Tuesday, July 22, 2014
Senate Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs, Abuse of Structured Financial Products: Misusing Basket Options to Avoid Taxes and Leverage Limits (97 pages):
- Bloomberg, Renaissance Avoided More Than $6 Billion Tax, Report Says
- New York Times, Senate Inquiry Faults Hedge Funds’ Tax Strategy
- Wall Street Journal, Senate Report: Tax Move Helped Hedge Funds Save Billions Companies Claimed Long-Term Capital Gains for Trading Activity
The Senate Finance Committee holds a hearing today on The U.S. Tax Code: Love It, Leave It or Reform It!:
- Mihir Desai (Harvard University)
- Peter Merrill (PricewaterhouseCoopers)
- Leslie Robinson (Dartmouth College)
- Pascal Saint-Amans (OECD)
- Allan Sloan (Fortune)
- Robert Stack (U.S. Treasury Department)
In connection with the hearing, the Joint Committee on Taxation has released Present Law and Background Related to Proposals to Reform the Taxation of Income of Multination Enterprises (JCX-90-14) (99 pages):
Tuesday, June 24, 2014
The Senate Finance Committee holds a hearing today on Less Student Debt from the Start: What Role Should the Tax System Play?:
- Mark J. Mazur (Assistant Secretary for Tax Policy, U.S.Treasury Department)
- Jayne Caflin Fonash (Director of School Counseling, Loudoun Academy of Science, Sterling, VA)
- Scott A. Hodge (President, Tax Foundation, Washington, D.C.)
- Amber Lee (Graduate, Willamette High School, Eugene, OR)
- Dean Zerbe (National Managing Director, alliantgroup, Washington, D.C.)
In connection with the hearing, the Joint Committee on Taxation has released Background And Present Law Related To Tax Benefits For Education (JCX-70-14) (June 20, 2014):
Wednesday, June 11, 2014
Wednesday, April 23, 2014
GAO, Internal Revenue Service: Absorbing Budget Cuts Has Resulted in Significant Staffing Declines and Uneven Performance (GAO-14-534) (Apr. 21, 2014):
IRS Enacted Appropriations, FY 2009-2014, and Fiscal Year 2015 Request
Wednesday, April 9, 2014
Senate Budget Committee, Supporting Broad-Based Economic Growth and Fiscal Responsibility through a Fairer Tax Code:
- John L. Buckley (Former Chief Counsel, House Ways & Means Committee and former Chief of Staff, Joint Committee on Taxation)
- Jane Gravelle (Senior Specialist in Economic Policy, Congressional Research Service)
- Diana Furchtgott-Roth (Senior Fellow, Manhattan Institute for Policy Research)
Senate Finance Committee, Protecting Taxpayers from Incompetent and Unethical Return Preparer: (detailed coverage here):
- Chair Ron Wyden
- Ranking Member Orin Hatch
- John Koskinen (Commissioner, IRS)
- James McTigue (Director, Tax Issues, Government Accountability Office)
- Nina Olson (National Taxpayer Advocate, IRS)
- Dan Alban (Attorney, Institute for Justice)
- John Barrick (Associate Professor, BYU)
- William Cobb (President & CEO, H&R Block)
- Janis Salisbury (Chair, Oregon Board of Tax Practitioners)
- Chi Chi Wu (Staff Attorney, National Consumer Law Center, Boston)
House Ways & Means Committee, The Benefits of Permanent Tax Policy for America’s Job Creators:
- Thomas Hungerford (Director of Tax and Budget Policy, Economic Policy Institute)
- Joshua Odintz (Partner, Baker & McKenzie)
- James Redpath (Managing and Tax Partner, HLB Tautges Redpath)
- Bob Stallman (President, American Farm Bureau Federation)
- Judith Zelisko (Vice President of Tax, Brunswick Corporation)
Tuesday, April 1, 2014
The Permanent Subcommittee on Investigations Subcommittee of the Senate Homeland Security and Governmental Affairs Committee holds a hearing today on Caterpillar's Offshore Tax Strategy (webcast):
- Thomas F. Quinn (PricewaterhouseCoopers, Chicago)
- Steven R. Williams (PricewaterhouseCoopers, McLean, VA)
- James G. Bowers (PricewaterhouseCoopers, Dallas)
- Julie A. Lagacy (Finance Services Division, Caterpillar)
- Robin D. Beran (Chief Tax Officer, Caterpillar)
- Rodney Perkins (Former Senior International Tax Manager, Caterpillar)
Press and blogosphere:
- Bloomberg, Caterpillar Dodged $2.4 Billion Tax in Swiss Move, Inquiry Finds
- Bloomberg, Caterpillar Says Legal Swiss Tax Move Eliminated Unneeded Costs
- Los Angeles Times, Today in Corporate Tax Avoidance: Caterpillar's 'Pink Elephant'
- New York Times, Senate Report Says Caterpillar Used Swiss Subsidiary to Reduce Taxes
- Wall Street Journal, The $2.4 Billion Tax Question for Caterpillar; Senate Panel Says Company's Strategy Allowed It to Defer or Avoid Paying Some U.S. Taxes
