2014 July Budget & Tax News

Issue Date: 
July, 2014
Newspaper PDF: 

The July issue of Budget & Tax News reports all three major credit rating agencies – Fitch, Standard & Poor’s, and Moody’s Investors Service – have issued stern warnings to Pennsylvania policymakers, saying credit rating reductions are likely unless pension debts are addressed and spending is brought in line with revenue.

Also in this issue:

  • Tax breaks provided through the Promoting Employment Across Kansas economic development program don’t bring jobs to the state, according to a researcher at Washington University.
  • Missouri legislators overrode the veto of Gov. Jay Nixon to enact the state’s first income tax cut in nearly 100 years. The top tax rate on personal income, which starts at taxable income of just $9,000, will decline from 6 percent to 5.5 percent in stages beginning in 2017. Missouri also will become the third state to offer a special business-income deduction on personal tax returns.
  • E-cigarettes have no tobacco smoke, but that hasn’t stopped the Food and Drug Administration from proposing rules to treat e-cigarettes much like tobacco-based cigarettes. The draft regulations also cover cigars, pipe tobacco, and other tobacco products that have not been regulated like cigarettes.
  • Moody’s Investors Service says it is “time to wind down” Fannie Mae and Freddie Mac. The declaration appears in an in-depth analysis of the Johnson-Crapo Finance Reform and Taxpayer Protection Act that was presented in May at a Federal Reserve Bank of Chicago’s annual bank structure conference. The bill would wind down Fannie Mae and Freddie Mac and replace them with a new government agency.
  • Regulations took more than $1.86 trillion out of the U.S. economy in 2013, according to the Competitive Enterprise Institute’s annual Ten Thousand Commandments report on the size and scope of federal regulations. The report aims to establish a baseline for the largely unknown “hidden tax” of the U.S. regulatory state, since more than 99 percent of federal regulations are never subjected to cost-benefit analysis.
  • The government has announced it will receive another multibillion-dollar “dividend” from Fannie Mae and Freddie Mac, returning to the U.S. Treasury (with interest) all of the $187 billion in bailout money lent to the two mortgage giants after September 2008. The entire legal landscape, however, was radically changed by the August 2012 “net worth sweep” under which FHFA and Treasury entered into a deal that magically converted all the net receipts of Fannie and Freddie as “dividends” to be paid to the government, a complicated deal that did great harm to their shareholders.

Newspaper Articles in this Issue