Sunday, December 23, 2018

A Christmas Miracle

The Tax Cuts and Jobs Act touted by President Donald Trump is one of three reasons that at least 19 states are reporting unexpectedly high general fund revenue halfway through fiscal year 2019, tax policy expert Adam Michel told The Daily Caller News Foundation Thursday.

“[Trump] can also take credit for the larger economy to the extent that that’s now fueling additional spending,” Michel, a Heritage Foundation policy analyst, told TheDCNF via telephone. “It’s not only the Tax Cuts and Jobs Act that’s growing the economy but his deregulatory agenda is fueling economic growth. All of those things wouldn’t have happened if he didn’t push for them.”

Increased spending in the larger economy gave state sales tax revenue a boost.

“I think we will see most states end up with more revenue at the end of the year,” Michel told TheDCNF. Heritage is a conservative think tank located in Washington, D.C.

The current fiscal year will hit its halfway point on Dec. 30. The National Association of State Budget Officers (Nasbo) released a report Thursday that said 19 states have received general fund revenue that exceeded expectations for fiscal year 2019. Those states include Georgia, Pennsylvania, Washington and Connecticut, reported The Wall Street Journal. The latter state expects to take a $600 million chunk out of its budget gap by summer 2021 thanks to the increased revenue, reported WSJ.

Fourteen states say their revenue is meeting expectations for fiscal year 2019, while five report falling short, according to the report cited by WSJ.

The revenue increases are directly tied to the Tax Cuts and Jobs Act (TCJA) touted by Trump, Michel told TheDCNF.

“Because the federal tax code expanded what is taxable income — the main change being they eliminated the exclusions for individuals and children and they compensated in other areas — income that is taxable at the state level for many states went up,” he said. “So we should expect to see in a majority of states income tax revenue rise because of the changes in the Tax Cuts and Jobs Act.” (Read more.)

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