- Wall Street Journal, Caterpillar's Senate Show Trial; An American Company Stands Accused of Paying All the Taxes It Owes
- Wall Street Journal, Levin: Caterpillar Shifted Profits Overseas to Lower U.S. Tax Liabilities; McCain Blames High U.S. Corporate-Tax Rate
- Washington Post, Caterpillar Skirted $2.4 Billion in Taxes, Senate Report Says
Monday, March 31, 2014
Thursday, February 27, 2014
Wednesday, February 26, 2014
- Press Release
- Executive Summary
- Statutory Language
- Section-by-Section Summary
- Joint Committee on Taxation Technical Explanation, Revenue Estimate, Distributional Effects, and Macroeconomic Analysis
Press and blogosphere coverage:
- Bloomberg, Camp to Cap Mortgage Benefit While Ending State Tax Break
- Bloomberg, Muni Tax Break Would Be Curbed Under House Republican’s Revamp
- Bloomberg, Republican Tax Plan Hits Finance as Wall Street Ire Grows
- Fiscal Times, Tax Reform Proposal Divides Republicans
- National Journal, Why the Republican Tax Reform Proposal Is Likely Going Nowhere
- New York Times, Tax Overhaul Plan Faces Key Hurdles
- Politico, Democrats Get Election Year Fodder in Dave Camp Tax Plan
- Politico, GOP Avoids Tough Tax Reform Details
- Politico, Republicans Take on Wall Street
- Politico, Republican Tax Writer Borrows Some Democratic Ideas for Revamp
- Reuters, Little Support Expected for U.S. House Republican's Tax Plan
- Salon, Republican Proposes Shockingly Non-Awful Tax Reform, Is Promptly Shot Down
- Wall Street Journal, Boehner Calls Tax Plan 'Beginning of Conversation'
- Wall Street Journal, Camp’s Bank Tax Shows Wall Street Still in Doghouse
- Wall Street Journal, U.S. Private-Equity Tax Change Doubtful This Year, Says Carlyle Co-Founder
- Washington Post, Chairman Camp’s Tax Proposal Gives Republicans an Edge
- Washington Post, House GOP Releases Detailed Tax Plan
Janice Mays, Democratic Staff Director, Chief Counsel, and Former Chief Tax Counsel of the House Ways & Means Committee received the 2014 Pillar of Excellence Award at the Tax Council Policy Institute's 15th Annual Tax Policy & Practice Symposium in Washington, D.C.:
- Committee on Homeland Security and Governmental Affairs, Permanent Subcommittee on Investigations, Offshore Tax Evasion: The Effort to Collect Unpaid Taxes on Billions in Hidden Offshore Accounts
- Bloomberg, Credit Suisse Helped Clients Hide Billions, Senate Says
- Forbes, Credit Suisse Goes to the Mattresses Over Tax Evasion, by Robert W. Wood
- Forbes, Senate Offshore Tax Cheating Report Skewers Credit Suisse and U.S. Justice Department, by Janet Novack
- Los Angeles Times, Senate Probe Accuses Swiss Bank of Helping Rich Americans Evade Taxes
- New York Times, Credit Suisse Helped U.S. Clients Hide Billions in Assets, Senate Report Says
- USA Today, Senators: Spy Tactics in Swiss Bank's Tax Scheme
- Wall Street Journal, Senate Report Blasts Credit Suisse as Soliciting Tax Evaders
Tuesday, February 25, 2014
The House Ways & Means Committee Republicans today released a tax reform plan, Making Today’s Tax Code Simpler and Fairer while Creating More Jobs and Higher Take Home Pay for American Workers:
The Ways and Means Committee has held more than 30 separate hearings on comprehensive tax reform over the last three years and released three discussion drafts.
This draft is specifically focused on reducing the burden the tax code imposes on small businesses and their workers. With about half of the private sector workforce employed by a small business – a total of nearly 60 million Americans – every dollar spent on complying with an overly complex, burdensome and broken tax code is a dollar that cannot be used for investment, hiring and higher wages for American workers.
The discussion draft contains several core components that simplify tax compliance for small businesses and provide certainty with respect to the ability of small businesses to recover certain costs immediately. These include widely supported reforms such as permanent section 179 expensing and expansion of the “cash accounting” method, amongst other provisions. The discussion draft also includes two separate options designed to achieve greater uniformity between S corporations and partnerships – one that revises current rules and a second that replaces current tax rules with a new unified pass-through regime.
