Daily Deduction

from the Tax Policy Center

Tax Revenue Headaches and Hangovers

By :: May 21st, 2014

Fourteen senators want multinationals to quit inversions cold turkey. Or at least, they’d like a two-year moratorium on the practice of a firm changing mailing its address  to lower its corporate tax bill. During that period, Congress would, theoretically, have time to advance corporate tax reform and improve the United States’ competitiveness in the global marketplace. It remains unclear how far the bill—sponsored by 13 Democrats and one independent—will go. TPC’s Howard Gleckman doubts, aside from tax implications, whether a corporation’s mailing address even matters.

Or, let them drink wine! Chilean President Michelle Bachelet proposed $8.2 billion in tax hikes, including an increase in the corporate tax rate from 20 percent to 25 percent. She doesn’t believe they’ll hurt business investment, despite her opposition’s concern. The tax bill, moving ahead now to the Chilean senate, also seeks to increase the tax on wine, much to the dismay of wine producers. President Bachelet’s coalition holds the majority in both Chilean chambers.

The recession hangover still hurts for more than half the states. State tax revenues in 26 states haven’t bounced back to 2008 levels, according to the latest from The Pew Charitable Trusts. More than half of the 24 states whose revenues climbed did so in part with tax increases.

So take two taxes and call me in the morning? New Jersey Democrats continue their push for a millionaires’ tax to cover the state’s $807 million budget shortfall. Illinois Democrats are still trying to make permanent a temporary tax hike to fund public schools and other programs.

Speaking of pain that won’t seem to go away: Tax extenders negotiations. No real surprise here, but Senator Majority Leader Harry Reid is still not interested in debating the repeal of the medical device excise tax to help advance the EXPIRE Act. The Nevadan asserted, “That’s an Obamacare amendment…. [Republicans] can have as many amendments as practical to change the bill that’s on the floor… So, the answer is ‘no’,” reports Roll Call.

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2Comments

  1. Michael Bindner  ::  9:52 am on May 21st, 2014:

    I disagreed on whether inversion reform matters but not on whether it is at all likely to get done. It would be just as easy to encourage employee-ownership, especially of multinationals, so that CEOs are no longer gods and it matters much less where HQ is.

    Pres. Bachelet’s attempts at reform pose an interesting case – both as to their passability and their efficacy. I suspect she will win on both grounds.

    That the ALEC states are still mainly in recession is no surprise. Taxing and spending gets you out because both diminsh the savings sector and increase the spending sector. Parsimony never got anyone out a recession.

    New Jersey and Illinois Democrats face an interesting task. In Jersey, Christie will veto any increase – but if he is impeached due to Bridgegate (along with the Lt. Gov), this may not be important. Illinois is the classic Chicago v. Downstate battle. Let us hope that reasonable people realize the need is great – and it is cheaper to educate than incarcerate,

    I like it that Reid is holding the line on not repealing the medical device tax to get extenders passed. We will see who blinks. My guess is that it will be the GOP once busienss interests start leaning on them (and writing checks to the Democrats).

  2. 2014 TAX DAY CALIFORNIA  ::  10:18 am on May 23rd, 2014:

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