Daily Deduction

from the Tax Policy Center

The ACA, Extenders, and More Swiss Banks

By :: May 27th, 2014

Employers can’t “dump” their employees in ACA exchanges. Some large employers hoped to offer tax-free cash to employees to help them pay Affordable Care Act insurance premiums, a cheaper alternative to covering workers directly. But the IRS ruled against that. The penalty for doing so could cost firms $36,500-a-year per employee. If employees need help paying for premiums for ACA exchanges or elsewhere, employers could instead offer higher—and taxable—wages.

The House GOP asks the Senate to get on with it, already. The Hill reports that Ways and Means Chairman Dave Camp and his allies would like the Senate to act quickly on a stalled measure to resurrect the 50-plus tax breaks that expired in December 2013. They “believe that quick action in the Senate opens up the chance for a conference committee before November's election, increasing their odds of permanent extensions.” There’s still no plan to pay for them, by the way.

What about repealing the medical device excise tax and replacing it with a higher cigarette tax? Senate action on the bill to restore those tax breaks is stalled thanks in part to a fight over a GOP amendment to repeal the medical device tax. It’s an ACA provision unpopular with Republicans, but Democrats find it irrelevant to the tax bill at hand. TPC’s Len Burman considers an alternative. He argues the device tax would mostly hit consumers with little impact on manufacturers’ profits and would be costly to administer given the revenue it would generate. A cigarette tax, however, might “be viewed as a kind of benefits tax—paying for health insurance that is more valuable to smokers than the rest of us.”

Thirteen more Swiss banks could follow Credit Suisse’s example. Cooperating with the US  investigations of how they’ve helped Americans evade taxes will determine their penalties upon pleading guilty. The 13 banks vary in size and scope. Only HSBC has major US operations, and if it pleads guilty, it could continue to operate in the US, just like Credit Suisse. The smaller banks without a US presence wouldn’t likely be as lucky.

Interested in subscribing to The Daily Deduction, the Tax Policy Center summary of the day’s tax news? Sign-up here for free access. If you’d like to tell us about a new research paper or have any comments about our new feature, write us at dailydeduction@taxpolicycenter.org.

3Comments

  1. 2014 TAX DAY DEALS  ::  1:18 am on May 28th, 2014:

    […] TaxVox » Blog Archive The ACA, Extenders, and More Swiss Banks … […]

  2. Michael Bindner  ::  2:43 am on May 28th, 2014:

    I think it was the press and the Chamber of Commerce that speculated on dumping people in exchanges. Now we know it won’t happen. This might actually bring about some real reform legislation with the Republicans voting for their own positions once compromise is reached.

    It is no shock that Camp wants the extenders done now in both Houses, with conference and passage soon after. Not sure that anything on taxes will pass this year – nor should it.

    Switching to a cigarette tax from a device tax is an interestng idea which I disagree with. The device makers made a deal and should honor it. Extorting addicts with taxes will not get them to quit smoking – and as a cash cow it is particularly cruel. Better to adopt a VAT.

    I can see where the other Swiss banks may cut a deal – although a deal that does not either make the IRS whole for income hidden or allows disclosure of client data is a license to keep stealing. This won’t mean anything without an agreement or treaty from the Swiss to allow the required disclosure. Of course, it will be the last bank to the table that will really get hit.

  3. Tax Roundup, 5/27/14: IRS not so severe on e-file identification … – Taxes-Info.com  ::  9:42 am on May 30th, 2014:

    […] Zaretsky, The ACA, Extenders, and More Swiss Banks.  The TaxVox title roundup includes a couple to a NY Times piece on a new IRS statute to forestall […]