The path to tax reform in 2017 is getting bumpier. House Ways & Means Chairman Kevin Brady still promises that tax reform will happen this year. But Senate leaders keep questioning a key element of the House plan, border-adjusted taxes of imports and exports. In a speech to the US Chamber of Commerce yesterday, Finance Committee Chair Orrin Hatch had some questions: Who’ll actually bear its burden, will it satisfy international trade rules, and what industries will be hurt? Meanwhile, Politico reports that the Senate’s #2 Republican, John Cornyn, is warning that the upper chamber will not “rubber stamp” a House destination-based tax. Hatch also promised to get started on his own version of a tax bill without waiting for a House plan.
As for the Treasury Secretary-designee… The Republican majority on the Finance Committee voted to send the nominations of President Trump’s Treasury pick Steven Mnuchin and Health and Human Services choice Tom Price on to the full Senate. No Democrats were in the room at the time. Democrats still want both men to answer more questions about their past financial practices. Republicans want them confirmed. The acrimony is unusual for the Finance panel, which usually avoids nasty partisan bickering.
And Hatch wants to dump ACA taxes. Also in his Chamber speech, Hatch said he wants to repeal the Affordable Care Act taxes right away. Other Republicans have been more cautious.
House conservatives want Trump to fire John Koskinen. They failed to impeach the IRS commissioner last year. Now they want the president to fire him. The latest to jump aboard the bandwagon: Judiciary Committee Chair Bob Goodlatte. Koskinen’s term expires next fall.
Amazon will collect sales tax in ten more states. The online retailer just added Iowa, Louisiana, Mississippi, Missouri, Nebraska, Rhode Island, South Dakota, Utah, Vermont and Wyoming to the jurisdictions in which it will collect sales tax. TPC’s Richard Auxier offers a reminder: Even if your online retailer doesn't assess a sales tax because it doesn't have a brick-and-mortar location in your home state, you probably still must pay an equal use tax on your purchases. “There's something to be said about being a good resident and paying.”
Can we make small stockholders feel great again? The Tax Hound wonders whether there are ways to reform the US corporate tax system that benefit them? Maybe. We just need to remember who pays corporate taxes and how.
Here’s a primer on the taxation of pass-through businesses. TPC’s Frank Sammartino’s new brief explains that the vast majority of US businesses are pass-through entities such as sole proprietorships, partnerships, and S corporations. Unlike C corporations, these firms are not subject to the corporate income tax. Instead, the owners include their share of profits as taxable income under the individual income tax, which is taxed up to the maximum rate of 39.6 percent rate.
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