Ways and Means bill would cut health care taxes by nearly $100 billion. The House panel voted to expand Health Savings Accounts, delay the Cadillac tax on high-cost employer-sponsored health plans, and provide new medical expense deductions for gym memberships and some sporting goods. It would boost the debt by $100 billion over the next decade. The bill has little chance of passing the Senate this year.
President Trump hated the BAT, but loves a tariff. Why? TPC’s Howard Gleckman compares the goals and implications of the border-adjustable tax, proposed by GOP lawmakers and dismissed by Trump, with tariffs on imported goods, enthusiastically pursued by the president. “The BAT would have largely neutralized the tax treatment of cross-border transactions.... Crucially, there would be no presidential discretion when it comes to deciding what is taxed and what is not. In contrast, tariffs are explicitly designed to protect selected industries in the US by reducing imports from targeted countries. And, especially as imposed by the current Administration, they give the president enormous power to pick winners and losers.”
And the Senate weakly rebukes his trade policy. With the Senate’s GOP leadership blocking a vote to reverse some of the president’s tariffs, the Senate voted 88-11 yesterday to assert that it should have some role in setting trade policy. The resolution was non-binding, however. Congress normally approves tariffs but Trump has circumvented that requirement by claiming trade practices by Canada and other allies risk US national security.
Treasury and the IRS finalize inversion rules. The regs, first developed during the Obama Administration, attempt to block “serial inversions.” The proposed regulations blew up a $160 billion deal between pharmaceutical giants Pfizer and Allergan in 2016.
Speaking of winners: A nearly 60-year-old tax provision gives the wealthy a chance at a tax cut. The measure enacted during the Kennedy Administration gives American taxpayers a choice between paying the individual or corporate income tax rate on investments held offshore. There was little incentive to choose the corporate rate when it was 35 percent and the individual top rate was 39.6 percent. But now the corporate rate is 21 percent and the top individual rate is 37 percent. If they can afford it, Americans can hold investments offshore that yield interest, rent, or royalties and defer millions of dollars in taxes. Bloomberg explains how.
Sens. Lee, Rubio and Cruz: Let states manage highway funding. They have introduced a bill, called the Transportation Empowerment Act, to transfer the authority for most taxing and spending for highway and mass transit programs from the federal government to the states.
Harvard Business School study: State corporate tax cuts widen income gap. New research by Assistant Professor Ethan Rouen and colleagues finds, that state corporate tax cuts do not help workers earning less than $200,000 a year. However, such tax cuts do increase real investment.
North Dakota imposes online sales tax collection requirements. Just weeks after the Supreme Court’s Wayfair decision expanded the ability of states to require remote sellers to collect sales taxes, North Dakota has acted. Online sellers must register with the state and begin collecting sales and use tax on purchases no later than October 1. The state exempts firms that sold less than $100,000 or had 200 or fewer transactions in the state last year. In an effort to require collections, North Dakota brought the original Quill case to the High Court 26 years ago.
Ugandans protest social media tax. Since July 1, Ugandans have been paying 5 cents a day to access all social media websites and apps. A pop star organized a protest, saying that the tax hurts his and other artists’ marketing efforts. Yesterday Ugandan police used tear gas and bullets to break up the street protests. ABC News reports that Prime Minister Ruhakana Rugunda told lawmakers that his government would review the tax and propose a new bill next week.
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