A computing giant’s merger plans might attract IRS scrutiny. Dell wants to thread the needle of US tax laws to purchase storage company EMC. Dell would purchase EMC stock with a mix of cash and tracking shares in a business unit of EMC. Tracking stocks allow shareholders to participate in the performance of a specific unit of a larger company, while the operation is actually owned and controlled by the parent. But the IRS could see the distribution of the tracking stock as taxable, both to Dell and the former EMC shareholders. The IRS might treat the tracking shares as stock of a new subsidiary, rather than of Dell. If it does, Dell would owe up to $9 billion in taxes, likely killing the deal.
Ryan still hopes for international tax reform in 2016. In an interview with Bloomberg TV (starting at about 1:40 on this video), the new Speaker says he thinks there is a chance to get a consensus bill next year. He also says he wants congressional Republicans to draft their own specific broader reform plan. He’ll leave it to the tax-writing committee to do the heavy lifting.
On the Hill… A group of 40 transportation advocates wants a steady increase in annual funding for road and transit projects, even if Congress needs to trim the overall length of the highway bill. In a joint letter, the lobbyists told the House and Senate that their bills do not provide a sufficient increase in annual spending to meet projected needs. Congress needs to renew funding by November 20.
Looks like there’s a budget deal in Pennsylvania. Democratic Governor Tom Wolf has a preliminary agreement with the legislature to fund school districts and reduce property taxes. The price: The deal includes a hike in the state sales tax from 6 percent to 7.25 percent.
Apple plans to staff-up in Ireland. They’re expanding their campus in Cork, and expect to hire 1,000 people through 2017. European Union antitrust officials are investigating Apple’s tax deals with Ireland and expect to rule after Christmas.
The UK Parliament’s Work and Pensions Committee urges tax credit cut caution. Chancellor of the Exchequer George Osborne has a plan to reduce the cuts to the nation’s earned income tax credit, but the committee tells him, “There is no magic bullet within the tax credit system. One of three things has to give: the impact on poverty, work incentives or the cost. We recommend that if, indeed, the effects cannot be satisfactorily mitigated, the government pause any reforms to tax credits until 2017-18.”
All’s still fair in debates and tax talk. TPC’s Howard Gleckman offers a rundown of how the GOP candidates illustrated their different visions for tax policy. The Democratic candidates get another turn on Saturday evening.
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