White House support for tax reform continues to crumble. In an interview with The Economist, President Trump and Treasury Secretary Steven Mnuchin suggested they’d retain the corporate interest deduction. Repealing the deduction is a key element of the House Republican leadership’s destination-based cash flow tax. The White House also threw more cold water on the border adjustable tax, another key piece of the House GOP’s reform plan. "It's not really what I'm considering," Trump said. As if that wasn’t enough, Trump also said it would be “OK” if his tax plan increases the deficit. It would, he said, “prime the pump.”
So does House support for repealing the advertising deduction. While both the president and the House GOP leadership have vowed to eliminate most business tax preferences, one evergreen—the deduction for advertising costs—has lots of support among the House rank-and file. A bipartisan group of 120 members signed a letter urging that the deduction be saved. Not a coincidence that it is important for commercial social media, local newspapers, and TV stations.
Trump also insisted he won’t release his tax returns as part of a deal with Democrats on tax reform. “It would be disrespectful of the importance of this deal,” he explained. However, he acknowledged they’re worth releasing— some day. “Maybe I'll release them after I'm finished [serving as President] because I'm very proud of them actually. I did a good job.”
On the Hill next week. The House Ways & Means panel’s subcommittee on Tax Policy will hold a hearing on Thursday, May 18, on how tax reform could spur economic growth.
Seattle’s support for its own progressive income tax may not be enough. State GOP lawmakers plan to introduce a bill that would prohibit a county, city, or city-county from levying a tax on income. Seattle expects to go to the state Supreme Court to fight for its right to tax.
Arizona lawmakers conclude their year by extending tax breaks. They approved a bill that extends until 2025 tax breaks to employers who meet certain hiring and salary goals. The measure also extends the state’s research and development tax credit program for five years. State Democrats warn that the bill could cost as much as $10 million over the next three years. They say the state’s legislative budget office underestimated the revenue loss by $1.6 million a year.
In the United Kingdom: Bottoms Up. The whiskey and gin company Diageo, which owns brands including Johnnie Walker and Tanqueray, has to pay £107m to the British government following its investigation into the company’s profit shifting. Diageo says the UK’s new Diverted Profits Tax rules mean the company would have to pay even more tax and interest on the past two financial years, but it will challenge that assessment.
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