Can tax credits and other programs cap a family’s cost of child care? Democratic presidential hopeful Hillary Clinton hopes so, and Vox examines whether her yet-to-be-detailed plan could work. Clinton would limit the out-of-pocket cost of child care to 10 percent of a family’s income by increasing federal funding and tax relief—including the child and dependent care tax credit—for low- and middle-income families.
Pick your poison: Identity thieves or loan sharks? The Wall Street Journal explains (paywall). Thanks to a new law designed to prevent fraud, the IRS waits until February 15 to send refunds to households receiving the earned-income tax credit and child tax credit. Unfortunately, the delay may be reviving the high-interest refund-loan market. That’s the same business that lost opportunities to prey on low-income families when the IRS used technology to make made filing easier and faster. Of course, we’ve since learned that online filing also created a new market in identity fraud, which forced the agency to delay those refunds, which… well, you get it.
In Philadelphia: Looking for wiggle room in a soda tax. City Council President Darrell Clark has countered Mayor Jim Kenney’s 3-cent-per-ounce tax with a proposal that would yield, at best, half the $95 million in annual revenue Kenney wants. Clark wants to look at what a 1-cent, a 0.75 cent, and 0.5 cent levy would raise. The short answer: A lot less. While a lower tax might still finance community schools, parks, and recreation centers, it would support only 2,000, not 6,500, pre-K students, and provide no money for the city’s pension system.
Mexico has expanded its tax evasion investigations, thanks to the Panama Papers. It will now require banks to share names of local clients with transactions in tax havens. Banks would file their reports with the Mexican tax authority known as SAT.
And China has a plan to close a corporate tax loophole. The government may soon require multinationals to report transfer pricing, those internal transactions between overseas branches and US operations. US-based multinationals often alter the prices of intangible asset transfers within their global operations. That allows them to divert profits to low-tax countries and costs to the relatively high-tax US.
A Ways & Means Republican will soon propose a consumption tax. Tax Notes reports that Rep. Jim Renacci of Ohio will soon roll out a business consumption tax that will include some form of income tax rebate for low-income households.
US tax geeks also explore international tax solutions. There is lots of international tax talk at this week’s National Tax Association’s annual spring symposium. You can find plenty of consensus that the current system is a mess, but not about what to do about it. A Value-Added Tax, a cash flow tax, and various other ways to shift most corporate tax to shareholders all get some love among the economists, lawyers, and accountants.
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