Brace for Big Tax Hikes in 2026 Unless Congress Acts

Published

1 month ago

May 14, 2024

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Most Americans face tax hikes starting in 2026, and the increased federal tax bite will come about without Congress lifting a finger. That’s because 2017’s Tax Cuts and Jobs Act (TCJA) expires at the end of 2025, and despite some politicians’ contrary claims, a majority of Americans benefited from that law. The end of tax cuts for so many people necessarily results in corresponding increases to come.

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Δ Tax Cuts for Most, but With a Time Limit

“Unless Congress acts, the vast majority of Americans will see higher, more complicated taxes beginning in 2026 as major provisions from the Tax Cuts and Jobs Act of 2017 expire,” warns the Tax Foundation. “The TCJA reduced average tax burdens for taxpayers across the income spectrum and temporarily simplified the tax filing process through structural reforms. It also boosted capital investment by reforming the corporate tax system and significantly improved the international tax system.”

The widespread benefits of the TCJA shouldn’t be a matter for debate. But there’s confusion because Team Biden and fans of high taxes fibbed about the law leading up to the 2020 presidential election.

“Biden’s false claim that no one but the rich got Trump’s tax cuts,” headlined a 2019 Washington Post Glenn Kessler piece about the debate over the law. “Most Americans received a tax cut,” he added.

“About 65 percent of households paid less in individual income taxes in 2018 as a result of the TCJA,” wrote the Tax Policy Center’s Howard Gleckman. “About 6 percent paid more. The rest paid about the same.”

Adjusting for all federal taxes under pre-TCJA law, the Cato Institute’s Chris Edwards commented, “lower? and middle??income groups received the largest relative individual income tax cuts.”

So, there’s widespread agreement that a law which cut taxes for most Americans is poised to expire, resulting in higher taxes. But, just as the benefits of the tax cuts varied across the population, so will the size of the bite taken by tax increases starting in 2026. Tax Hikes for All

“The largest average tax hikes would be experienced by taxpayers who reside in California’s congressional districts,” note the Tax Foundation’s Garrett Watson and Erica York. “For example, the congressional district covering the San Francisco area would see an average tax hike of $16,127 per taxpayer, the highest in the U.S. By contrast, northern New York City would see an average tax increase of $807 per taxpayer under TCJA expiration.”

That link takes you to a tool that lets you look up the estimated impact of TCJA expiration on taxpayers in states and congressional districts across the country.

Separately, the Tax Foundation published a tax calculator that lets you estimate the impact of TCJA expiration on you and your family, given specifics such as marital status, income, number of children, and choice of standard or itemized deductions. The calculator accounts for “most aspects of the federal individual income tax code except provisions related to business and self-employed income.”

That said, extending the TCJA’s tax cuts has high costs of its own since that would reduce the amount of money collected by the federal government to spend on its projects. Tax Cuts and Tradeoffs

“Federal tax revenues would fall by more than $4 trillion on a conventional basis and by nearly $3.5 trillion on a dynamic basis over the coming decade; and without spending cuts, debt and deficits would increase,” concedes a May Tax Foundation report on options regarding the law.

“By the year 2050, permanent extension of TCJA laws would reduce federal revenues from 18.4 percent to 17.1 percent of annual Gross Domestic Product (GDP),” Jagadeesh Gokhale and Mariko Paulson of the University of Pennsylvania’s Penn Wharton Budget Model specify. “Federal debt held by the public would rise from 226.0 percent of GDP to 261.1 percent by 2050.”

But that decrease in revenue and corresponding rise in debt and deficits may matter only if it hampers a serious plan to control the federal government’s ongoing spending spree. Separately, the Penn Wharton Budget Model predicts that “a maximum debt-GDP ratio of 200 percent can be sustained even if investors believe (maybe myopically) that a closure rule will then prevent that ratio from increasing into the future.” They say the real ceiling on federal debt is more like 175 percent of GDP before the financial markets entirely lose faith in the U.S. economy. Debt as a percentage of GDP above that point is disastrous, whether at 226 percent or 261 percent.

It makes sense, then, for Americans to submit to significant tax hikes only if those increases go to balancing the federal budget, eliminating deficits, and controlling debt. Otherwise, we’re going to pay more for what is essentially the same very bad outcome. A Need for Serious Reform

Benefits of extending the TCJA, on the other hand, operate independent of faith in a sudden surge in responsibility among the political class. Extending the law’s provisions “would boost long-run GDP by 1.1 percent and employment by 913,000 full-time equivalent jobs,” according to the Tax Foundation.

