 2018 under the new tax law, the nonpartisan congressional Joint Committee on Taxation estimates.

The Treasury Department has been taking emergency measures to keep the U.S. solvent since the debt limit was suspended Dec. 8, but if Congress doesn't raise the federal borrowing limit in early March, "the government would be unable to pay its obligations fully, and it would delay making payments for its activities, default on its debt obligations, or both," the CBO warned. The federal government ran a $23 billion deficit in December and a $666 billion deficit for all of 2017, the biggest shortfall since 2013.

Congress hates raising the debt ceiling but has never failed to do so, brinkmanship notwithstanding. Lawmakers also have to pass a spending bill by Feb. 8 to keep the government open, and deal with the immigration status of DREAMers before President Trump's March deadline. It's possible all these items will be rolled up into a big, must-pass package, The Washington Post notes, though House conservatives would balk "and it's unclear what political coalition will form this time to help raise the borrowing limit." Peter Weber

January 23, 2018
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Republicans start 2018 with full control of the federal government, at least one government shutdown under their belt, a historically unpopular president, and a potentially ominous sea change among white women. But "Republican strategists are plotting an election-year survival strategy to steer the midterms away from the dangerous terrain of Trump's tweets and Capitol Hill dysfunction," The Washington Post reports: "Talk up job growth, highlight the soaring stock market and, most of all, convince voters that the tax-cut legislation that stands as their only major accomplishment is bringing back the good times."

About 60 percent of U.S. adults in a new Washington Post/ABC News poll say the GOP tax overhaul favors the rich over the middle class, and 46 percent say passing it was a "bad thing," versus 34 percent who call it a "good thing." But there's a large swathe of persuadable voters, and Republicans, wealthy donors, and the U.S. Chamber of Commerce are throwing tens of millions of dollars into a full-court press to convince voters to love the tax cut.

"Answer this question and I will tell you if we keep the House or not," says Corry Bliss, head of the GOP-aligned American Action Network, which pumped $24 million into GOP tax-cut boosterism last year and plans to spend $10 million more this quarter: "In 10 months, does the middle class think we cut their taxes?"

Without a push, most people won't really notice a 2018 tax cut until they do their taxes in 2019, though a single person making $50,000 should see $35 extra in each paycheck this year — or about $3,600 a year. The top 1 percent of households will get a tax cut of about $50,000. Luckily, the wealthy donors bankrolling the tax pitch were already thriving before the tax cuts — 82 percent of all wealth created last year went to the top 1 percent, Oxfam says in a new report, and the three wealthiest Americans now have the same wealth as the bottom 50 percent, or 160 million Americans. Peter Weber

December 23, 2017
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President Trump signed the GOP tax bill into law on Friday, and now the Treasury Department and Internal Revenue Service must negotiate its implementation.

"The [regulatory] process has got to be thorough but prompt," former IRS Commissioner Mark Everson told The Hill, even as confusion over the new system prompts "a flood of calls into the call centers." The new law makes a number of major changes to the tax code, including cutting the corporate tax rate to 21 percent from 35 percent, lowering income tax rates for six of seven tax brackets, and doubling the standard deduction.

The IRS will need to update tax forms and withholding procedure, and changes will be made more complicated by the agency's decades-old technology. "A lot of our forms are hard-coded," explained former IRS Commissioner John Koskinen, "so you don't just enter a little thing in your computer, you actually have to go into the code and change the date or change the forms." Bonnie Kristian

December 22, 2017

Corporations will get the bulk of the direct benefits from the Republican tax overhaul — $1.3 trillion over 10 years — and Wall Street seems to have done particularly well. Next year alone, America's top eight banks will get an extra $15.3 billion, according to an internal Goldman Sachs report obtained by ThinkProgress, including $3.5 billion for Bank of America, $3.3 billion for J.P. Morgan, and $1.4 billion for Citigroup.

But if Wall Street banks got a big bonus, hedge fund managers at Blackstone Group, Carlyle Group, and KKR & Co. arguably scored an even bigger win. Despite explicit pledges from President Trump, the bill he'll sign did not get rid of the carried interest loophole that allows hedge fund and private equity managers to claim their hefty earnings as capital gains, taxed at a significantly lower rate than ordinary income. And it isn't just liberals who are angry the loophole survived.

