Corporate rate cuts: Maybe not this year, after all. Bloomberg reports that House Republicans have greater interest in reanimating expired tax breaks and changing the international tax system. What about cutting the corporate tax rate and the possible effect on small businesses? House Ways & Means Chair Paul Ryan says he’s worried about “exacerbating the disparity” between corporations and pass-throughs such as partnerships. He urged business to be patient and eventually compromise on favored tax breaks. “Don’t fight for the little tiny table scraps,” Ryan said. “Think about the broader goal of getting rates down, of having comprehensive tax reform.”
The online sales tax: Why all the hate? TPC’s Howard Gleckman considers the reaction to Utah Representative Jason Chaffetz’s proposed Remote Transactions Parity Act. Conservative anti-tax critics claim his bill would result in a huge tax increase on consumers and a tremendous compliance burden on small, online merchants. TPC’s Howard Gleckman says there is no reason why governors couldn’t use the revenue to lower sales tax rates. Besides, he asks, “Can anyone think of a good reason why I should pay tax if a buy a toaster at my local kitchen store but not if I buy the same toaster online? The current arrangement violates all rules of tax equity.”
Donald Trump: He’s fired… up! (About running for President.) He announced yesterday that the country needs him: “Somebody that can take the brand of the United States and make it great again.” What might he do for the tax code? As Vox retells, fifteen years ago he was in favor of a one-time net worth tax of 14.25 percent on individuals and trusts worth $10 million or more. But in 2011, he wanted to make the Bush-era tax cuts permanent. Stay tuned… (you know that’s what Trump wants).
We should all be so lucky. Bloomberg dives into the long and winding tale of Medallion, a hedge fund started by James Simons that averaged, before fees, a 71.8 percent annual return from 1994 through mid-2014. Pieces of it have been placed in Renaissance Technologies employees’ Roth IRAs, and future earnings will never be taxed. That’s the result of four years of legal wrangling and two waivers from the US Department of Labor. TPC’s Steve Rosenthal said, “It’s quite amazing. They’re very tax-savvy.” To say the least. Senator Ron Wyden said, “There shouldn’t be two sets of rules –- one for sophisticated organizations leveraging a complex tax system to their benefit and another for middle-class Americans trying to save for retirement.”
On the Hill. The House Ways & Means Committee holds its hearing today on the Federal Highway Trust Fund. Yesterday, Senate Democrats gave Republicans 45 days to negotiate a long-term highway funding extension. The fund runs out of money at the end of July, thanks only to a two-month extension passed before the Memorial Day recess. Congress has passed 33 short-term extensions over the past six years.
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