For extending the TCJA, the Tax Foundation considers two options, both including modifications that seek to reduce the hit to federal revenues while maximizing gains for individuals. Option 2, for example, “broadens the individual income tax base by ending the income tax exclusion for employer-provided fringe benefits, most notably health insurance.”

That’s a matter of tweaking the current system around the edges to maintain relief for individuals and a faster-growing economy. Tax Foundation experts also propose possible fundamental changes, including entirely dumping the income tax system in favor of a consumption tax. That has the potential to significantly boost personal income as well as GDP and reduce the national debt. Of course, the gains really apply only if the government also reduces spending.

But such fundamental reform is a lot to ask of a political class that spent us into a corner and now wants tax hikes so there’s even more of our money to spend. Letting the TCJA expire requires placing enormous faith in people who got us into a fiscal mess to begin with.

Fundamental reforms to the federal government’s finances are absolutely necessary. Until that happens, we should resist stealth tax hikes so we can keep our hard-earned money for ourselves.

Entertainment

Booker prize-winning author Arundhati Roy to be prosecuted in India for Kashmir comments

Published

2 hours ago

June 15, 2024

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Booker prize-winning author Arundhati Roy to be prosecuted in India for Kashmir comments

Indian authorities are set to prosecute author Arundhati Roy over comments she made about Kashmir in 2010.

Roy is reported to have said the disputed region of Kashmir is not an “integral” part of India at a panel discussion 14 years ago.

Lieutenant governor for Delhi VK Saxena, who belongs to Prime Minister Narendra Modi’s BJP party, gave the green light to pursue legal action, the Press Trust of India has reported.

Roy, whose novel The God Of Small Things won the Booker prize in 1997, has been one of Mr Modi’s most vocal critics.

As part of her political activism, she has been outspoken against laws the BJP has brought in against minority groups and press freedoms.

Mr Saxena has said she will be prosecuted for the comments alongside a former university professor from Kashmir, Sheikh Showkat Hussain.

According to law enforcement, the pair can now be charged under anti-terror laws for advocating for the ‘secession’ of Kashmir.

Roy’s home in Delhi was mobbed with protesters after the comments made during the panel discussion were published.

India and Pakistan have long fought over who Kashmir belongs to. After Indian independence from the British in 1947 its leader chose to become part of India, with several wars breaking out since.

Both countries now claim the region in full but only control respective parts of it.

Mr Modi was re-elected prime minister last month but fell short of a majority.

Entertainment

What time you should actually arrive at cinema to avoid adverts

Published

2 hours ago

June 15, 2024

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What time you should actually arrive at cinema to avoid adverts

The time on your ticket is 7pm, but you already know it’s not going to start then.

So, what time do you get to the cinema?

If you’re arriving at 7.10pm, you’re almost certainly safe, but any later and you may cut it fine.

Here, we’ve gathered information from the UK’s major cinema chains and spoken to experts about how long you can expect adverts and trailers to run until the main event actually begins.

Cineworld

According to the Cineworld website, ads and trailers “normally last between 30-45 minutes before the actual film begins”.

The cinema also asks customers to collect tickets at least 20 minutes before the listed time “to make the most of their visit”.

Odeon

There appears to be a shorter wait at Odeon, which claims advert and trailer length is “typically 15-25 minutes” – but this varies with each performance and can be “considerably less”.

“We always recommend to avoid disappointment you arrive with enough time to enter the screen at the scheduled performance start time,” the website says.

Everyman

There’s a wider range at Everyman, which says it plays 25 minutes’ worth of adverts and trailers.

But beware – “the length of ads and trailers varies for special events and it can be between 15 and 40 minutes, subject to type of event”.

Showcase

There isn’t any specific information on the website and we got no response when we reached out to them, but Showcase did respond to a customer on social media on this very question.

In a May 2022 tweet, the cinema said: “The advertised time is when the adverts/ trailers start and are approximately 20-25 minutes long before each show.”

Vue

Vue offers a more precise window: “Please be aware that most films have around 20 to 25 minutes of ads and trailers before the feature starts.”

Its only recommendation is to be in your seat at the time stated so you “don’t take any chances in missing the start of your film”.

‘In general, it’s 24 minutes’

Karen Stacey, the chief executive of Digital Cinema Media, which supplies advertisement for the likes of Odeon, Vue and Cineworld, told Sky News the wait is typically 24 minutes – 12 minutes for ads, and 12 for trailers.

his remains true whatever the film and whatever the time of day, with about 95% of DCM’s schedules “exactly the same”.

