Are entrepreneurs overtaxed? It depends. You’ll be able to learn more next Friday, January 13, at a TPC event examining the issue. Meanwhile, take a look at the new paper, “Taxing Entrepreneurial Income,” from TPC’s Eric Toder. He estimates the tax rate on entrepreneurial income under alternative assumptions and looks at how the tax plans of Trump and the House Republicans would affect these businesses.
Deutsche Bank AG will pay the US $95 million to settle a tax fraud lawsuit. The bank, which has loaned the President-elect over $300 million, has resolved a US government lawsuit accusing it of tax fraud. Deutsche Bank admitted to using “insolvent” shell companies to hide significant tax liabilities from the IRS in 2000, and then trying to make the shell companies foot the tax bill for Deutsche-Bank’s stake in Bristol-Myers Squibb.
Trump’s latest tariff tweet targets Toyota. All alliteration aside, the President-elect has gone after yet another automaker for building a plant in Mexico. Trump’s “pay big border tax” threat was seconded by his new spokesman. The president has some authority to act on his own, but the House Republican leaders have been warning that new tariff laws are a non-starter in Congress.
Pennsylvania’s lawmakers need more time to pass a constitutional casino tax. The state’s high court ruled last year that a casino tax is unconstitutional but gave the legislature until January 26 to fix the problem. Now, lawmakers want a 90-day extension. The current system imposes a higher tax burden on casinos that generate less revenue. The tax raises $140 million annually for police and rescue services, economic development, and road and sewer projects.
In 2017, some may lose a federal income tax deduction for tuition and associated fees. In 2014, over 1.7 million tax filers paying for graduate school or a fifth or sixth year of undergraduate education claimed the deduction, averaging $2,200 per return. However, the tax break expired at the end of 2016 for filers who earn between $65,000 and $80,000 (singles) or $130,000 and $160,000 (couples). So far, at least, Congress has not renewed the subsidy for 2017. Students and their families will still be able to claim the deduction when they file their 2016 returns this spring.
French energy company Engie may have to return $316 million to Luxembourg. The European Commission is investigating Luxembourg’s tax treatment of Engie, alleging that the nation may have broken the European Union’s curbs against state aid.
The House Ways & Means Committee adds new members. A welcome goes out to Republicans David Schweikert of Arizona, Jackie Walorski of Indiana, and Carlos Curbelo of Florida, and to Democrats Brian Higgins of New York, Terri Sewell of Alabama, and Suzan DelBene of Washington.
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- © Urban Institute, Brookings Institution, and individual authors, 2016.