Top Senate Finance Committee Democrat Ron Wyden wants to simplify tax treatment of derivatives. (Think: “The Big Short.”) The tax code allows investors in these instruments to delay, minimize, or avoid taxes. Wyden proposes one set of rules for taxing all derivatives: Require investors to mark-to-market their unrealized profits each year, and tax them as ordinary income rather than lower-rate capital gains. He’d also repeal nine tax code sections and wipe out hundreds of pages of unnecessary regulations. The plan is effectively revenue-neutral: It would raise $16.5 billion over ten years.
Also on the Hill: Two hearings, and a motion to censure. Next week the Senate Finance Committee will hold a hearing on the debt versus equity dilemma in corporate tax integration. In the House, the Ways & Means oversight subcommittee will hold a hearing on the IRS’s troubled asset forfeiture program. And Oversight and Government Reform Committee Chairman Jason Chaffetz introduced a resolution to censure IRS Commissioner John Koskinen. It’s either a precursor to impeaching him or a way for House conservatives to blow off steam and try to win points with their base.
Attention taxers and vapers: Some questions to consider. TPC’s Richard Auxier considers using taxes to influence behavior—specifically e-cigarette use. "Given the uncertainty about the health effects of vaping, states face a number of tough questions. Should they tax them at all, and if so by how much? Do they impose a unit tax on the vape/e-cigarette or the refillable nicotine cartridges or both? Or do they use a percentage-of-price tax?"
In Oklahoma, a new online sales tax. Governor Mary Fallin just signed the measure. Starting November 1, the state will try to collect sales tax on all online purchases. Online retailers with no physical presence in the state can either collect the tax or send their Oklahoma customers an annual notice of what they owe. Consumer will then have to pay when they file their tax returns.
Portland, Oregon, voters say yes to a gas tax. They’ve OK’d a 10 cents per gallon city gas tax—the highest municipal-level tax in the state. The city expects it to bring in $64 million to fund road repairs and safety improvements for bicyclists and pedestrians before it is due to expire in 2020.
Say “cheese” to prevent fraud. Alabama’s Revenue Department will have a new way to authenticate taxpayer identities next year. The agency paid $250,000 for an app that allows taxpayers to scan information from their driver’s licenses and upload a selfie. The app will match the photo with one in the state’s records and notify a taxpayer when a return has been filed. It won’t be processed until the taxpayer verifies he or she filed it. Logging on to the app requires one more selfie—which the state hopes will be harder to hack than a password. Georgia and North Carolina may follow Alabama’s lead.
And on the other side of the world… China faces higher duties on its steel exports to the US—five times higher. Chinese-made cold-rolled flat steel will face a 522 percent tax. The construction industry and auto and shipping container manufacturers use this kind of steel. The US and Europe have accused China of dumping its excess supply abroad and distorting the global market.
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