The proposal seeks to modernize tax rules to minimize Wall Street’s ability to hide and disguise potentially significant risks through the abuse of derivatives and other novel financial products – an activity that was a contributing factor to the 2008 financial crisis. The discussion draft also outlines changes to tax rules designed to provide greater simplicity and uniformity.
Despite losing jobs to foreign competitors, America is still using an outdated international tax system designed nearly 60 years ago. Yet, in recent years, virtually every one of our major competitors around the globe has been actively reforming their tax laws. Even our closest neighbors are getting ahead of us, as Canada has already reformed its tax code and Mexico is doing so right now. If we don’t take action, we risk falling further behind.
An American tax code should make it easier for American companies to bring profits earned overseas back home to the U.S. – so they can be invested here – and that is the purpose of the international tax reform draft.
- Ways and Means Discussion Draft
- Discussion Draft Section-by-Section
- Press Release: Camp Releases International Tax Reform Discussion Draft
- Discussion Draft: One Page Highlights
- Discussion Draft: Three Page Summary
- Talking Points and Background: Reforming the Tax Code to Get America Working Again
- Comments: Business Leaders in Support of a Territorial Tax System
Press and blogosphere coverage:
- Bloomberg, Biggest Banks Said to Face Asset Tax in Republican Plan
- Bloomberg, Rate Cut Promise Leads to Corporate Tradeoff in Tax Code Redo
- MSNBC, Don't Weep for Tax Reform
- New York Times, GOP Tax Plan Seeks Lower Rates and Fewer Brackets
- Politico, Republicans Fret Over Tax Reform
- Times, Reid and McConnell: No Tax Reform in 2014
- Wall Street Journal, Congressman Aims to Bridge Party Gap With Tax Plan
- Wall Street Journal op-ed, How to Fix Our Appalling Tax Code, by Dave Camp
- Wall Street Journal, House GOP Tax Overhaul Would Cut Capital Gains, Dividend Rates
- Wall Street Journal op-ed, Suddenly, an Opening for Tax Reform, by Phil Gramm & Mike Solon
- Washington Post, The GOP’s New Tax-Cutting Plan Still Hits the Rich
- Washington Post, House GOP Tax Plan Would Cut Top Rates but Also Hit High Earners With a Surtax
- Washington Post, McConnell: Tax Reform Is Dead
Friday, February 7, 2014
Congressional Research Service, Tax Rates and Economic Growth (R42111) (2014):
(Hat Tip: Bruce Bartlett.) Prior TaxProf Blog posts:
- CRS: An Economic Analysis of the Top Tax Rates Since 1945 (Sept. 17, 2012)
- Dems, GOP Trade Barbs After CRS Pulls Report on Tax Rates and Economic Growth (Nov. 2, 2012)
- Republican Staff Study: CRS Report on Tax Rates Is Flawed (Nov. 14, 2012)
- CRS Re-issues Report: Tax Rates on Rich Have 'Negligible' Effect on Economic Growth (Dec. 14, 2012)
- Tax Foundation Gives F Grade to CRS Report on Tax Rates and Economic Growth (Jan. 9, 2013)
Thursday, January 30, 2014
Thursday, January 16, 2014
Sunday, December 22, 2013
Joint Committee on Taxation, Description of Certain Revenue Provisions Contained in the President's Fiscal Year 2014 Budget Proposal (JCS-4-13) (220 pages):
Thursday, December 19, 2013
- Senate Finance Committee, Press Release: Baucus Unveils Proposal for Energy Tax Reform
- Senate Finance Committee, Summary of Discussion Draft: Energy Tax Reform (8 pages)
- Senate Finance Committee, Summary of Discussion Draft: Energy Tax Reform (1 page)
- Joint Committee on Taxation, Technical Explanation of the Senate Committee on Finance's Staff Discussion Draft to Reform Certain Energy Tax Provisions (JCX-21-13)
- Statutory Language
- Bloomberg, Energy Tax Breaks to Shrink in Baucus Focus on Emissions
- The Hill, Baucus Proposes Dumping Energy Breaks
- Reuters, U.S. Senator Eyes Overhaul of Energy Tax Incentives
- Wall Street Journal, Baucus Looks to Trim Energy-Related Tax Breaks
Tuesday, December 10, 2013
- Testimony of John Koskinen
- Statement of Chair Max Baucus
- Statement of Ranking Member Orrin Hatch
- Accounting Today
- USA Today
- Wall Street Journal
- Washington Post
- Washington Times
Monday, December 9, 2013
Congressional Budget Office, The Distribution of Household Income and Federal Taxes, 2010:
Thursday, November 21, 2013
- Senate Finance Committee, Press Release: Baucus Works to Overhaul Outdated Tax Code
- Senate Finance Committee, Cost Recovery and Accounting Tax Reform Discussion Draft (1 page)
- Senate Finance Committee, Summary of Staff Discussion Draft: Cost Recovery and Accounting (12 pages)
