Tax reform might look like a sure thing in 2017, but it will still be hard. The Hill runs down the obstacles. First, the GOP’s slim Senate majority is vulnerable to filibuster, making budget reconciliation the most likely path to legislative changes. Second, House and Senate Republicans do not agree on the details of tax changes. Third, lawmakers have to figure out how infrastructure spending could work with tax rate reductions. Fourth, tax cuts proposed by the incoming Trump Administration would add trillions to the debt, while GOP tax writers in Congress want revenue neutrality. And finally, lobbyists and trade groups are already pushing back against some changes.
Whither tax extenders? Forty-three special interest tax breaks expire at the end of the year but it is increasingly unlikely that Congress will extend them, at least in a lame duck session. The chairmen of both the House and Senate tax writing committees have turned thumbs down on the idea. Will they get rolled into a 2017 tax bill instead?
Have you used bitcoin? The IRS would like a word. The agency has asked Coinbase, a bitcoin exchange, to supply records of all customers who used the exchange to buy the virtual currency from 2013 to 2015. An IRS agent recently found three cases in which people were using bitcoin to evade taxes. Two of those cases involved Coinbase.
Buzzkill: Some California localities will tax newly legalized recreational marijuana. Earlier this month, Voters in 37 counties and cities said yes to separate local taxes or fees on pot. How much will higher prices affect demand? Industry leaders worry that local taxes of up to 15 percent, on top of California’s state excise tax of 15 percent, could make the price of a legal marijuana price too… high.
Some UK film industry investors owe millions to the UK. British courts have ruled that the United Kingdom’s “Eclipse” film investment partnership—which used British tax breaks to spur investment in the film industry—was really a tax avoidance scheme. An Eclipse investor could invest £20,000 of his own money and borrow the rest. But the tax relief on the full investment could have been as much as £400,000, or 20 times the investor’s actual risk. Those investors now need to repay what they owe the British treasury, to the tune of “multiple millions” of British pounds.
Congress is in recess, and the Daily Deduction returns to its regular schedule next week. Happy Thanksgiving.
Interested in subscribing to the Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here to get the Daily Deduction delivered to your inbox every morning. If you’d like to tell us about a new research paper or have any comments about our feature, write us at dailydeduction “at” taxpolicycenter “dot” org.
