If AHCA fails, will tax reform die too? Some in the GOP warn that it might. Hill Republicans want to use the AHCA to cut Affordable Care Act taxes in part to set a lower revenue baseline. That would make it easier for Congress to pass a permanent revenue neutral tax bill with 50 votes as part of a reconciliation bill. But Rep. Tom Cole remains hopeful about a big tax bill, even if it isn’t revenue neutral. “God made Republicans to cut taxes. That’s what they do. And they don’t worry too much about the budgetary consequences of it sometimes.”
Is AHCA II a windfall for investors? In their revised bill, House GOP leaders repealed many of the ACA’s tax hikes retroactive to January 1, 2017, instead of 2018. Ways & Means chair Kevin Brady says this would be a big stimulus. But providing tax breaks to stock sales that took place two months ago wouldn’t do much to boost the economy. It would, however, be a windfall for investors who sold into the Trump rally.
Tax reform may have a new lobbyist. The House Ways & Means Committee’s top tax counsel Harold Hancock has just signed on as a partner with McGuireWoods, a law and lobby firm. Hancock spent the last six years serving past and present Ways & Means chairs Dave Camp, Paul Ryan, and Kevin Brady. Maybe this is why Brady is so confident in the future of a border-adjustable tax.
Wisconsin lost $27 million because of a tax credit double-dip. The Manufacturing and Agriculture Tax Credit, established in 2013, allowed several hundred state tax filers to claim the credit for income taxes paid to other states. But they also could claim a second credit for the same tax, creating a double benefit. Governor Scott Walker’s proposed budget would ban this practice. What about the original credit, which has been fully effect since 2016? Touted by the governor as a driver of manufacturing job growth, it will cost the state $284 million this year, $155 million more than projected. The state has not said how many jobs it created.
Massachusetts expects a “high” return on marijuana sales. The state’s voters legalized marijuana sales last fall, and the legislature’s Joint Committee on Marijuana Policy estimates annual tax revenue from sales will top $100 million once weed goes on sale in July, 2018.
No more profit shifting in Australia. At least, not for multinational firms like Facebook and Google. The Aussies changed their tax system to target global companies with annual incomes greater than A$1 billion. Those companies must pay tax in Australia based on profits earned there. To enforce the measure, Australian tax authorities are currently conducting 71 audits involving 59 multinationals. The change could raise an extra A$2 billion ($1.5 billion) in the current tax year.
But New Zealand’s stuck with a bad apple. Apple, Inc., has paid no tax to New Zealand over the past ten years even though it has sold more than NZ$4.2 billion ($3 billion) worth of its products in the country. Apple’s New Zealand subsidiary made income tax payments of NZ$37 million, but the money was sent to Australia’s tax office, thanks to a tax arrangement in place since at least 2007.
For Americans abroad: A new tax advocacy effort. The American Citizens Abroad Global Foundation wants the US to move to a residency-based system of individual income taxation. The group wants to commission revenue estimates to demonstrate that such a system would not add to the deficit.
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