House Republicans battling over insurance credits v. deductions. As if replacing the Affordable Care Act wasn’t hard enough, the House GOP has gotten bogged down in a theological battle over whether insurance subsidies should be delivered through tax credits (the leadership’s preference) or deductions (the choice of the most conservative lawmakers). The House may try to mark up a “repeal and replace” bill this week, though the leadership has so far refused to let the public—or even some Republicans—know what’s in it and the CBO has yet to score it.
Did you miss TPC’s corporate tax reform forum? Unsurprisingly, much of TPC’s event last Friday focused on the ever-controversial border-adjustable tax. The morning-long program included a robust discussion about whether the dollar would fully adjust to the BAT: The economists in the room generally thought it would while the lawyers and others had their doubts. Economist Doug Holtz-Eakin, who often advises Republicans, said Congress has a rare opportunity to pass tax reform this year, while top Senate Finance Committee Democrat Ron Wyden said a reform bill would not be “sustainable” if it passes with only GOP support.
Caterpillar has tax woes; maybe other woes, too. The federal government executed search warrants of the global headquarters of the world’s largest manufacturer of earth moving equipment last week. Investigators from the IRS, Federal Deposit Insurance Corp. and US Department of Commerce seized material focused on the movement of money and parts to Switzerland. Caterpillar contests the 2013 IRS assessment of a $2 billion tax penalty due to its tax strategy in Switzerland. But the search warrants do not include references to tax statutes.
Arizona lawmakers just killed a corporate tax break. A $20 million package would have provided sales tax breaks, a property tax break, and tax credits to businesses. The deal-breaker seemed to be $10 million in refundable credits for companies with no tax liability. Lawmakers on both sides of the aisle argued the state could not cover the cost of large business subsidies. Backers of the tax breaks may try again with a retooled bill before the legislative session ends.
Is Portland, Oregon’s “art tax” legal? The state’s Supreme Court will decide whether a $35 per adult “art tax” is an unconstitutional “head tax.” The levy is assessed on most residents over age 18 but exempts those over 70, those with low incomes, or those receiving only retirement income such as government pensions. The tax raised $9.9 million in the 2014 tax year to pay for nonprofit arts programs and public school art teachers.
Income tax audits continue their steep decline. The IRS audited just over 1 million returns in 2016. The number has been dropping for six straight years. The last time the IRS audited so few was in 2004, though the population has grown by 30 million since then. Budget cuts get credit of the drop in audits: IRS Commissioner John Koskinen they’re costing the US between $4 billion and $8 billion a year in uncollected taxes.
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