Could the House phase in a border-adjustable tax? House Ways & Means Chair Kevin Brady is proposing a five-year runway. Under his plan, only 20 percent of import costs would be nondeductible in Year One. That share would climb each year until it reaches 100 percent in Year Five. The tax exemption for exports would phase in over the same period. The top corporate tax rate would be 20 percent. The question remains: How will importers and his GOP colleagues react to the idea? It won’t take long to find out.
A “good” government shutdown? Treasury Secretary Steven Mnuchin told the Senate Budget Committee yesterday that while a government shutdown is “an unfortunate outcome. At times there could be a good shutdown, and [at] times there may not be a good shutdown.” He promised the panel that Treasury will fund the government through September if Congress cannot raise the debt limit before it departs for a month-long recess on July 28. This is a change for the Treasury Secretary who, until recently, was calling for Congress to act quickly on a debt bill.
Who could forget the Highway Trust Fund? A bipartisan group of 250 House members sent a letter to the House Ways and Means Committee urging it to come up with a long-term funding solution for the Highway Trust Fund while they reform the tax code this year.
Or carried interest. Politico reports that two dozen House Republicans have urged Brady to save the special tax treatment of compensation for managers of investment firms. "Changing that characterization as it relates to carried interest capital gains would arbitrarily punish investors in real estate, venture capital, private equity and other partnerships by treating their gains differently than those of other investors," said the letter.
And let’s remember where the real money is in tax reform. TPC’s Howard Gleckman considers Senator Jeff Flake’s report on a few of the tax code’s egregious preferences — such as the one for alpaca ranchers. Gleckman says “The real problems on the individual side of the tax code are preferences such as the mortgage interest deduction, the tax exclusion for employer-sponsored health insurance, and the multitudinous tax subsidies for many forms of saving.” Focus on those, and we might have a real chance at meaningful tax reform.
Rumors of a tax reform delay in India have been greatly exaggerated. Ignore speculation that the country will have to delay its tax overhaul—the first since India’s independence in 1947. Revenue Secretary Hasmukh Adhia tweeted that everything is on schedule and “Please do not be misled.” But three state government officials believe there is some chance of delay. The next goods and service tax council meeting takes place on June 18. The group will make a final decision whether to proceed with the overhaul, as planned, on July 1.
Indonesia settles with Google, for an undisclosed amount. The country has been pursuing Alphabet’s Google since last fall, claiming the company owed five years’ worth of back taxes, with a bill of over $400 million in 2015 alone. The Indonesian finance minister says “We already have an agreement with them based on 2016. But we can't disclose the figure.” Indonesia says that Google has avoided Indonesian taxes by booking most of its Indonesian revenue in Singapore.
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