GOP candidate Jeb Bush shares many, but not all, tax plan specifics. Bush laid out a detailed plan to lower the top individual tax rate to 28 percent, cut rates on corporate income and capital gains to 20 percent, and repeal the Alternative Minimum Tax and the estate tax, and remove millions of low-income Americans from the income tax rolls by raising the standard deduction and boosting the Earned Income Tax Credit. He’d also eliminate the deduction for state and local taxes and cap the value of most other deductions. Businesses could deduct capital expenses immediately but would lose the deduction for interest costs. TPC’s Howard Gleckman gives Bush high marks for transparency and figures the biggest beneficiaries would be the highest- and lowest-income households. But he wonders how much money the plan would raise.
It might be sunnier now, but the long-term fiscal outlook remains gloomy. TPC’s Bill Gale and University of California at Berkeley’s Alan Auerbach have a new paper that updates their projections of the nation’s fiscal outlook. It’s slightly better, but not good. Debt as a share of GDP has doubled since 2007and will likely rise. To bring the debt-GDP ratio down to its 2007 level of 36 percent by 2040, immediate and permanent spending cuts or tax increases would be necessary, to the tune of 3 percent of GDP.
Treasury has a lobbying idea for US businesses. International tax counsel Danielle Rolfes suggested US businesses lobby against an interest expensing deduction favored by foreign companies. The suggestion falls in line with Treasury’s hope for stronger rules against “earnings stripping,” a practice that lets firms deduct interest on loans made to a US subsidiary.
In Missouri: A three-month tax amnesty program. Individuals and businesses that had delinquent state taxes due prior to Dec. 31, 2014 have until November 30 to pay without penalty or interest. Eligible taxes include the consumer’s use tax, corporation franchise tax, corporation income tax, employer withholding tax, fiduciary tax, individual income tax, sales tax, and vendor’s use tax. Missouri taxpayers must comply with state tax laws for the next eight years and are excluded from future amnesty programs.
In debt and danger of default, Puerto Rico wants spending cuts and tax reform. In what could be a first step toward restructuring $72 billion in debt, The Wall Street Journal (paywall) reports the commonwealth is proposing to raise taxes, cut spending, reform welfare, revise its minimum wage, consolidate public schools, and create a control board to oversee the changes. These steps alone would still not avoid default on the island’s debt. A compromise would be required between its creditors and government.
India changes its mind about its retroactive capital gains tax. Earlier this year, the nation’s Finance Ministry sought to collect $6.5 billion in retroactive taxes from foreign investors under India’s Minimum Alternative Tax (Wall Street Journal paywall). The MAT took effect in 1996 but did not apply to foreign investors until a tax body issued a nonbinding ruling in 2012. Collection efforts this year prompted foreign investors to leave India. Finance Minister Arun Jaitley referred the issue to a special advisory committee that recommended excluding foreign investors from the levy.
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