“There’s gotta be a better way….” TPC’s Eric Toder says the most problematic provision of the Tax Cuts and Jobs Act may be its 20 percent deduction for qualified pass-through business income. He says that “if Congress really wants to tax most C corporations and other businesses at roughly the same rate, there are ways to do it without creating such a mess.” How? One solution: Eliminate the new pass-through deduction and, instead, tax all non-public companies as pass-through entities such as partnerships, limited liability companies, or subchapter S corporations. The change could be paired with an individual income tax rate cut.
In Illinois: Renting out your own car? There may be a tax for that. Peer-to-peer car rental platforms Turo and Getaround have lots of happy users. Now the Illinois state legislature decided to regulate and tax people in the business of renting their personal vehicles. They’ll have to pay the same 5 percent tax as car rental companies. Municipalities and counties may levy additional taxes.
Off the Hill… Long-time senior GOP Senate Finance Committee staffer Mark Prater has joined the tax and consulting firm PriceWaterhouseCoopers. He left the panel last month after more than twenty years.
This weekend’s Group of Seven talks should be… interesting. United Kingdom Prime Minister Teresa May calls President Trump’s tariffs on aluminum and steel “unjustified and deeply disappointing.” Trump and May have agreed to discuss the issue further at the G7 summit this weekend in Canada.
Tax protests in Jordan gear up for fourth consecutive night. They comprise the largest demonstrations the kingdom has seen in years, replete with tear gas and road blocks. Protestors are rising up against new tax increases and austerity measures supported by the International Monetary Fund, claiming that the effort will hurt the poor and middle class. King Abdullah II has forced Prime Minister Hani al-Mulki to resign as a result of the unrest.
Hong Kong’s government will soon release a vacancy tax study. Hong Kong’s financial secretary told legislators that he’ll soon complete a study on the effects of imposing a vacancy tax on real estate developers who maintain empty units. The tax would only apply to developers; not owners in the secondary property market. Hong Kong’s Transport and Housing Bureau found that developers kept about 9,000 apartments vacant from December last year to March. Hong Kong wants to add 18,000 apartments to the city’s housing supply per year.
Tomorrow at TPC: How is the TCJA affecting investment incentives and financial reporting? At 9:00 am tomorrow via live webcast, watch accountants and economists from the Urban-Brookings Tax Policy Center and the University of North Carolina Tax Center offer their perspectives on the TCJA. What are its effects on reported earnings? How will the new law affect cost of capital and investment incentives among industries and assets, and under different financing methods? How will its international tax rules affect reported earnings and location incentives? And what will the tax cuts mean for organizational forms and business structures?
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- © Urban Institute, Brookings Institution, and individual authors, 2016.