The voices of Tax Policy Center's researchers and staff
There’s more than one way to skin a cat (and reduce taxes). Warren Buffett, chairman of Berkshire Hathaway, has made a swap for Procter & Gamble’s interest in Duracell. The “cash-rich split-off” means that Berkshire Hathaway bought Duracell in exchange for its appreciated P&G stock, worth $4.7 billion. Capital gains taxes are not incurred since the shares were not sold in the open market. The deal—described as a “tax-free reorganization” in Berkshire Hathaway’s filing with the Securities and Exchange Commission—saved the company over $1 billion in taxes.
In West Virginia, tax forms reflect a new reality. The state’s ban on same-sex marriage was overturned earlier this month. The state’s tax department, in turn, will no longer consider gender when married couples' personal income tax filings are processed. The words “husband” and “wife” will no longer show up on any of the department’s materials.
States differ in how they tax poor families. A new report from the National Center for Children in Poverty at Columbia University shows that a number of states continue to levy income taxes on families with poverty-level incomes. Others use Earned Income Tax Credits and other refundable credits, reducing the tax burden on poor families.
Millions could end up in poverty if three tax provisions expire as scheduled. A new report from the Center on Budget and Policy Priorities explains how. A lower threshold for phasing in the refundable additional Child Tax Credit earnings exclusion expands the credit for millions of working families. The Earned Income Tax Credit currently provides “marriage-penalty” relief and gives a larger credit to families with more than two children. If these provisions expire in 2017 as scheduled, the CBPP estimates that about 50 million Americans—more than half of them children—would lose part or all of their CTC or EITC in 2018. More than 16 million would fall into, or fall deeper into, poverty.
The President nominates Antonio Weiss to be Treasury Undersecretary. The global head of investment banking at Lazard Ltd. has had a hand in a few tax-inversion deals. Given the Hill’s disapproval of companies that change addresses to reduce taxes, Weiss might face some tough questions at his confirmation hearing before the Senate Finance Committee.
This weekend, the G-20 will continue work on ending corporate tax avoidance. At the Brisbane, Australia, summit of the Group of 20 industrialized and developing nations, one can expect more talk about the G-20 plan to compel companies to pay tax in the countries where they make money. This follows last month’s commitment by 51 nations to automatically exchange data collected by financial institutions by 2017.
On the Hill next week… The Senate Finance Committee’s Subcommittee on Taxation and IRS Oversight will hold a hearing on Tax Relief After a Disaster on Tuesday, November 18.
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