- Joint Committee on Taxation, Technical Explanation of the Senate Committee on Finance Chairman's Staff Discussion Draft to Reform Certain Business Provisions (JCX-19-13) (73 pages)
- Statutory Language (144 pages)
- Bloomberg, Baucus Would Cut Corporate Rate With Slower Write-Offs
- Wall Street Journal, Baucus Proposes to Wipe Out Decades’ Worth of Depreciation Rules
Wednesday, November 20, 2013
- Senate Finance Committee, Press Release: Baucus Unveils Proposal to Combat Tax Fraud, Make Filing Safer, Simpler and More Efficient
- Senate Finance Committee, Summary of Staff Discussion Draft: Tax Administration (9 page)
- Senate Finance Committee, Tax Administration Discussion Draft (1 page)
- Statutory Language (64 pages)
- Joint Committee on Taxation, Technical Explanation of the Senate Committee on Finance Chairman’s Staff Discussion Draft of Provisions to Reform Tax Administration (JCX-16-13) (50 pages)
- Joint Committee on Taxation, Technical Explanation of the Senate Committee on Finance Chairman’s Staff Discussion Draft of Tax Technical Corrections (JCX-17-13) (11 pages)
- Joint Committee on Taxation, List of Provisions Indentified by the Staff of the Joint Committee on Taxation as Potential “Deadwood” in the Internal Revenue Code of 1986 (JCX-18-13) (19 pages)
- Accounting Today, Baucus Proposes Ways to Fight Tax Fraud and Simplify Tax Filing
- Bloomberg Businessweek, Baucus Seeks Tougher ID Theft Law With Tax Preparer Testing
- Senate Finance Committee, Press Release: Baucus Unveils Proposals for International Tax Reform
- Senate Finance Committee, International Business Tax Reform Discussion Draft (1 page)
- Senate Finance Committee, Summary of Staff Discussion Draft: International Business Tax Reform (6 pages)
- Senate Finance Committee, Chairman’s Staff Request for Comments on Certain Technical and Policy Issues Raised in the Staff Discussion Draft (3 pages)
- Statutory Language (Provisions Common to Options Y and Z) (71 pages)
- Statutory Language (Option Y) (84 pages)
- Statutory Language (Option Z) (93 pages)
- Joint Committee on Taxation, Technical Explanation of the Senate Committee on Finance Chairman’s Staff Discussion Draft of Provisions to Reform International Business Taxation (JCX-15-13) (90 pages)
- Bloomberg, Baucus Proposes Minimum U.S. Tax on Foreign Earnings
- Bloomberg, Business Groups Pan Baucus Tax Changes as Uncompetitive
- Bloomberg, Lew Praises Forthcoming Baucus Tax Plan as Constructive
- Forbes, International Tax Reform for Dummies, by Tony Nitti
- New York Times, Senator Offers Overhaul of Corporate Tax Code
- New York Times DealBook, Baucus Corporate Tax Proposal Takes Aim at Merger ‘Inversions’, by David Gelles
- New York Times DealBook, Wall Street Could Benefit From Tax Proposal, by Victor Fleischer (San Diego)
- NPR, Senate Finance Chairman Floats International Tax Code Overhaul
- Dan Shaviro (NYU), Senate Finance Committee International Business Tax Reform Discussion Draft: Part 1
- Dan Shaviro (NYU), Senate Finance Committee International Business Tax Reform Discussion Draft: Part 2
- Dan Shaviro (NYU), Senate Finance Committee International Business Tax Reform Discussion Draft: Part 3
- Tax Vox Blog, Baucus Proposes International Tax Reform But Future Action Remains Uncertain, by Howard Gleckman
- Wall Street Journal, U.S. Companies Split on Tax Plan
- Washington Post, Baucus Proceeds Alone on Tax Reform, Starting With Options to Handle Foreign Earnings
Thursday, November 14, 2013
Friday, October 25, 2013
Tuesday, September 17, 2013
Friday, September 13, 2013
Congressional Research Service, The Potential Federal Tax Implications of United States v. Windsor (Striking Section 3 of the Defense of Marriage Act (DOMA)): Selected Issues (R43157) (Sept. 9, 2013):
(Hat Tip: Bruce Bartlett.)
Wednesday, August 7, 2013
Congressional Research Service, The Potential Federal Tax Implications of United States v. Windsor (Striking Section 3 of the Defense of Marriage Act (DOMA)): Selected Issues (R43157):
This report will provide an overview of the potential federal tax implications for same-sex married couples of the U.S. Supreme Court (SCOTUS) ruling in United States v. Windsor, with a focus on the federal income tax. Estate tax issues are also discussed. Importantly, this report focuses on changes in the interpretation and administration of federal tax law that may result from the SCOTUS decision. This decision did not amend federal tax law. This report is not intended to address all tax-related issues that may arise as a result of the Windsor decision. Such discussion is beyond the scope of this report.
