The House repeals the ACA and heads home for a week. By a narrow partisan majority of 217 to 213, the House voted to replace the Affordable Care Act with the American Health Care Act. The AHCA cuts taxes by nearly $1 trillion over 10 years, with most of the benefits going to high-income households. It ends the ACA’s system of tax subsidies and penalties but creates its own set of tax credits, targeted by a mix of age and income. The Congressional Budget Office estimated that an earlier version would benefit the rich and hurt the lowest-income households. The House GOP says “it’s a start,” But many think it will be a non-starter in the Senate.
And Congress kept the government open. Yesterday the Senate passed a $1.1 trillion spending bill to avoid a government shutdown through Sept. 30. The House had passed it on Wednesday and President Trump is expected to sign the measure before today’s deadline.
President Trump signed an executive order in an attempt allow church politicking. The order gives the IRS “maximum enforcement discretion” to ignore the Johnson Amendment that prohibits churches and other tax-exempt organizations from backing or opposing political candidates. Enforcement is already rare. The American Civil Liberties Union plans to sue while some religious groups complain the order does not go far enough.
Is the DBCFT unconstitutional? Check out two opinions. Former Solicitor General Ted Olson argues that “as currently described, the tax would be imposed on taxpayers themselves, rather than on a transaction or activity. That makes it a direct tax that should be subject to the long-dormant requirement of apportionment”—and therefore, unconstitutional. The Tax Foundation’s Joseph Henchman says Olson is wrong. For one thing, “the tax would be more accurately characterized as on a product, event, activity, or exchange, rather than on a person, their income, or their property. Consequently, it is an indirect tax not subject to the apportionment requirements.”
Massachusetts’ budget problems are getting worse. April tax collections of $2.86 billion missed projections by $214 million, widening the state’s 2017 revenue gap. Revenue is growing by only 1.1 percent, far below its projected rate of 3.1 percent. “These results make it unlikely that the Commonwealth will meet its FY17 revenue target and we will also need to take a look at FY18 projections," said Revenue Commissioner Michael Heffernan.
Google’s paying up in Italy. Alphabet’s Google will pay $334 million, or €306 million, to the Italian government to settle their tax dispute. Italian tax authorities last year claimed that Google failed to pay taxes on €1 billion between 2002 and 2015. The settlement amount refers to Google’s units in both Italy and Ireland.
The IRS seeks nominations for the IRS Advisory Council. Applications will be accepted until June 16. The council provides an organized public forum for IRS officials and representatives of the public to discuss relevant federal tax administration issues. IRSAC members submit a report to the Commissioner of the Internal Revenue annually at a public meeting. IRSAC members are appointed to three-year terms by the Commissioner. Nine appointments will begin in January 2018.
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