Passing the GOP’s tax play was child’s play compared to the coming months in Washington D.C., according to Congressman Paul Gosar.
The challenging thing for lawmakers will be the tax play’s implementation, he says.
“The plan could have been better,” said U.S. Rep. Paul Gosar R-Arizona. “It could have been a little more simplified, but it’s always a problem getting things through the Senate. Still, this is a start and something that should be reviewed every one or two years.”
While generally happy with the tax plan, Gosar disagrees with vocal opponents who say it will hurt the middle class and raise taxes.
For one demographic group, it might, Gosar said.
“There are pass-throughs, businesses making more than $1 million in states like California, New York, New Jersey and higher-tax states that could see a slight increase in taxes,” he said. “This is one reason we should look at the tax package every year.”
A pass-through is a business that does not pay corporate income tax, and includes entities like sole proprietorships, partnerships and S-corporations.
Approximately 95 percent of businesses in the U.S. are categorized as a pass-through, according to the Brookings Institute, and they have traditionally paid a lower tax rate than larger C-corporations.
Along with implementing the tax plan, lawmakers will face the task of developing a budget, something it has failed to do for several years.
“In the short run there are opportunities for cuts, but it means we need to get back to the budgetary process,” Gosar said. “We need to get away from operating on continuing resolutions that keep us in financial limbo. We just keep kicking the can down the road instead of passing a budget.”
Of interest to Western states is how the lack of a federal budget impacts the Payment in Lieu of Taxes program.
PILT eligibility is reserved for local governments — mostly rural counties — that contain non-taxable federal lands and provide vital services, such as public safety, housing, social services and transportation.
These jurisdictions provide significant support for national parks, wildlife refuges and recreation areas. The funding stream is paid to local governments to offset losses in property taxes because of the non-taxable federal lands within their boundaries.
Last year more than 1,900 local governments received $464.6 million in PILT money. Mohave County’s share was nearly $3.6 million and La Paz almost $2 million.
Under President Donald Trump’s proposed 2018 federal budget, PILT funding would be limited to the most recent 10-year average of payments ($397 million). Some estimates are that rural counties would receive 39 percent less under the Trump plan than they currently receive.
“This is a sore spot for Western states, because we are already getting a pittance of what’s been promised,” Gosar said. “We are working through ideas, but once again it gets back to budget discussions. Can we see increases in PILT and possibly a permanent fix? If this is not what Congress wants to do, then it should return the land back to the states for their jurisdiction.”