Ready for the GOP convention? Republicans gather in Cleveland this week to nominate Donald Trump as their 2016 presidential standard-bearer. While conventions are not usually the place for heavy-duty policy analysis, Tax Vox will do its part to keep taxes on your mind. While the Daily Deduction will take the rest of the week off, we’ll be running daily posts on Trump’s tax agenda. Next week, we’ll do the same for Hillary Clinton and the Democrats.
Trump’s Number Two: An A-One Tax Cutter. TPC’s Richard Auxier tracks Indiana Governor Mike Pence, Trump’s pick for vice-president. Trump boasts that Pence has reinvigorated Indiana’s economy. That’s arguable, since a state’s economy is driven by much more than its governor’s actions. Still, Richard reports that Pence has spent three years successfully pushing tax cuts. He’s convinced his legislature to cut income taxes, corporate taxes, personal property taxes, and completely eliminate the state’s inheritance tax. He’s kept the state’s budget balanced by cutting spending.
Treasury official Robert Stack on debt-equity rules: Special exceptions not possible. The Deputy Assistant Secretary for International Tax Affairs is not inclined to grant exceptions that big banks want, reports Tax Analysts. Implementing such exceptions come with institutional cost. “We have sat here and watched the IRS be defunded over the last several years… Are we going to write a rule that we don't really have the resources to audit?”
A dead Michigan business tax may get an autopsy by the US Supreme Court. Some out-of-state companies that are suing the state over what they say is an illegal retroactive tax hike may ask the high court to review their case. At issue: What happened in the wake of a 2014 law that repealed the Michigan Business Tax. The companies argue that Michigan should be bound to a Multistate Tax Compact formula it adopted in 1970, which would entitle them to a corporate tax refund. In a related case, some of the same firms, including the Gillette Co, have asked the US Supreme Court to consider whether California and Minnesota also must abide by provisions of the Multistate Tax Compact.
Will India overhaul its tax system? The nation’s parliament convened today, and Prime Minister Narendra Modi’s planned tax overhaul has another chance to become reality, reports The Wall Street Journal (paywall). But it won’t be easy. Modi wants a goods and service tax to replace a labyrinth of federal and state taxes. Under the proposed GST, states in which a taxed product is consumed would receive the revenue. Interstate sales would face 1 percent surcharge, with those proceeds going to exporting states. States would continue to impose their own taxes on products such as alcohol, petroleum, real estate, and electricity. Maybe the new system wouldn’t be a labyrinth, but it wouldn’t be a straight line, either.
Congress is recess. The Daily Deduction will post Mondays until it resumes.
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