Summer Blockbuster? Congress’ Week Is Tax-Action Packed
By Renu Zaretsky :: July 21st, 2014
Another big inversion deal heads to closing. Pharmaceutical giant AbbVie agreed to purchase UK drugmaker Shire, making it the largest US company so far to move its address overseas for lower taxes. The deal, now estimated to be worth about $55 billion, will likely close despite any US action to curb inversions.
The Senate may try to curb inversions anyway. Tomorrow’s Senate Finance Committee hearing on international taxation is expected to address inversions and anti-inversion policies. Meanwhile, Michigan Democrat Debbie Stabenow expects a vote this week on her bill to “Bring Jobs Home” by providing a tax credit to US businesses moving operations back to the US and denying a deduction for some foreign outsourcing expenses.
A Senate panel will dive into a basketful of complexity: The Homeland Security and Government Affairs Permanent Subcommittee on Investigations holds a hearing tomorrow: “Abuse of Structured Financial Products: Misusing Basket Options to Avoid Taxes and Leverage Limits.” Witnesses include: TPC’s Steve Rosenthal; James White of the GAO; Martin Malloy and Gerard LaRocca of Barclays; Satish Ramakrishna and M. Barry Bausano of Deutsche Bank; and Mark Silber, Jonathan Mayers and Peter Brown of Renaissance Technologies. Rosenthal’s testimony will be available on TPC’s site soon after its delivered.
Highway funding: Senate floor action at last? Senate Majority Leader Harry Reid expects the chamber to vote this week on the bill passed by the House, with two Senate alternatives offered as amendments. The PATH Act provides different offsets through tax compliance provisions. A measure from the Senate’s Environment and Public Works Committee would fund highway projects only through 2014 in order to facilitate a long-term funding solution before the end of the year. However, President Obama seems willing to let Congress kick this can into next year.
The House will vote on bills to modify the higher education tax credit and the Child Tax Credit this week. The Student and Family Tax Simplification Act would consolidate the current above-the-line tuition deduction and the HOPE, lifetime learning, and American opportunity tax credits into a single tax credit. The Child Tax Credit Improvement Act of 2014 would index the child credit to inflation and increase the phaseout range for joint filers. TPC’s Elaine Maag demonstrates how the expansion would not assist workers with the most financial need.
What’s the matter with California’s tax increases? Apparently not much, when it comes to job growth. David Cay Johnston of Syracuse University College of Law reviews the aftermath of California’s temporary sales tax and higher-income tax increases passed under Proposition 30 in 2012. California added 410,418 jobs in 2013, up 2.8 percent from 2012. The US saw an increase of 1.8 percent.
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