The IRS Taxpayer Advocate speaks. In her latest report to Congress, Taxpayer Advocate Nina Olson makes four broad recommendations: Congress should reform the tax code by making it simpler and more transparent, and increase IRS funding in exchange for additional oversight; Congress and the IRS should set minimum standards and testing for paid tax preparers; and the IRS should do a much better job communicating with taxpayers, including by assigning staff to talk to them.
In: ACA repeal and replace. Out: Repeal and delay. Congressional Republicans and President-elect Trump are realizing how hard and time-consuming it will be to replace the Affordable Care Act and recognizing the consequences of prolonged uncertainty on consumers. As a result, lawmakers are now talking about putting off repeal until they can figure out how to replace it. This will likely keep the ACA taxes on the books for many more months.
The best offense is a strong defense? House Majority Leader Kevin McCarthy defended “border adjustability” yesterday. The feature is a key element of the House GOP’s plan to replace the corporate income tax with a destination-based cash-flow tax. The provision would tax imported goods but exempt exported goods from tax. President-elect Trump’s tax team and House leaders are "working through" the idea, while retailers, automakers, and oil refiners remain on edge.
If corporate tax reform efforts are less than crystal clear, TPC’s Bill Gale is here to help. He explains the Republicans’ corporate tax reform proposals and describes 11 key things to know about the destination-based cash flow tax—which is a value-added tax with a deduction for wages.
Corporate tax reform may not be as big of a profit booster for at least one bank. Corporate tax cuts could be especially beneficial to most banks, which receive fewer preferences and thus pay a higher US tax rate than many other industries. But New York-based Citigroup earns half of its profits overseas, and may benefit less than banks with more domestic business.
What will happen to state and local government finances with federal tax reform? It’s too early to tell, but state and local governments hope that Congress keeps both the deduction for state and local taxes and the exemption for municipal bonds. If Congress doesn’t, state and local governments may have to raise taxes. Trump’s tax plan didn’t mention either, but it does cap itemized deductions at $100,000 for individuals and $200,000 for married couples.
A small post-Brexit win for the United Kingdom. The Los Angeles-based maker of messaging-app Snapchat will make London its international headquarters, with 75 employees. The company will book revenue in the UK on sales in the UK and in countries without a local presence.
And a big win for a savvy St. Cloud shopper who takes a stand. Northern Minnesotan Diane Rohde bought jackets, snow pants, and gloves last month. She checked her receipt after she got home and noticed an $85 sales tax. Trouble is: Minnesota exempts clothing from its sales tax. When she went back to store, the cashier told her the clothes were designated for “fishing” and therefore a taxable “recreational” item. Incredulous, Rohde called the state attorney general and learned she was correct—and got her money back. She made the local news, too: She wants “people to be really aware of what they are purchasing and look at your receipts.”
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