Daily Deduction

from the Tax Policy Center

EPA Regulations, International Taxation and Hitting the Sweet Spot

By :: June 3rd, 2014

Will the EPA’s proposal to curb greenhouse gas emissions allow state-based carbon taxes? The new regulations would give states broad flexibility to require power plants to meet tough emissions standards, including creating new cap-and-trade systems. But the 645-page proposal never uses the word “tax.”

The OECD wants to improve international taxation. The Organization for Economic Cooperation and Development concludes its two-day conference on its new international taxation initiatives to address base erosion and profit shifting. Topics include transfer pricing, intangibles, country-by-country reporting, the digital economy, treaty abuse, hybrids, the Foreign Account Tax Compliance Act, and a common standard for automatic exchange of information. IRS Commissioner John Koskinen delivers the keynote address this afternoon.

But, Republicans and some business leaders don’t want foreign governments to raise taxes on US corporations. Bloomberg reports on Senator Orrin Hatch’s and House Ways and Means Chair Dave Camp’s concern that either the OECD or individual countries might change their tax rules. They, as well as the Business Roundtable, a US association of corporate chief executives, fear some changes might raise taxes of US-based multinationals by curbing tax preferences.

Meanwhile, overseas banks are coming forward to counter individuals’ tax evasion. In nearly 70 countries, 77,000 foreign banks have agreed to share information about U.S. account holders under the Foreign Account Tax Compliance Act, according to the Treasury Department.

And now for something completely different: a tax on calories? New research suggests a tax on calories, versus ounces of liquid, might curb the consumption of sugary drinks. Using a consumer-demand model based on supermarket scanner data, researchers from the Research Triangle Institute predict that a “.04 cent per-calorie tax on sugar-sweetened beverages would reduce consumption by 5,800 calories per person annually and could do so at a lower cost to consumers than an ounce-based tax.” The study, funded in part by the Robert Wood Johnson Foundation, did not model whether stores would absorb any of the tax or pass on costs to consumers.

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  1. Michael Bindner  ::  4:53 pm on June 3rd, 2014:

    States have enough power to lay carbon taxes, which are essentially an excise. Groups of states probably cannot because of the excise clause of Article I, although the rate could match by “coincidence.” Likely blue states will, red states won’t and ironically red states will have to deal with rising sea levels in the Gulf and Atlantic lowlands. Bye-bye Florida. Of course, Florida is probably cooked with or without a carbon tax.

    It is good that the OECD is acting – and I am sure the Tea Party is thrilled at the involvement of the IRS Commissioner. Truth is, to get real tax improvement we need more political integration with our OECD partners, as well as financial integration (which a 21st Century Hamilton might have said). That needs to start in Europe. Whether our cooperation is good or not depends on whether we wish to thwart too much progress. It is not only Germany that benefits from the status quo – it is the U.S. Treasury and Federal Reserve who continue to be the big dogs in world finance. In reality, the biggest thing John K. could say to increase province is that the USA would not allow it. As for Repubicans and the Business Roundtable are right to fear – they will be paying more money if there is progress – which means they are conciously aware that they are underpaying their obligations. It appears some individuals have no choice. The IRS got lots by simply asking. I wonder what the Swiss will do?

    A tax on calories is an interesting concept – although many health researchers will tell you that artificial sweeters are as harmful to losing weight or weight gain as real sugar. Not so sure that is true. It might be for normal people, but selling me that a hypoglycemic reasion will occur with fake sugar is impossible – I knew the difference. If we want to help weight issues, finding the various causes of hypoglycemia – the biologic, not the behavioral, are the they key. For instance, when my adrenal tumor was removed I was able to eat all sweets without further craving. Oh, NIH took out that tumor for free. The answer may be more funding, not more taxes.

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