Tax Action: The Quick, the Clever, and the Familiar
By Renu Zaretsky :: July 17th, 2014
Treasury calls for quick Congressional action, because Congress is known to be… quick. Secretary Jack Lew asked top congressional tax writers to act now to end corporate inversions, and make such legislation retroactive to May of this year, giving Congress time to reform the corporate tax system. The Senate Finance Committee will hold a hearing on international tax issues next week, but Republicans balk at any retroactive stop-gap measure. Meanwhile, multinational corporations in the middle of acquisition deals can use the time to adjust purchase terms and protect shareholder interests.
Some banks are under scrutiny (again). At the Senate’s Permanent Subcommittee on Investigations hearing next week, Barclays and Deutsche Bank are expected to defend their sale of products to hedge-fund manager Renaissance. The sales allowed the banks to avoid borrowing limits and reduce taxes. Both banks have history. Barclay’s was the first bank fined for rigging the Libor interest rate index. Just under four years ago, Deutsche Bank paid $554 million to avoid US criminal charges related to the sale of tax shelters.
Tax extenders: History repeats itself. Tax Notes retells the sad and tired tale: Most are renewed but at the last minute, most are not paid for, and they tend to get lumped into broader legislation. The Committee for a Responsible Federal Budget breaks down their costs this year.
The CBO budget outlook: A fiscal problem still looms. The federal debt as a share of GDP is at an unprecedented 74 percent. In 25 years, under a better-if-not-best case scenario, it will be 106 percent. Under more realistic assumptions given current policy, TPC’s Bill Gale reports that “CBO finds that the debt-GDP ratio would rise to 163 percent by 2039 – and to 183 percent” if the economy is slowed by very high government borrowing.
Investigating the investigators: The House Oversight and Government Reform Committee’s Subcommittee on Economic Growth, Job Creation and Regulatory Affairs holds a hearing this morning to examine the Justice Department’s response to the alleged IRS targeting scandal.
The National Taxpayer Advocate shares its FY 2015 objectives with Congress. The report, presented by NTA Nina E. Olson, sets the following priorities for the coming year: Taking steps to implement the agency’s Taxpayer Bill of Rights, providing refunds to victims of preparer fraud, improving the voluntary return preparer certification program, and continuing improvement in the Exempt Organizations area.
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