Another tax plan from a House Ways & Means Committee Republican… Rep. Jim Renacci (R-OH) has proposed a 7 percent business activity tax to replace the corporate income tax and a three rate (10-25-35 percent) individual income tax. He’d preserve deductions for mortgage interest and charitable contributions, exclusions for retirement savings and employer sponsored health insurance, and the Earned Income Tax Credit and the Child Tax Credit. He’d set a $15,000 per-filer standard deduction and a $5,000 personal exemption. Capital gains and dividends would be taxed at ordinary rates.
And a group of economists has also proposed a consumption tax. At a Tax Policy Center Conference, a high-powered group of international economists unveiled their own consumption tax. This one, a destination-based cash flow tax, was developed by a group including Alan Auerbach of the University of California, Berkeley; and Michael Devereux and colleagues at Oxford University. They suggested two versions of the tax at the event, which you can learn about here.
And from the Senate Finance Committee… As Congress was leaving town for the summer, panel chairman Orrin Hatch announced two bipartisan bills designed to prevent identity theft and tax refund fraud. The panel’s top Democrat Senator Ron Wyden introduced a bill to give first-time homebuyers a refundable tax credit worth up to $10,000, or 2.5 percent of a home purchase up to $400,000. Hatch did not unveil his business tax reform plan, which he had hoped to make public by the end of July.
Pennsylvania balanced its budget, after all. The state’s Republican-controlled House and Senate approved a revenue package worth $1.3 billion, balancing the state’s $31.5 billion budget that Democratic Governor Tom Wolf allowed to go into effect without full funding earlier this week. The last-minute revenue measures include higher taxes on cigarettes and smokeless tobacco. The state will also tax, for the first time, digital downloads.
Ireland braces for the EU’s Apple decision. The European Union’s antitrust chief Margarethe Vestager met with Ireland’s finance minister Michael Noonan this week to discuss the EU’s investigation of Apple’s tax deals with Ireland. Noonan said “We’ve no indication which way it’s going to go yet.” Vestager expects a decision in September or October. Should the EU rule against Ireland, Apple could owe billions of dollars—or perhaps only hundreds of millions of dollars. Some speculate a smaller bill would send a message to multinationals and tax-deal-making countries, but not be so big that it would wreak havoc if the EU courts overturn the ruling.
Congress is now in recess. The Daily Deduction will post Mondays until it resumes.
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