On Fox Business, Trish Regan slammed Trump and his team for allowing "fat cat private equity investors" to keep lower tax rates "than a New York City cop." America's "founding fathers never, ever anticipated a swamp like the one we have today," she said.

On Wednesday, Trump's top economic adviser Gary Cohn said "we probably tried 25 times" to get congressional Republicans to ax the loophole, and "the president asked just this past Monday if we could still get rid of it." Cohn, formerly the No. 2 at Goldman Sachs, blamed Congress for Trump's failure, and Fox Business reported that Blackstone, Carlyle, and KKR did funnel "massive amounts of campaign cash into the coffers of Republican leaders in the House and the Senate as these same lawmakers voted for a tax bill that preserves the so-called carried interest loophole." But they also cited people "close to the tax bill process" who said "the White House didn't make ending the loophole a priority," citing "Trump's close relationship with Blackstone chief Steve Schwarzman, a key outside economic adviser." Peter Weber

December 21, 2017

President Trump's big sales pitch for the huge tax overhaul congressional Republicans passed on Wednesday has been consistent for weeks:

But depending on what happens next in Congress, Trump probably won't sign the tax bill into law by Christmas, or even New Year's Day. The reason? If he signs the bill this year, he's starting the clock on $120 billion in automatic spending cuts, including to popular programs like Medicare, under pay-as-you-go rules Congress passed decades ago (and have regularly flouted ever since). Congress can waive the cuts, triggered if lawmakers pass legislation that adds to the national debt — and the GOP tax bill is projected to add $1.46 trillion or more over 10 years — but Democrats may resist letting Republicans off so easily in the spending package that needs to pass by Saturday.

If Trump waits until January to sign the bill, on the other hand, the automatic spending cuts wouldn't kick in until 2019, Ed Lorenzen at the Committee for a Responsible Federal Budget tells CBS News. "That means Congress wouldn't have to do anything to prevent it from taking effect until the end of next year." Trump's top economic adviser, Gary Cohn, said Wednesday that Trump wants to sign the bill as soon as possible. "If we can get Paygo waived in the (spending bill), we will sign the tax bill this year," he said.

Taxpayers won't be affected either way, and their paychecks should reflect the law starting in February. How much of a cut they see will depend on their tax bracket — people making $25,000 or less will keep an average of $60 more next year, according to Tax Policy Center estimates, while the middle class — $49,000 to $86,000 — will get an extra $900 next year and people earning more than $733,000 will get an average boost of $51,000. Peter Weber

December 20, 2017
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The key moment in the Republican Party's mad dash to passing a sweeping tax bill was when Republicans abandoned revenue neutrality and Sens. Pat Toomey (R-Pa.) and Bob Corker (R-Tenn.) agreed in September that the package could add up to $1.5 trillion to the federal deficit, Senate Majority Leader Mitch McConnell told Bloomberg on Monday. "Without that there would've been no tax bill." Republicans have maintained that the deep tax cuts for businesses would juice the economy enough that the tax bill would pay for itself, but no economic analysis has borne that out.

The Congressional Budget Office projects that the GOP tax bill will add $1.46 trillion to the federal deficit over 10 years, while the official tax analysts at Congress' nonpartisan Joint Committee on Taxation said it will add $1 trillion, accounting for economic growth, as Republicans requested. The right-leaning Tax Foundation estimated Monday that the tax bill will increase the deficit by $448 billion, also factoring in economic growth.

Meanwhile, the tax analysts at the Wharton School at the University of Pennsylvania — where President Trump, as he likes to remind people, got his bachelor's degree in economics — project the bill will add $1.9 trillion to $2.2 trillion in federal debt over the next decade, including growth. That's largely because the Penn Wharton Budget Model projects that the tax bill will increase GDP growth by a modest 0.06 to 0.12 percentage points a year.

To prevent the defection of deficit hawks, "Republicans walled themselves off from criticism, convincing one another that unfavorable economic analyses of their bill were wrong," The New York Times reports. Not every Republican believed the bill would pay for itself — Sens. John McCain (R-Ariz.) and Susan Collins (R-Maine) both met with conservative economist Douglas Holtz-Eakin, who said he told McCain "it's going to have some deficits, no matter what you hear." McCain decided it was worth it. Collins, the Times says, "came away with the impression that the bill would pay for itself." Peter Weber

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