Daily Deduction

from the Tax Policy Center

A Ditch, an Add, and Maybe an End Run

By :: July 18th, 2014

Australia repeals its two-year-old carbon tax. It’s been a contentious issue for seven years. Australia is one of the biggest producers of carbon emissions per capita. Its government is committed to reducing emissions to 5 percent below year 2000 levels  by 2020. A carbon tax might have been the most expedient method to accomplish that goal but  Prime Minister Tony Abbott prefers a taxpayer-financed AU$2.55 billion incentive fund for companies that use cleaner energy.

The House voted to add another $16.2 billion to the deficit over ten years. This time, it passed a bill to make permanent several new charitable tax breaks and lengthen the tax year for individuals' charitable contributions. The measure would also modify the excise tax on private foundations’ investment income.

The Senate wants to bypass the Finance Committee on internet taxation. The Internet Tax Freedom Act, banning states and localities from taxing internet access, passed the House this week. The Marketplace Fairness Act, designed to allow states to collect sales tax from internet retailers, passed the Senate last year. Illinois Democrat Senator Dick Durbin would like to combine the two bills in the Senate to send to the House. But Senate Finance Committee Chair Ron Wyden is against blending the two bills.

Could the rush to inversions sink tax reform? The hottest new M&A trend is corporate inversions that allow US firms to cut their tax bills by acquiring a foreign company. But as more high-tax firms vote with their feet, pressure for corporate tax reform could fade, says TPC’s Howard Gleckman.

On the Hill next week: The Senate may vote for the House-passed, ten-month Highway Trust Fund patch. The Senate’s Permanent Subcommittee on Investigations will examine how some hedge funds used derivatives to turn short-term capital gains into lower-taxed long-term gains. The Senate Finance Committee will discuss international taxation, including perhaps the latest push for quick action on corporate inversions. The Finance panel’s Subcommittee on Taxation and IRS Oversight will review the ABLE Act, which would allow individuals with disabilities or their families to open tax-sheltered savings accounts to pay for certain long-term expenses. The House Ways & Means Subcommittee on Oversight will hear from the GAO on the “integrity of the administration of the Affordable Care Act’s premium tax credit.”

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.

2Comments

  1. Michael Bindner  ::  1:33 am on July 19th, 2014:

    Australia has a high per capita carbon usage because it is darn near empty. I worry about China more, which is terrible on all standards. The pork barrell solution by the new PM is interesting, especially if it works – although such spending would give American conservatives fits. I am not sure that a country with a VAT can long have a carbon tax as well and I still favor making government, not polluters, in charge of making changes, including shuttting down plants. This is the current U.S. policy and the GOP cannot stop it. Ha!

    Interesting that the Repubicans are making permanent the extenders, rather than continuing the annual donor shakedown. One wonders if the Senate will follow suit and if this is a sign that the GOP knows it will be in the minority again soon. (if not now, than in 2016)

    I can see why Durbin wants to combine the two Internet bills and to make sure without much delay or amendment. He seems like he wants to get this done in time for a quick vote in the House on the Internet sales tax bill. I sense that a deal has been made.

    I enjoyed Howards piece on inversions and I still think the solution should include a VAT and higher dividend and capital gains rates, which is no more likely than any tax reform passing. The question is always who owns both the domestic and overseas parts of the these companies.

    Next week looks busy. Only guidance on high will let the pension leveling bill pass. I almost hope it does not – but if it does maybe we can get labor angry enough to be more radical. Note to Issa and Camp: the Senate investigation committee hearings on Hedge funds is what an investigation should look like. Finance’s inversion hearings will do nothing more than stoke the fires to do more inversions. The Able Act is interesting, but too late for those of us whose disabilities were found later in life. The House is on a fishing expedition on Obamacare – not news. Sadly, the divided Congress means real adjustments won’t happen (like providing releif for someone who is not covered under spousal insurance but because of their spouses income cannot get a subsidy under the Act).

  2. Related Site  ::  10:49 pm on August 17th, 2014:

    Video shows the way to conceal your ip address that is real