The voices of Tax Policy Center's researchers and staff
Maybe the duck will walk again? Lawmakers are putting down their markers on anti-inversion legislation. Top Senate Democrats Dick Durbin and Chuck Schumer have introduced a bill to curb “earnings-stripping” by multinational corporations—a practice where firms maximize U.S. tax deductions for interest payments and other business costs while shifting income to low-tax countries. Senate Finance Committee Chairman Ron Wyden is still shopping ideas that he hopes may win GOP support but acknowledges there is unlikely to be any action before a lame duck session of Congress. And House Ways & Means Committee Chair Dave Camp insisted that inversion legislation must be linked to corporate tax reform.
Corporations like REIT rules—but will they change? Real estate investments trusts are growing in number, thanks to a broader IRS definition of “real estate.” The Hill reports that the Obama administration may give the use of REITs a second look. TaxAnalysts’ Marty Sullivan’s latest Tax Note (paywall) reviews CBO data on 20 recent REITs, and finds that they will, in the long term, “reduce corporate revenues by between $900 million and $2.2 billion annually (based on profits at estimated 2014 levels).”
“I showed you mine, now you show me yours.” House Ways & Means Chairman Dave Camp wonders when we'll see a tax reform proposal from the Obama Administration. He stated that “the last time Washington successfully reformed our tax code, the Treasury Department released… two complete tax reform drafts.” Camp believes Treasury has a plan but is not yet ready to share.
Whatever the plan, individual income tax reform won’t be enough to boost the economy. A new paper from TPC’s Bill Gale and Andrew Samwick of Dartmouth’s Rockefeller Center prompted a lively TPC discussion this week. TPC moderator Howard Gleckman sums up: “While changes in the individual income tax may have relatively little effect on economic growth, other adjustments, such as corporate tax reform or a shift to a consumption tax, might be more beneficial.”
Florida’s Governor proposes tax changes—perhaps not for the better. TaxAnalysts’ David Brunori reviews the good, bad, and ugly tax proposals put forth by Florida Republican Governor Rick Scott, summing up: “Like most election-inspired tax reform, Scott’s proposals are mostly geared toward collecting votes and have little to do with sound tax policy.” Brunori’s good: Scott would like to eliminate the sales tax on commercial leases and manufacturing equipment, as well as the state’s corporate income tax. His bad: The Governor proposed $200 million in new sales tax holidays. And his ugly: Scott would like a constitutional amendment to limit property taxes.
Colombia might not want to rely on a wealth tax for economic help. The nation plans to levy a 2.5 percent annual wealth tax on fortunes greater than $4 million, with lower rates on all wealth above $385,000. A “wealth tax” has been proposed by economist Thomas Piketty, but under that plan, the tax would be levied by all nations at the same time. Going it alone, as Colombia plans, might prove a lonely journey, parallel with an exodus of wealthy residents.
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Posts and Comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.