Senate Finance Committee on indexing capital gains: It is Congress’ job. Leaders of the panel agree that only Congress, not the Treasury, can index capital gains. Republican members of the panel support the idea, Democrats don’t. Meanwhile, White House Press secretary Sarah Sanders says President Trump asked Treasury to determine whether the Administration could index gains unilaterally. “No administration policy has been determined,” she added.
A Treasury nominee will wait a bit longer. Top Senate Finance Committee Democrat Ron Wyden says he will put a hold on a Senate confirmation vote on the nomination of Justin Muzinich to be Treasury’s deputy secretary. Yesterday, the Finance panel cleared Muzinich along with IRS general counsel nominee Michael Desmond. Wyden, who wants the IRS to continue to require non-profits to disclose to the agency the names of donors, will let the Senate vote on Desmond and Charles Rettig, Trump’s nominee to serve as IRS commissioner.
Senate approves an IRS funding bill. The Senate measure would give the service $11.3 billion in Fiscal 2019. The House version appropriates a bit more, $11.6 billion, but also includes language barring the agency from enforcing curbs on politicking by religious organizations. The Senate bill does not restrict the agency’s ability to enforce the so-called Johnson Amendment, though the law is rarely applied.
Taxpayers should check their withholding. It probably is wrong. A new report from the Government Accountability Office finds that employers are not withholding enough taxes for 21 percent of taxpayers. Those 30 million Americans may be getting bigger pay checks now, but they’ll owe the IRS next April. At the same time, the GAO’s simulation found that employers are over-withholding for 73 percent of taxpayers. They’ll be due a refund next spring… assuming they file. The IRS offers a withholding calculator here that taxpayers can use to determine if their withholding is correct.
IRS proposes transition tax regulations. The rules would govern the Section 965 transition tax on offshoreearnings that were not repatriated before last year. The IRS states that for domestic corporations, foreign earnings held in the form of cash and cash equivalents generally are taxed a 15.5 percent rate while remaining earnings will face an 8 percent tax. The proposal seems to answer the question about whether chickens should be treated as cash or as a non-cash asset. It looks like they are not cash (though chicken futures are) so they’ll be subject to the lower tax rate.
To avoid retaliatory Chinese tariffs on US imports, Tesla will produce cars in China. The automaker plans to build a $5 billion factory in China, with funds raised from partners there. Chinese duties on US auto imports climbed to 40 percent in response to US tariffs on Chinese steel and aluminum. China is Tesla’s second largest market.
Who’s got high hopes for legal marijuana tax revenue? The Tax Hound returns to consider the taxation of legalized recreational marijuana. Legalization of the drug is on the ballot in five states this fall. In Michigan, some gubernatorial candidates already are thinking about how to spend future marijuana tax revenue. What should they consider?
Cupertino, California, delays a head tax vote. Its city council had proposed a per-employee tax on big companies to raise $10 million for transportation. But after Apple, its largest employer, objected, the council decided to put the proposal on the ballot in two years, rather than this November. In the meantime, the city will work with Apple on developing transportation solutions.
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