US Supreme Court declines to hear Altera’s appeal. In a big win the for the IRS, the High Court declined to hear Altera Corp.’s challenge to agency regulations from 2003 that determine how companies split costs—namely stock-based compensation often used in the tech industry—with their foreign subsidiaries. The ruling could cost tech giants like Facebook, Alphabet (Google), and Twitter as much as $2 billion in taxes. The firms tried to reduce taxes by booking more of their costs to US operations.
It won’t hear a tariff case either. The high court also declined to review the American Institute for International Steel’s challenge to President Trump’s 25 percent tariff on imported steel products, That leaves the import tax in effect.
The House Democrats’ infrastructure bill is a tax cut Christmas tree. It includes new or expanded tax breaks for electric vehicles, a more generous low-income housing tax credit, the New Markets Tax Credit, and Qualified Zone Academy Bonds. The House plans to vote on the bill by early July.
Remember those stimulus payment debit cards that came in plain envelopes? It turns out that about 44,000 were thrown in the trash by unsuspecting recipients—who have now asked for replacements. Another 972,000 have yet to be activated. For what it says were security reasons, the government mailed the cards in envelopes that looked to many like junk mail.
Online sales tax revenue soars in North Dakota. Sales tax collections from online retailers jumped 500 percent in April during the worst of COVID-19 closures. Online retailers collected $2.9 million in sales taxes in April 2020, compared to $475,000 in April 2019. But total April sales tax revenues were 35 percent lower than forecast.
White House economic adviser Kevin Hassett is leaving the Administration, again. Hassett served as chair of the Council of Economic Advisers, left, and returned to the White House in March as an unpaid volunteer, intending to stay for only 90 days. Then the coronavirus hit. At times, Hassett was much more bearish on the COVID-19 economy than President Trump. “It’s always distressing when a high-ranking economic adviser leaves in the middle of an economic catastrophe,” said Ernie Tedeschi, a former Treasury economist in the Obama administration.
New study shows sugary drink taxes can improve health and lower medical costs, depending on their design. New research in the American Heart Association’s journal Circulation modeled the effects of a tax by drink volume (1 cent per ounce), a tiered tax based on sugar content, and a fixed tax on absolute sugar content. Researchers found the tiered tax and sugar content tax could generate the largest health gains and cost savings.
The next episode of TPC’s The Prescription will feature former assistant secretary of labor William Spriggs. The webcast will be from 12:00-12:30 on Thursday. Spriggs,(@WSpriggs), the chief economist of the AFL-CIO and professor of economics at Howard University, recently wrote the essay “Is Now a Teachable Moment for Economists?,” following the death of George Floyd. He’ll be interviewed by TPC senior fellow Howard Gleckman (@howard_gleckman).
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