- Bloomberg op-ed, Why Gay Couples Hate the IRS, by Anthony Infanti (Pittsburgh)
(Hat Tip: Bruce Bartlett.)
Wednesday, July 31, 2013
Joint Economic Committee Holds Hearing Today on Lessons From Reagan: How Tax Reform Can Boost Economic Growth
The Joint Economic Committee holds a hearing today on Lessons from Reagan: How Tax Reform Can Boost Economic Growth:
- James S. Gilmore III (President & CEO, Free Congress Foundation; 68th Governor of Virginia)
- Laura D’Andrea (Professor, UC-Berkeley Haas School of Business)
- Kevin Hassett (Senior Fellow, American Enterprise Institute)
- Jane Gravelle (Senior Specialist, Congressional Research Service)
Friday, July 26, 2013
Joseph W. Nega
Joseph W. Nega is a Senior Legislation Counsel to the Joint Committee on Taxation of the United States Congress, a position he has held since 2008. His primary areas of responsibility are the individual income tax, tax exemption requirements for state and local bonds, tax credit bonds, and employment taxes. Mr. Nega has served on the Joint Committee staff since 1985. Prior to his current position, Mr. Nega served as a Legislation Counsel from 1989 to 2008, and as a Legislation Attorney from 1985 to 1989. Mr. Nega received a B.S.C. in Accounting from DePaul University, a J.D. from DePaul University School of Law, and an M.L.T. (Taxation) from Georgetown University School of Law.
Judge Michael B. Thornton
Judge Michael B. Thornton currently serves as a Judge of the United States Tax Court, a position held since March 1998. From June 2012 to March 2013 he served as Chief Judge of the Tax Court. Previously, Judge Thornton served in the U.S. Department of the Treasury as Deputy Tax Legislative Counsel in the Office of Tax Policy from 1995 to 1998, first joining the Department as an Attorney-Adviser in February 1995. He served with the U.S. House Committee on Ways and Means as Chief Minority Tax Counsel in 1995, and as Tax Counsel from 1988 to 1994. Judge Thornton was an Associate Attorney with Miller and Chevalier from 1985 to 1988 and Sutherland, Asbill, and Brennan from 1982 to 1983. He was a Law Clerk to the Honorable Charles Clark, Chief Judge, U.S. Court of Appeals for the Fifth Circuit from 1983 to 1984. Judge Thornton received a B.S. and M.S. from University of Southern Mississippi, an M.A. from University of Tennessee, and J.D. from Duke University School of Law.
Wednesday, July 24, 2013
Politico, Tax Committee Transforms Into Fort Knox:
Senate Finance Committee leaders have a message for their anxious colleagues: Your secret is safe with us.
In a memo to the tax staffer for every senator, committee officials said they’re going to great lengths to make sure that tax reform submissions, which are due to the panel on Friday, won’t leak.
For starters, the committee says submissions will be sealed by the panel and the National Archives until Dec. 31, 2064. Today’s fiscal policy fights, which have an endless feel about them, should be less relevant by then.
But staffers are taking other measures to transform the Finance Committee into Washington’s version of Fort Knox. The documents will receive unique identifying numbers, a confidential seal and a special encryption. Paper copies of each proposal will be kept in a safe. And beyond Finance Committee Chairman Max Baucus (D-Mont.) and ranking Republican Orrin Hatch, only 10 staffers will have any sort of access to the proposals.
The unusual tactics speak to the high stakes of the so-called blank slate approach to tax reform Baucus and Hatch are pursuing. They’re starting from scratch in their pursuit of a new tax system and they’ve given their colleagues until Friday to explain which tax provisions should stay on the books.
That’s put senators in the uncomfortable position of defending — or choosing not to defend — breaks with powerful constituencies. Many lawmakers have said they’re reluctant to play ball, worried about picking winners or losers and concerned that those choices might later be held against them.
