Top Treasury tax official exits over audit rules. Kenneth Kies, Treasury’s assistant secretary for tax policy and acting IRS chief counsel, is leaving after clashing with White House officials over IRS audit rules, reports The Wall Street Journal (paywall). The dispute included a recent meeting in which Kies warned that a potential White House request could violate Section 7217 of the tax code, which bars the president, vice president, White House staff, and some agency heads from asking the IRS to start or stop an audit or investigation of a specific taxpayer.
Michigan Democrats revive high-income tax proposal. Michigan Democrats are renewing a push to amend the state constitution to impose a surcharge on high-income residents. The proposal would apply to individuals with income above $500,000 and married couples with taxable income above $1 million, starting in 2027. Revenue would be dedicated to pre-K-12 education, childcare, health and human services, housing, and water infrastructure. A constitutional amendment would require two-thirds support in each chamber.
Chile bets on tax cuts to lift growth. Chile’s government is relying on a broad tax and regulatory bill to help revive its slowing economy, Bloomberg reports (paywall). The bill would cut the corporate tax rate from 27 percent to 23 percent for medium and large companies, create a lower effective rate for some firms that hire unskilled workers, remove a capital gains tax on some low-value stock sales, and create a new investment framework for local and foreign investors. The government says the package, along with separate permitting measures, could lift growth to 3.7 percent in 2027. Some economists warn the growth assumptions may be too optimistic.
China will tax some battery and solar products. China will impose new consumption taxes on some battery and solar products that had been exempt, Reuters reports. A 2 percent tax on lithium primary batteries and lithium-ion batteries will begin Sept. 1 and rise to 4 percent a year later. A 2 percent tax on solar cells will begin April 1, 2027, and also rise to 4 percent after one year. The move comes as Chinese policymakers try to address industrial overcapacity in sectors such as solar panels and electric vehicle batteries.
Itemized: Fact of the Week. Capital gains and qualified dividends are concentrated among higher-income taxpayers. TPC baseline estimates show that in 2025, 18.7 percent of all tax units reported long-term capital gains or qualified dividends. But that share rises sharply with income: 42.7 percent of tax units with incomes between $200,000 and $500,000 reported them, as did 69.2 percent of those with incomes between $500,000 and $1 million and 83.5 percent of those with incomes above $1 million. Tax units with incomes above $1 million paid 77.6 percent of all positive individual income tax on capital gains and qualified dividends.
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