Everything old is new again. It took the Senate Finance Committee about 90 minutes to move a bill to renew a slew of expired tax breaks for two years. The cost: $97 billion. Bloomberg notes that beneficiaries include Broadway producers, big banks, and wind-energy companies. Finance Chair Orrin Hatch said: “Each of these provisions have large constituencies and all of them have broad support here in Congress.” Lawmakers say they would rather see comprehensive tax reform, but as Virginia Democrat Mark Warner said, “While we sit and talk about tax reform, the rest of the world is moving.” House Republicans want to make some costly extenders permanent. Hatch says, “Not now.”
Speaking of moving. Senate Majority Leader Mitch McConnell says he’s got bipartisan agreement to move a transportation bill but early last evening Democrats balked, claiming they didn’t want to vote for a bill they hadn’t seen. The measure would extend authority for the Highway Trust Fund for six years but fund it for just three. Much of the money would come from tougher tax compliance. The House wants to extend the trust fund for five months. The two chambers have 10 days to sort it all out.
Moving, indeed: “The Tax Code Chainsaw Massacre,” Rated “R” for “Rand Paul.” The GOP presidential candidate would like a universal tax rate of 14.5 percent. This dramatic change nearly pales in comparison to the accompanying optics in his latest video. It shows him wielding a chainsaw to a copy of the tax code, sending it through a wood chipper… and then burning it—all to a throwback soundtrack of Jimi Hendrix playing the Star Spangled Banner. Who said tax policy was dull?
Speaking of gimmicks… TPC’s Howard Gleckman takes a closer look at Hillary Clinton’s plan to give firms a 15 percent tax credit for each dollar of profit they share with employees. He finds that “the idea of profit sharing is worth debating, but Clinton’s specific proposal is enormously complicated and depends on budget gimmicks to add up.” It leads one to wonder whether many firms would bother with it.
In the United Kingdom, the summer budget has an interesting tax. The UK would reduce the corporate tax rate from 20 percent to 19 percent in 2017 and 18 percent in 2020. The UK wants a competitive corporate rate, after all. But, the UK would also increase the tax on shareholders in order to raise £1.96 billion by 2021. Beginning in April 2016, dividends in excess of £5,000 would be taxed at between 7.5 percent and 38.1 percent, depending on the taxpayer’s income. Interesting idea, as TPC’s Rosanne Altshuler, Benjamin Harris and Eric Toder have noted.
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- © Urban Institute, Brookings Institution, and individual authors, 2016.