Another exit tax proposal hits the Hill. With the support of 50 fellow House Democrats, Texan Lloyd Doggett introduced a bill last week to slow inversions by taxing either the deferred foreign income of a US company’s foreign subsidiary or the appreciation in value of the subsidiary, whichever is greater. Democrat Sherrod Brown of Ohio introduced his own exit tax bill in the Senate in March. Neither bill will make it through the GOP-controlled Congress this year, though the idea has the support of Democratic presidential front-runner Hillary Clinton.
Kansas lawmakers start to tackle taxes. The legislature sent Governor Sam Brownback a bill that imposes a limited cap on local property taxes, though it includes exceptions for tax hikes that fund public safety. But the state House overwhelmingly rejected a bill that would have taxed partnerships and other pass-through firms that lawmakers exempted from tax in 2012. That exemption costs the state $250 million-a-year in revenue. Lawmakers did send Brownback a state sales tax exemption for materials to replace fencing destroyed in a massive wildfire. The bill would also give state taxpayers the option to donate to Kansas public schools on their returns. State tax returns would also remind Kansans that they must pay sales tax on internet purchases. The state still needs to figure out how to address a $228 million budget shortfall.
Will Oklahoma fund its Medicaid program with a tobacco tax? The state just introduced an alternative to Medicaid expansion under the Affordable Care Act. The $100 million plan would move about 175,000 children and pregnant women from Medicaid to private insurance purchased through the federal ACA marketplace. Premiums would be subsidized with a $1.50 per pack cigarette tax increase, making Oklahoma’s tobacco levy the highest in the country. A pack would cost $7.44.
Mind the gap. In case you missed it, the IRS last week estimated the federal tax gap—the difference between what taxpayers owe and what they pay-- is $458 billion. Most is due to unreported, or under-reported, income. The agency says it captures about $52 billion through audits.
Tune in tomorrow. TPC will air its webcast of the inaugural TPC Donald C. Lubick Symposium at 3:00 pm. Participants will examine the implications of worldwide tax changes for US tax reform. The keynote speaker will be Bob Stack, Treasury’s Deputy Assistant Secretary of International Tax Affairs. TPC’s Eric Toder will moderate a panel discussion with Manal Corwin of KPMG US, David Rosenbloom of the New York University School of Law and the law firm Caplin & Drysdale, John Samuels of Yale Law School, and—this just in—Barbara Angus, Chief Tax Counsel for the House Ways and Means Committee.
Congress is in recess this week. The Daily Deduction will return to its regular schedule on May 11.
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