Senate ratifies four tax treaties, businesses are relieved. The Senate ratified the protocols with Spain, Luxembourg, Japan, and Switzerland. The agreements, negotiated and signed years ago, prevent double taxation of companies doing business in the US and abroad and reduce tax avoidance. Sen. Rand Paul had blocked Senate consideration of the treaties for as long as nine years.
Also on the Hill. Speaker Nancy Pelosi would like Congress and the Trump Administration to reach a budget deal by the end of this week so she can bring it to floor before the House recesses for the summer at the end of next week. The House passed the Middle Class Health Benefits Tax Repeal Act of 2019, which kills the Cadillac tax, the never-implemented 40 percent excise tax on high-cost employer-sponsored health insurance.
Three states sue the IRS and Treasury for blocking their SALT workaround. New Jersey, New York, and Connecticut passed laws that allowed residents to make tax deductible charitable contributions to municipalities and school districts in lieu of paying local taxes, which are subject to the Tax Cuts and Jobs Act’s $10,000 cap on state and local tax deductions. In May, the IRS blocked the laws. New Jersey’s Attorney General says the IRS move violates his state’s tax code.
Oregon companies give up their fight, a new state business tax is likely to take effect January 1. The group Oregon Manufacturers & Commerce had been fighting the new tax, passed in May by the Oregon legislature. But the group retreated this week, perhaps because it found itself opposing new school funding. Under the new law, businesses will pay a 0.57 percent tax on annual Oregon sales above $1 million. Half of the expected $2 billion in biannual revenue is earmarked for grants to school districts, while the rest will fund programs for toddlers and preschoolers, programs to prevent dropouts, to improve school performance, and career and technical education.
Did the TCJA cut demand for affordable housing tax credits? When the TCJA cut the corporate tax rate from 35 percent to 21 percent, it may have reduced bank demand for low-income housing tax credits. A firm that manages the credits finds that companies reduced low-income housing investments by 10 to 15 percent since late 2016. The California Housing Partnership estimates a 23 percent decrease in affordable housing production, from 24,000 units in 2016 to less than 19,000 in 2018.
Bulgarian finance minister tells his taxpayers: Sorry. He admitted that hackers stole financial data on 5 million taxpayers. One researcher estimates that the financial records of every Bulgarian adult have been compromised. The breach of the tax agency happened at the end of June and likely occurred outside the country.
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