“It’s very formulaic, that’s what consumers are used to,” she said. “By making it consistent in length, people are always happy to come and join in.”

She said 24 minutes gives schedulers enough time to prepare the film and allow a more staggered entry for the audience – while also bringing in revenue.

Any longer than half an hour, though, is “rare”.

“Cinemas want to have as many films in as possible and they want to be mindful they don’t finish too late in the evening,” Ms Stacey said.

“My experience working with them is they are quite strict.”

Are there rules over the length?

As the above suggests, there aren’t any set rules or procedures governing cinema advertising length.

Kathryn Jacob, chief executive of cinema advertising company Pearl & Dean, said the length was determined by the cinema.

“Some cinemas take only one ad, like the BFI IMAX, and the maximum length is determined by the cinemas themselves,” she told Sky News.

“Factors determining the length depend on demand from advertisers and the films that a cinema might want to showcase to the audience that’s at the screening via trailers.”

Cinema policy is the key decider and she said research has shown audiences find advertising in cinema “part of the entertainment”.

Do viewers like the adverts and trailers?

Ms Jacob may have a point.

According to research published by DCM, advertising in cinemas is more effective than in any other media.

For a 60-second advert in the cinema, viewers will watch 48 seconds, which is a far higher proportion than TV or social media.

It is also highly trusted, with DCM citing a survey by IPA Touchpoints claiming nearly 100% of respondents say they trust what they see in the cinema – for comparison, 75% trust TV adverts.

Avid cinema-goer Bill Boswell, who pays £18 a month for an unlimited pass at Cineworld on the Isle of Wight, said he was happy to wait.

“I know that these adverts help pay for the cinema to run,” he told Sky News. “The cinema is my place to escape, so it’s good for my mental health and I would not want to lose it.

“If I watch at home, I can sometimes reach for my mobile phone, but a film on the big screen would get my 100% attention, so I just accept the pre-show adverts.”

But what are the drawbacks?

The main thing Mr Boswell considers is his car, as his nearest Cineworld offers three hours of free parking.

“I would sometimes plan on 30 minutes of trailers and work back so I can fit the free parking in, as the cinema costs enough already,” he said.

“If the film is more than two and a half hours, I park outside town and walk to the cinema.”

Consumer expert Martin Lewis raised parking tickets as one of the issues in a 2019 tweet, in which he said he waited 33 minutes for a film to start.

Responding to one user, he said greater clarity would help customers to save on parking tickets and babysitting, while giving “legitimate expectation”.

“And there’s no rigorous research that prices [cinema tickets] would go up – they’re often set by market demand,” he added.

Are there alternatives?

If you want to avoid the pre-show altogether, your best bet might be independent or community cinemas.

Draycott Community Cinema, for example, is the only cinema in the Somerset village and is run by volunteers.

Committee member Chloe Haywood told Sky News they are always debating how long to make their pre-show.

They try to keep it to two short trailers, often without any adverts – though they are planning to find a sponsor later this year.

“We do find that it sets the audience up for the screening,” she said, referring to their brief pre-show.

“We don’t have trailers for long. They’re to advertise the next two films, any local news that might be of interest, and then standard ‘switch off your phones’ type info.”

Sports

Astros’ Verlander (neck) scratched vs. Tigers

Published

2 hours ago

June 15, 2024

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Astros' Verlander (neck) scratched vs. Tigers

ESPN News Services

Jun 15, 2024, 12:46 PM ET

The Houston Astros scratched right-hander Justin Verlander from Saturday’s start against the Detroit Tigers because neck discomfort.

Verlander told reporters prior to Saturday’s game that his neck issue first popped up a couple weeks ago between starts and that he wasn’t sure if it would keep him out for more than one game.

“When I was out there, I felt like it wasn’t really bothering me,” Verlander said. “But when I go home and sit down and really think about it, I think it’s too much of a coincidence and my mechanics were really thrown off.”

Rookie right-hander Spencer Arrighetti (3-5, 5.33 ERA), who was scheduled to pitch the series finale Sunday, will start in place of Verlander (3-2, 3.95).

Verlander, 41, allowed four runs on seven hits in five innings in each of his past two starts. The former American League MVP, nine-time All-Star and three-time Cy Young Award winner missed the first three weeks of the season while recovering from an offseason shoulder injury.

Arrighetti, 24, has yet to face the Tigers in his career. He allowed one run on four hits in 5⅔ innings in a no-decision against the San Francisco Giants on Monday.

Information from Field Level Media was used in this report.