Infrastructure, Implied Messages, Inequality, and Inversions
On the Hill this morning: The Senate Finance Committee will explore “New Routes for Funding and Financing Highways and Transit” at a hearing this morning, in an effort to restore the dwindling Highway Trust Fund. Joseph Kile of the CBO, Secretary Aubrey Lane of the Virginia Department of Transportation, Jayan Dhru of Standard and Poor’s, Samara Barend of AECOM Capital, and Chris Edwards of the Cato Institute will appear.
The House will hold three symbolic tax votes this week. The GOP-controlled House will vote to make the research and experimentation tax credit permanent. It will also vote to hold former IRS official Lois Lerner in contempt of Congress and vote to urge the Justice Department to appoint a special prosecutor to investigate the way the IRS treated conservative political groups seeking tax-exempt status. Message votes are hot these days.
So, in one case, is a message bill. Thanks to Democratic Representative Tony Cardenas’ latest bill, TPC’s Howard Gleckman reluctantly provides a tax policy-centric reaction to LA Clippers owner—and US taxpayer—Donald Sterling.
Chile may use tax reform to correct income inequality. Its president, Michelle Bachelet, enjoying a political majority in Congress, seeks to overhaul Chile’s tax system by closing loopholes for the wealthy and raising corporate taxes. Additional revenue, estimated in the billions, would fund free, universal education. Wonder what Thomas Piketty would say?
Location, location, location! Key to corporate tax reform? The number of US firms seeking a low-rate address through inversion is growing, with more attention on the practice thanks to the proposed Pfizer deal with AstraZeneca. An exception to a 2004 law allows a US firm to take a foreign address if merging with a non-U.S. partner that holds at least 25 percent of their combined market value. Could such attention prompt corporate tax reform? Wonder what Warren Buffet would say?
In case you missed them: more thoughts on inversions. Some economists in a roundtable discussion at the Fordham University School of Law suggest that a value added tax or lower corporate rates could reduce inversions. Fellow discussant, TPC’s Eric Toder, suggested a different approach: eliminate the corporate income tax and replace it with a tax on individual owners of publicly traded companies.
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