An international tax reform draft will be here eventually, just not this month. The House Ways & Means subcommittee on tax policy will not have its draft ready by the first quarter as subcommittee chair Charles Boutsany, Jr., had hoped, reports Tax Analysts (paywall). Boustany’s office did not officially comment on the timeline, but it seems the March deadline might have been too ambitious.
Also on the Hill. This Thursday the Senate Finance Committee will hold a hearing to review operations and enrollment under the Affordable Care Act’s website, healthcare.gov.
On modeling presidential tax plans… TPC’s Howard Gleckman shares his take on the task’s inherent challenge. “Modeling these plans is a bit like playing three-dimensional chess…. [Y]ou need to start by doing what TPC does, model their revenue and distributional effects. But you also have to consider at least three other issues: the net economic impact of an explicit trade-off of higher taxes for new spending programs, the relationship between tax changes and the overall economy, and the impact of bigger deficits on economic growth.” How many taxpaying voters know how to play 3D chess?
The “innovation box” is a “step in the wrong direction.” Jason Furman, chairman of the President’s Council of Economic Advisers says that applying a lower tax rate to business income from intellectual property would not support innovation. In a talk last week at the Georgetown University Law Center, Furman argued instead that the research and development tax credit is a proven, effective method to encourage greater investment in innovation.
Mississippi’s revenue collections are down, but a tax cut idea moves ahead. The first seven months of the state’s fiscal year have seen revenues 0.6 percent below last year’s, or $18.1 million. The state has experienced year-over-year revenue drops only three times since 1970. Governor Phil Bryant has cut budgets by $39.8 million and drawn $35.2 million from the state’s rainy day fund to avoid additional cuts. Meanwhile, the state Senate just passed a tax cut for businesses and individual that would reduce general fund revenue $575 million—or 10 percent of general fund revenue—over 15 years.
Another tax evasion crackdown in the United Kingdom. The Chancellor of the Exchequer’s proposed budget, due out Wednesday, will require people hired off-payroll, or contracted, to pay employment taxes. Under the proposal, public sector employers would have to determine whether off-payroll compensation should be taxed as employment income. Current rules leave the decision up to employees, which the government says results in an estimated 20,000 public-sector workers who are not on the public sector payrolls paying less in income tax and national insurance contributions than their on-payroll peers—an average of £3,500 ($5,000) a year.
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