- The Hill, Senators Are Promised 50 Years of Secrecy for Tax Reform Proposals
- Tax Analysts Blog, Our Secretive Senate, by Christopher Bergin
Thursday, July 18, 2013
The House Committee on Oversight and Government Reform holds a hearing today on The IRS’ Systematic Delay and Scrutiny of Tea Party Applications:
- Elizabeth Hofacre (Revenue Agent, Exempt Organizations, Tax Exempt and Government Entities Division, IRS)
- Carter Hull (Recently Retired, Tax Law Specialist, Exempt Organizations, Tax Exempt and Government Entities Division, IRS)
- J. Russell George (Inspector General, Treasury Inspector General for Tax Administration)
- Michael McCarthy (Chief Counsel, Treasury Inspector General for Tax Administration)
- Gregory Kutz (Assistant Inspector General for Management Services and Exempt Organizations, Treasury Inspector General for Tax Administration)
Wednesday, July 17, 2013
The House Small Business Committee holds a hearing today on The Internal Revenue Service and Small Businesses: Ensuring Fair Treatment:
On May 14, 2013, the Department of the Treasury's Inspector General for Tax Administration (TIGTA) issued a report which found that the IRS used inappropriate criteria that identified for review conservative organizations that had applied for tax-exempt status based on their names or policy positions. Recent investigations by Congress have raised additional questions about the IRS's improper targeting of non-profit organizations, and whether the IRS may have also targeted small businesses for additional scrutiny or audits. This hearing will be an opportunity for members to question the Acting IRS Commissioner about how the agency selects, classifies and audits the returns of small businesses.
Monday, July 8, 2013
Max Baucus (Chair, Senate Finance Committee) and Dave Camp (Chair, House Ways & Means Committee) kick off their Nationwide Tour for a Simpler, Fairer Code to Boost Economy, Create Jobs and Improve Wages in Minneapolis today with visits to 3M and Baldinger Bakery:
The 3M Company is an American multinational corporation based in Maplewood, Minnesota. With $30 billion in global sales, 3M employs 88,000 people worldwide and has operations in more than 70 countries.
Baldinger Bakery is a fourth generation, family-run businesses in St. Paul, Minnesota. Baldinger Bakery was founded in 1888 when Henry and Rebecca Baldinger left Eastern Europe and made their way to America, settling in St. Paul. Over the years they developed a following for their breads, rolls and buns. As their following expanded so did operations. Today, the commercial bakery is in a state-of-the-art facility that can produce about 65,000 buns per hour.
On their tax reform tour, the tax-writing Chairmen will be talking to a range of Americans and businesses – from large multinational corporations with overseas operations like 3M, to small, family-run businesses and individual taxpayers.
“Over the past two years we’ve heard from hundreds of experts on how to fix the tax code to make it simpler for families and spark a more prosperous economy. We want even more input and want to hear directly from the American people. That is why we are going around the country and starting off in St. Paul, meeting with leaders in business — big and small,” said Chairman Dave Camp and Chairman Max Baucus.
Thursday, June 27, 2013
- Senate Finance Committee, Press Release
- Senate Floor Colloquy (Sen. Baucus & Sen. Hatch)
- Accounting Today, Senate Finance Leaders Offer Blank-Slate Approach to Tax Reform
- Bloomberg, Tax Reform: Baucus Starting from Scratch with Zero Breaks
- Chicago Tribune, Senate Tax-Writers Give Colleagues Deadline for Tax Fixes
- CNN, Senators to Corporate Interests: Want to keep That Tax Break? Convince Us.
- Dallas Morning News, Will Congress Truly Pursue Tax Reform 2.0 or Repackage Last Century Ideas?
- Forbes, Can The Baucus-Hatch 'Blank Slate' Plan Jump-Start Tax Reform?
- The Hill, Senators Begin Drive for Tax Reform by Wiping the Slate Clean
- Mother Jones, The Exciting Return of Zero-Based Tax Reform, by Kevin Drum
- New York Times, Finance Committee Asks Senators to Start Tax Reform Process
- Politico, Tax Lobbyists Spring Into Action
- Think Progress, Why We Should Be Wary Of ‘Blank Slate’ Tax Reform
- U.S. News & World Report, Senate Takes 'Blank Slate' Approach on Tax Reform
- Wall Street Journal, Baucus and Hatch on Tax Breaks: Keep or Toss?
- Washington Post, Senators Propose ‘Blank Slate’ Approach to Tax Reform
- ataxingmatter, Senate Finance Leaders Push "Blank Slate" to Tax Reform, by Linda Beale
- Bloomberg, Senate Invitation to Defend Deductions Propels Lobbyists
- The Hill, K St. Feeding Frenzy Expected From 'Blank Slate' Tax Reform
- National Journal, Hands Off My Tax Break
- Tax Vox Blog, Can The Baucus-Hatch Blank Slate Plan Jump Start Tax Reform?, by Howard Gleckman
- Wall Street Journal op-ed, Tabula Rasa Tax Reform, by Stephen Moore
- Wall Street Journal op-ed, Taking a Sword to the Tax Code, by Harry Graver
Wednesday, June 26, 2013
The House Committee on Oversight and Government Reform yesterday released Questionable Acquisitions: Problematic IT Contracting at the IRS (157 pages):
The IRS spends approximately $2 billion every year on information technology (IT) alone. The agency has over 400 dedicated employees who work on IT acquisition. Many vendors compete to do business with the IRS. Considering the large annual IRS investment in IT, any advantage in the contracting process gained by a particular vendor could prove very lucrative. The Committee found that one company—Strong Castle, Inc.—gained precisely such an advantage based on the relationship between the company’s CEO and an IRS contracting official. Strong Castle, Inc. was formerly known as Signet Computers. In January 2012 Braulio Castillo purchased Signet Computers and subsequently renamed the company Strong Castle, Inc. Except for specific references in documents, testimony, and discussion surrounding the purchase of the company, this report will refer to the company as Strong Castle.
