A different D-Day: September 29? Treasury Secretary Steven Mnuchin told Congress Friday that it will have to increase the debt ceiling by September 29. Not only will it be the last regular workday before the end of the fiscal year, it is the day Treasury estimates the government will run out of money to pay its bills, including interest on its debt.
Corporations get at least one more year to engage in earnings stripping. Treasury has delayed by 12 months an Obama Administration rule that requires corporations to either document internal loans for the IRS or reclassify the debt as equity. The rule change, which will be postponed from January 2018 to January 2019, would make it harder for companies to load up their US subsidiaries with intracompany debt, make tax-deductible interest payments on that US-based debt, and push profits to subsidiaries in lower-tax jurisdictions. The Trump Administration chose this rule among eight Treasury rules to scrutinize as part of its deregulatory efforts.
Treasury will close down a retirement savings program for low- and middle-income workers. Demand for the program was too low to justify its costs, said US Treasurer Jovita Carranza. The “myRA” program rolled out in 2015 as an option for workers without employer-based retirement plans. Treasury estimates it has spent $70 million to manage the program since 2014. There are currently 20,000 myRA accounts worth a total of $34 million. Another 10,000 accounts are open, but empty.
Will tax reform be “skinny,” too? Politico’s Brian Faler dives into the deep, broad pool of tax breaks in the Internal Revenue code. Those waters may very well be too choppy for tax reformers. With a two vote majority in the Senate, a fractious caucus in the House, and the year coming to an end, “many predict Republicans will be forced to settle for something more narrow, like a tax cut that’s partially paid for, in order to reduce the number of losers to a more doable level.”
An ode to the border adjustment tax. TPC’s Adam Looney explains why the border adjustment tax proposed (and now withdrawn) by House Ways & Means Chairman Kevin Brady, would have been better for the US economy and American workers than any available alternative. “The BAT addresses the fundamental problem: as long as there is a lower-tax country out there, there is always going to be a tax incentive to produce abroad and sell it in America, rather than to make it in America in the first place.”
Massachusetts Governor Baker signs higher pot tax into law. He signed a bill Friday that raises the tax on retail sales of recreational marijuana from the 12 percent included in the state’s successful 2016 ballot initiative to 20 percent. The GOP governor opposes marijuana legalization, but honors “the will of the voters regarding the adult use of marijuana.”
Cook County, Illinois: A tax on sugary drinks goes into effect Wednesday. A circuit court judge threw out a lawsuit by the Illinois Retail Merchants Association that claimed the penny-per-ounce levy was vague and unlawful. The group attacked a provision that exempts custom-made sweetened beverages, such as coffee drinks made in a cafe, but taxes pre-made beverages, such as sodas, sports drinks and flavored water. The judge agreed with county attorneys that it was an undue administrative burden to tax custom-made beverages, and that taxing pre-made beverages would be more effective in improving public health.
