Making tax shelters great again! TPC’s Steve Rosenthal considers Donald Trump’s proposal to allow businesses to expense the full cost of plant and equipment at the time of purchase, while also allowing them to deduct their borrowing costs for these acquisitions. Rosenthal says the idea “would return us to the 1980s, when tax shelters were fueled by highly accelerated tax depreciation and deductible interest (along with light taxation of capital gains)… Tax reform should not take us back to the bad old days of wasteful tax shelters, with see-through office buildings and even bigger budget deficits.”
Trump’s running mate Mike Pence released ten years of tax returns. Indiana’s governor and his wife reported $113,026 in adjusted gross income in 2015. They paid $8,956 in federal taxes and contributed $8,923 to charities. Steve Rosenthal noted that their effective tax rate of 8 percent is typical for the income category.
As for Trump’s charitable foundation? The Washington Post examined 17 years of tax filings and interviewed over 200 individuals or groups listed as donors to or beneficiaries of the Donald J. Trump Foundation. “In tax records, the last gift from Trump was in 2008. Since then, all of the donations have been other people’s money — an arrangement that experts say is almost unheard of for a family foundation.”
Ways & Means may mark-up the tax-free Olympic bonus bill on Wednesday. The committee has scheduled a working session for Wednesday and the Olympic bill is reportedly on the agenda. The measure would allow medal winners to receive their awards, including cash bonuses, tax free. It would mostly benefit wealthy professionals and do little or nothing for struggling athletes, yet it has already passed the Senate and President Obama endorsed an earlier version.
Later this week at TPC: Dynamic scoring of the candidates’ tax proposals. On Friday morning, learn how TPC and Penn’s Wharton School are using a dynamic economic model to analyze Trump’s and Hillary Clinton’s proposed tax changes. Researchers will discuss how the plans would affect the economy in the short- and long-run and their effects on the federal budget. Doug Holtz-Eakin of the American Action Forum and Louise Sheiner of the Brookings Institution will comment on the results. Register here for the September 16 event.
In Europe: “Pay your taxes,” multinationals. This weekend, Eurozone finance chief Jeroen Dijsselbloem endorsed the European Union’s fight against corporate tax dodging. “"My message to those companies is you are fighting the wrong battle. You have to move on. Times are changing.” Meanwhile, German Finance Minister Wolfgang Schaeuble thinks efforts by the European Commission to create a common consolidated corporate tax base in Europe were “very good.” Trouble is: US-based multinationals and US lawmakers are pushing back—hard.
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- © Urban Institute, Brookings Institution, and individual authors, 2016.