The Committee learned of allegations concerning a series of contracts, potentially worth more than $500 million, awarded by the IRS to Strong Castle. Witnesses who contacted the Committee alleged that Strong Castle engaged in fraud to win those IRS contracts. Documents and testimony obtained by the Committee showed that a cozy relationship between Strong Castle President and Chief Executive Officer Braulio Castillo and IRS Deputy Director for IT Acquisition Greg Roseman may have influenced the selection process.
- Bloomberg, IRS Deputy Seen Aiding $500 Million in Contracts to Pal
- The Hill, Friendship May Have Greased Wheels for IRS Contracts
- Huffington Post, IRS Official Helped Strong Castle Win Millions In Contracts, New Report Alleges
- Reason, IRS Official Awarded $500 Million in Contracts to Friend of Official
- Reuters, House Republican Says IRS Awarded 'Inappropriate' Contracts
Monday, June 24, 2013
Congressional Research Service, A Brief Overview of Business Types and Their Tax Treatment (R43104) (June 12, 2013):
In the United States, how a business is taxed at the federal level is partly dependent on how it is organized. The income of subchapter C corporations, also known as “regular” corporations, is taxed once at the corporate level according to the corporate tax system, and then a second time at the individual-shareholder level according to the individual tax rates when corporate dividend payments are made or capital gains are recognized. This leads to the so-called “double taxation” of corporate income. Businesses that choose any other form of organization are, in general, not subject to the corporate income tax. Instead, the income of these businesses passes through to their owners and is taxed according to individual income tax rates. Examples of these alternative “pass-through” forms of organization include sole proprietorships, partnerships, subchapter S corporations, and limited liability companies.
This report summarizes the general tax treatment of corporate and pass-through businesses. The intent is to introduce those who are unfamiliar with the current U.S. business tax environment to the basics of corporate and pass-through taxation. Understanding how various businesses are taxed provides a starting point from which one can evaluate current and future proposals to change the taxation of corporations and pass-throughs. Additionally, since pass-through income is typically taxed only at individual income tax rates, this report is also a useful starting point for understanding the effects on pass-through businesses from a change to individual income tax rates. A list of related CRS products on business taxation may be found at the end of the report.
Friday, June 21, 2013
This document is the last in a series of ten papers compiling tax reform options that Finance Committee members may wish to consider as they work towards reforming our nation’s tax system. This compilation is a joint product of the majority and minority staffs of the Finance Committee with input from Committee members’ staffs. ... The paper outlines the following potential goals for reform in this area:
- Simplify the law in order to reduce the cost to businesses and individuals of complying with the tax code.
- Ensure that the overall federal tax system is fair, while minimizing the negative effect of taxes on economic growth.
- Carefully consider whether and how non-income tax measures should account for any positive or negative externalities.
The paper lists the following broad reform options with more details included for each policy proposal:
I. EMPLOYMENT TAXES
- Increase FICA and SECA taxes.
- Eliminate or reduce the FICA and SECA taxes.
- Make the Social Security tax less regressive.
- Eliminate employment tax exclusions for certain categories of workers.
- Simplify, clarify, and make fairer the FICA and SECA tax rules.
- Reform the income tax treatment of Social Security and Medicare benefits.
II. WEALTH TRANSFER TAXES
- Repeal the estate and generation-skipping transfer taxes.
- Replace the wealth transfer system with an alternative wealth transfer tax system.
- Modify the tax rates and exemptions.
- Reform and simplify the current wealth transfer tax system.
- Miscellaneous simplification reforms.
III. EXCISE TAXES
- Introduce a securities transactions excise tax.
- Prohibit the Treasury Department from assisting foreign governments in enforcing taxes on securities transactions occurring on a U.S. exchange.
- Impose a levy on large financial institutions.
- Enact or increase sin taxes.
- Repeal all sin taxes.
- Enact a tax on the value of land.
- Modify the rum excise tax transfer (“cover-over”) to the United States Virgin Islands and Puerto Rico, and limit the total amount of direct or indirect government assistance to rum producers.
IV. CONSUMPTION TAXES
- Enact a consumption tax, while preserving the income tax and employment taxes.
- Replace the income tax with a consumption tax.
- Replace employment taxes with a consumption tax.
