Publications

The Washington Post reports that Senate Republicans are considering a corporate tax rate above 20% in order to generate extra revenue for last-minute changes to the tax bill. Multiple parties have expressed openness to a corporate tax rate above 20% to generate extra revenue for the repeal of the corporate alternative minimum tax, a tax provision that threatens to render certain research tax credits obsolete. WaPo

According to The Wall Street Journal, the Senate has voted to start formal tax-bill negotiations with the House of Representatives. The two chambers still face significant differences between their bills, including deductions for state taxes, individual and corporate alternative minimum taxes, and the possible repeal of the estate tax. WSJ

Heather Gillers and Melanie Evans of The Wall Street Journal write that hospitals and universities are rushing to issue tax-free debt before Congress passes a tax bill. Borrowers issued $4 billion in tax-exempt private activity bonds last week, triple the amount from the same period a year ago, as Congress edges closer to eliminating the tax-exempt status of private-activity bonds. WSJ

David J. Lynch of the Washington Post argues that the current tax reform plan could leave policymakers with few tools to combat an economic downturn in the coming years. Lynch contends that the current tax reform plan is expected to widen the federal deficit substantially over the coming decade, which would leave the government little room to boost spending during a recession. WaPo

According to Nick Timiraos of The Wall Street Journal, recent appointments to positions in the Federal Reserve system have reinforced a gradual shift from hawkish to more centrist policymakers. Timiraos says that the new, more centrist Fed could provide increased policy stability and could signal a shift away from hiring career economists to leadership positions. WSJ

According to The Wall Street Journal, the House and Senate tax bills both would allow corporations to repatriate billions of dollars held overseas, which could reduce the need for corporations to issue bonds. If the supply of corporate bonds falls, bond prices would likely rise and drive yields even lower than they already are, which could force investors to seek higher returns elsewhere. WSJ

The Wall Street Journal reports that homebuyers are increasingly resorting to all-cash purchases as the supply of homes for sale continues to decline. While the rate of all-cash purchases is still nowhere near its 2011-2012 peak, all-cash purchases have become increasingly popular as sellers wish to close quickly and avoid waiting for a bank to approve a mortgage. WSJ

The Wall Street Journal reports that The Federal Reserve Bank of Richmond is expected to pick Thomas Barkin, a senior executive at McKinsey & Co., to be its next president. Barkin would be the first person selected from outside the Richmond Fed to lead the institution, though Barkin has previously served as chair of the Atlanta Fed’s board of directors. WSJ

Paul Hannon of the Wall Street Journal writes that The Bank for International Settlements (“BIS”) believes that the Fed’s interest rate increases have failed to cool financial markets and therefore may not have had a significant impact on the U.S. economy. The BIS has said that interest rates have been too low for too long, encouraging risky activity and a buildup of debt that may become problematic if interest rates rise quickly. WSJ

According to The Wall Street Journal, many companies could lose the research-and-development tax credit under the Senate tax bill, which could stifle innovation and technological advancements. Now that the Senate bill preserves the 20% corporate alternative minimum tax, firms who would otherwise benefit from the R&D tax credit may now lose those tax benefits and reduce R&D spending as a result. WSJ

The Financial Times reports that Congressional Republicans are scrambling to rework their tax reform bill after the Senate parliamentarian determined that the prior bill did not conform to Senate rules. The Senate parliamentarian ruled that the inclusion of an automatic “trigger” that would raise taxes if economic growth was below projections was against Senate rules, forcing bill-writers to revise key parts of the plan. FT

According to the Wall Street Journal, House Republicans will propose a short-term spending bill today to avoid a government shutdown when the government’s current funding expires on December 9^th. Republicans aim to extend the government’s current funding through December 22^nd with the short-term bill, which would give them time to negotiate a two-year budget deal that would allow for a detailed spending bill for the rest of the fiscal year. WSJ