House Ways & Means’ GOP members balk at Treasury’s anti-inversion plan. They wrote a letter to Treasury Secretary Jack Lew expressing “grave concerns” about the department’s proposals to treat some debt as equity. The rules are supposed to limit the tax benefits of corporate inversions, but the Ways & Means Republicans say they would “reduce overall investment and economic activity.” They’ve asked Lew for an economic analysis of the rules’ impact. Democrats, meanwhile, worry that the rules could hurt ordinary business transactions.
Exactly what is the Republican tax plan? TPC’s Howard Gleckman notes the striking contrast between the tax plans of Donald Trump and Paul Ryan. Trump doubles-down on the taxation of worldwide income while Ryan and the House GOP move toward a business cash flow tax, and exempt from tax the foreign income of US-based multinationals.
The IRS launches new online safeguards. For 2017, the agency will expand its pilot program to add 16-digit verification codes to W-2 forms, broaden its information campaigns on tax safety, and boost research and information sharing to protect taxpayers. Complaints about identity theft have fallen by as much as 40 percent and the IRS reports it has stopped $1.1 billion in fraud this year, $350 million more than last year.
New Jersey ok’s a sales tax cut and gas tax hike. Lawmakers are trying to fill the state’s nearly empty Transportation Trust Fund. Early Tuesday morning, the state assembly voted to cut the sales tax from 7 to 6 percent and raise the gasoline tax by 23 cents per gallon. With state senate approval, Governor Christie could sign the bill as early as Friday.
Connecticut will begin its fiscal year with fiscal woes. The state’s new budget year will begin on Friday, but weak tax collections may mean a third consecutive year of deficits. Governor Dannel Malloy downgraded expected income tax receipts by $75 million and sales tax revenues by $28 million. Long-term liabilities, including pension and retiree health contributions as well as debt service, have made balancing the budget increasingly difficult.
UK’s finance minister George Osborne: “I told you so.” The shock to the British economy from leaving the European Union means the next government will have to enact tax hikes and spending cuts, Osborne warned. Perhaps less than helpfully, he added that his pre-referendum warnings "have started to be borne out by events.”
Indonesia will offer temporary tax amnesty. The Indonesian parliament approved the program aimed at raising billions of dollars to close its growing budget gap. The country also wants to increase infrastructure spending to boost economic growth. Individuals who fail to repatriate foreign assets will face a penalty of 4 to 10 percent, while those who bring the money back will pay only 2 to 5 percent. The central bank estimates the nine-month program could bring $42.5 billion back to the country.
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