The Tax Cuts and Jobs Act made for a very good quarter in corporate earnings. Financial data firm Calcbench finds that a decline in effective tax rates contributed to more than half of the combined net-income growth reported by 200 large public companies in the first quarter of the year.One third of those companies saw pretax income rise, while taxes fell.
Another private equity firm goes corporate, thanks to the TCJA. KKR & Co LP will convert from a partnership to a corporation. It says it hopes to expand its investor base in exchange for paying higher taxes. Ares Management, another private equity firm, converted to a corporation earlier this year.
The IRS finds more identity theft. This time the targets include small businesses and estates. The agency warned business owners that there has been a hike in fraudulent filings in the name of C corporations, S corporations, and partnerships, as well as trusts and estates. Scammers are using the fake returns to request "bogus" refunds, the IRS said.
Kansas lawmakers are closer to tax deal. The state’s legislative session ends tonight at midnight, and House and Senate negotiators are trying to reach agreement on a new tax plan. Their shared goal: Allow Kansans to itemize deductions on their state tax returns even if they take the standard deduction on their federal returns. So far, lawmakers have agreed on $77 million in tax relief for next fiscal year. “It is a mix of many good ideas that may not result in ideal tax policy,” said the top House Republican negotiator.
Iowa lawmakers will write their tax plan on the Senate floor. The bill apparently will cut state revenue by $2.1 billion over the next six years, according to the Iowa Department of Revenue. The Senate Majority Leader says the revenue projections fit within the state’s budget. A printed copy of the bill was not available this week so Republicans will amend an older bill on the Senate floor, replacing it with the as yet unreleased measure. Got it?
Amazon has stopped construction plans in Seattle given the city’s proposed “head tax.” The online retail giant will wait for the outcome of a city council vote on a proposed tax on high-earning businesses. At stake: as many as 7,000 new jobs.
Oh boy, oh boy, no soy… The CEO of US food company Bunge Ltd. says that China has stopped buying soybeans from US suppliers. Instead China is buying from Canada and Brazil—where there are no tariff-inspired trade tensions. Meanwhile, according to a study by Zurich Insurance, Ernst & Young, the Atlantic Council, and the Organization for International Investment, the US GDP could fall by $2 trillion by 2022 due to restrictive trade policies.
If you’d like to tell us about a new research paper or have any comments about the Daily Deduction, TPC’s summary of the day’s tax news, write Renu Zaretsky at [email protected]. You can sign up here to receive the Daily Deduction as an email newsletter every weekday morning (Mondays only when Congress is in recess) at 8:00 am.