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Today on the Hill. The Senate Finance Committee examines tax complexity, compliance, and administration with an eye toward simplification in tax reform. Witnesses include Carol Markman of EP Caine & Associates, Mihir Desai of Harvard University, Bruce Bartlett, former deputy assistant secretary for economic policy, and T. Keith Fogg of Villanova University School of Law.
The Congressional Budget Office has a revised deficit estimate. CBO had earlier estimated the budget deficit would total $468 billion this year, but has revised the number slightly upward to $486 billion, or 2.7 percent of GDP. Because CBO also predicts the economy will grow a bit faster, the deficit as a share of the economy would tick down. CBO now projects higher-than-expected mandatory spending on big-ticket items like student loans, Medicaid, and Medicare. But over the next decade, it estimates the projected fiscal shortfall will shrink a bit, largely because of lower-than-expected Affordable Care Act costs.
A Chicago property tax hike: Inevitable? Mayor Rahm Emanuel, in a recent debate, ruled out a post-election property tax increase to cover the city’s $300 million operating shortfall. The city’s $20 billion public pension crisis, however, has to be addressed at some point after the run-off election on April 7, no matter the outcome. Emanuel ally Carrie Austin, chairman of the City Council’s Budget Committee, acknowledged a property tax increase is possible, even if Emanuel wins.
Argentina wants its $3.5 billion back. Last year the country charged the Swiss private bank HSBC with helping over 4,000 clients evade taxes by shifting their assets offshore. The Central Bank of Argentina later banned HSBC Bank Argentina from transferring money and assets abroad for 30 days. Now Argentina’s tax authorities demand that HSBC repatriate some $3.5 billion that the firm allegedly moved to its Swiss private bank. HSBC says it respected Argentine law. Its officials also faced tough questions on tax evasion from members of British parliament yesterday.
The United Kingdom is gearing up to tax tech firms. UK Chancellor George Osborne has proposed a 25 percent tax on big tech companies’ UK-based profits that have been shifted offshore. The tax is part of the UK budget to be released later this month. Still unknown: Whether the levy would be collected retroactively, and how much money it would raise. In December, when Osborne first suggested the idea, some estimated it could generate as much as $1.5 billion (or £1 million) over five years. The so called “Google tax” would be higher than the UK’s 20 percent corporate tax, and would be applied to companies with annual revenues over $376 million.
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