Credits, Shelters, Gaps, Collections and Rates
On the Hill next week: The House Ways and Means Subcommittee on Oversight holds a hearing on June 10 to review the government’s ability to verify income and insurance information when it comes to the Affordable Care Act’s tax credits and subsidies. About two million people who purchased health care through the ACA exchange provided information inconsistent with federal records—about half for reported income and half for citizenship or residency status.
“When a man loves a woman… He’d trade the world for what he’s found.” But would he trade marriage for domestic partnership? TPC’s Howard Gleckman pops that question: Domestic partnerships, designed to help same-sex couples get around marriage bans, could be used in some states by heterosexual couples to avoid the federal income tax marriage penalty. Of course, you could lose the marriage bonus, too, since domestic partners can’t file jointly. Maybe tax shelters are more romantic.
Mind the gap, state governments. The wealth gap, that is. The Associated Press reports that “Since the mid-1970s, states as a whole have cut their top individual income tax rates by nearly one-fourth, while boosting state sales tax rates by almost half… That has meant lower taxes for those earning the most and a bigger proportionate tax bite for those who spend more of their income on retail sales.”
Meanwhile, tax collections are up in Massachusetts. The state collected $1.6 billion in tax revenues in May, 7 percent more than May, 2013. The revenue commissioner credited “better than expected corporate and business collections, withholding, sales and use tax collections, and estate tax payments.”
Spain wants to cut its corporate income tax rate. Spain’s Prime Minister Mariano Rajoy has offered an economic stimulus plan worth 6.3 billion euro to create jobs and make companies more competitive. Unemployment in Spain hovers at around 25 percent. The stimulus plan would cut the corporate income tax rate from 30 percent to 25 percent.
How low can a corporate tax rate go? Northern Ireland may be granted new taxing powers in the fall, and is considering cutting its corporate tax rate from 21 percent to 12.5 percent. That would make its tax competitive with its independent neighbor, the Republic of Ireland. Backers think the low rate will make it possible for the North to compete for companies like Google and Facebook, each with operations in the republic. Opponents are concerned about “brass plating”—where firms set up nominal operations without employing many people. Sound familiar?
All’s fair in love and taxes? A new report from Citizens for Tax Justice and the US Public Interest Group says that “US multinationals each year avoid paying about $90 billion in federal income tax” by setting up “offshore tax havens” and using “accounting tricks.” They say “tricks,” corporations say “legal practice.” Either way, the corporate tax code needs help, stat.
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