President Obama’s new international tax proposals promise to “replace tax advantages of creating jobs overseas with incentives to create them at home”. The main offender is the so-called deferral provision. Under current law, U.S. corporations pay tax on their worldwide profits, but can defer tax on profits earned by their overseas subsidiaries until they “repatriate” the profits as dividends to the U.S. parent corporation. If the foreign subsidiary is located in a country with a corporate tax rate lower than the U.S. corporate tax rate, deferral makes the effective tax rate companies pay lower on foreign investments than here -- an incentive for U.S. corporations to invest in low-tax foreign countries instead of in high-tax foreign countries or at home. (Some of our major trading partners also allow their companies to defer tax on foreign profits, while many exempt most foreign-source income from tax entirely.)

The landmark Tax Reform Act of 1986 would never have happened without Jack Kemp. The voluble supply-sider, who died yesterday at 73, helped make tax reform, and not just tax cuts, acceptable to Republicans. As early as 1977, then-congressman Kemp and Senator Bill Roth (R-DE) pushed a bill that would have reduced tax rates across-the-board. In 1983, Kemp bucked many in his party by making back-channel overtures to Democratic tax reformer Senator Bill Bradley (D-N.J.)—an effort recounted in Jeff Birnbaum’s and Alan Murray’s Showdown at Gucci Gulch. Bradley and Kemp shared a key political insight: If you can get rates low enough, you will ease the pressure to create, and protect, tax loopholes.

President Obama said last night he was going to request $1.5 billion to help address the swine flu outbreak. I wish he had also promised to find the dough to pay for this initiative. But, he didn’t. This follows a troubling, and ongoing, pattern. Obama and the congressional Democrats say they recognize the consequences of burgeoning deficits and promise to address the problem—next time.

A new package of anti-swine flu tax incentives was introduced in the House today. The three-pronged package would provide a new tax credit for businesses that purchase liquid hand sanitizers, make it easier for state and local governments to sell tax-exempt bonds to finance swine flu first-response teams, and provide a new deduction for automobile air handlers.

Jan Kinney, Tax Legislative Coordinator at Steptoe & Johnson, LLP, a Washington law firm with a significant tax practice, puts together a very handy daily tax update. When Congress is in session, it includes lists of newly introduced tax legislation. Here’s the list for April 22.

As a bike freak and a tax geek, you’d think that I’d be thrilled about the new tax break for qualified bicycle-commuting reimbursement. I’ve been riding my bike to work for 30 years, so this new tax expenditure has my name written all over it. The biker in me wants to cry out, “It’s about time!” But the tax geek just groans.

When it comes to retirement savings, the recent stock market collapse has surely focused the mind. For years, we embraced the lovely, but ultimately absurd, idea that double-digit returns on equity investments would continue forever. Now, retirees-in-waiting must get their arms around a market that lost half of its value between June, 2008 and March of this year. In this gut-wrenching environment, how should we think about retirement savings? Harvard law professor Dan Halperin, a visiting scholar at TPC, has a provocative solution: He’d dump all tax-advantaged employer-based retirement savings plans and use the money—nearly $100 billion in 2009-- to enhance Social Security.

Tax Day has come and gone and IRS commissioner Doug Shulman says refunds this year will total roughly $300 billion. About two-thirds of that amount had already gone out to early tax filers by the beginning of this month. That’s a significant amount of money and it could boost the economy—if recipients spend it. In today’s economic environment, that’s a big if.

Commenter dh has raised a provocative question in response to my post the other day about why I hate filing taxes: “I wonder if the use of tax software actually increased the complexity of the tax code. Perhaps the fact that AMT was reaching a large swatch of the population would (have) been addressed sooner if everyone was required to hire an accountant rather than buy a $50 program to figure it out.”

State revenues are collapsing with the economy. A new study from the Nelson A. Rockefeller Institute of Government reports that state tax collections fell in the last quarter of 2008 for the first time since 2002 (see graph). Not only did the volatile personal and corporate income tax revenues drop but so did the usually more stable sales taxes—declining by 6 percent before adjusting for inflation.