Tuesday, June 18, 2013
Following up on my previous post, The IRS Takes a Bite Out of Bitcoin (May 2, 2013): GAO, Virtual Economies and Currencies: Additional IRS Guidance Could Reduce Tax Compliance Risks (GAO-13-516):
Recent years have seen the development of virtual economies, such as those within online role-playing games, through which individual participants can own and exchange virtual goods and services. Within some virtual economies, virtual currencies have been created as a medium of exchange for goods and services. Virtual property and currency can be exchanged for real goods, services, and currency, and virtual currencies have been developed outside of virtual economies as alternatives to government-issued currencies, such as dollars. These innovations raise questions about related tax requirements and potential challenges for IRS compliance efforts.
This report (1) describes the tax reporting requirements for virtual economies and currencies, (2) identifies the potential tax compliance risks of virtual economies and currencies, and (3) assesses how IRS has addressed the tax compliance risks of virtual economies and currencies.
- Accounting Today, IRS Could Begin Taxing Bitcoin and Other Virtual Currencies
- The Hill: GAO: IRS Needs to Keep an Eye on Virtual Currencies
- National Journal: The Tax Man Cometh—For Your Bitcoins
Monday, June 17, 2013
George K. Yin (Virginia), Former Chief of Staff Thinks JCT Should Investigate the IRS, 139 Tax Notes 1443 (June 107 2013):
House Ways and Means Committee Chair Dave Camp, R-Mich., has reportedly rejected use of a joint committee to investigate the IRS because such a committee would not be authorized to access confidential tax return information. Yet Camp already heads a joint committee (the Joint Committee on Taxation), which has that specific authority under sections 6103(f) and 8023. Moreover, the JCT was created for the express purpose of investigating the tax agency's administration of the tax laws, following a lengthy Senate investigation of corruption charges against the agency and possible favoritism towards companies associated with then-Secretary of the Treasury Andrew Mellon. Congress wanted a permanent organization to conduct future tax investigations, oversee the agency, and make sure it was administering the law in the manner Congress intended. Camp should make use of this valuable resource to streamline Congress's efforts and prevent the integrity of its investigation from being undermined by political squabbling.
All Tax Analysts content is available through the LexisNexis® services.
Friday, June 14, 2013
This paper is a slightly revised version of comments submitted to the House Committee on Ways & Means concerning four proposals to reform the taxation of passthrough entities. Among other things, the paper urges that passthrough entities be required to recognize gain on distributions of appreciated property to an owner of the entity. Adoption of this single proposal of the committee would be a meaningful step towards achieving the committee’s dual goals of simplification and reform.
This document is the ninth in a series of papers compiling tax reform options that Finance Committee members may wish to consider as they work towards reforming our nation’s tax system. This compilation is a joint product of the majority and minority staffs of the Finance Committee with input from Committee members’ staffs. ... The paper sets out the following broad goals for reform in this area:
- Maximize the efficiency and effectiveness of any incentives for charitable giving that are retained or reformed;
- Consider whether the availability of tax incentives for charitable giving should be broadened to more taxpayers;
- More tightly align tax-exempt status with providing sufficient charitable benefits;
- Closely examine the relationship between political activity and tax-exempt status;
- Reconsider the extent to which tax-exempt organizations should be allowed to engage in commercial activity; and
- Improve the accountability and oversight of tax-exempt organizations.
I. CHARITABLE DEDUCTION
The paper outlines the following broad policy options with more specific proposals detailed in the paper:
- Repeal the charitable contribution deduction
- Fundamentally reform the charitable contribution deduction
- Attempt to increase the effect of charitable incentives on charitable giving
- Incrementally reform the charitable contribution deduction
II. TAXATION OF BUSINESS ACTIVITIES OF NONPROFITS
- Tax all commercial activities of tax-exempt
- Revise the requirements for tax-exempt status for organizations engaged in commercial activity
- Revise the UBIT rules for organizations engaged in commercial activity
- Tighten rules on conversion from tax-exempt to for-profit status
- General reforms to tax-exempt entities
III. POLITICAL ACTIVITY AND LOBBYING OF TAX-EXEMPTS
- Limit political activity of 501(c)(4), (c)(5) and (c)(6) organizations
- Change the categories of tax-exempt organizations that may engage in political activities
- Reform reporting and disclosure rules
- Clarify that payments to 501(c)(4) organizations are excluded from the gift tax
- Expand the prohibition on 501(c)(4) organizations engaging in lobbying from receiving any federal funds to include contracts.
IV. BROAD TAX-EXEMPT ISSUES
- Reform the taxation of private foundations
- Reform the taxation of endowments
- Ensure that donor-advised funds and supporting organizations are directing resources for charities
- Limit executive compensation by tax-exempt organizations
- Reform reporting requirements
- Develop enforcement methods other than revocation of tax-exempt status as the only penalty for noncompliance
Thursday, June 13, 2013
The House Ways & Means Committee holds a hearing today on Tax Reform: Tax Havens, Base Erosion and Profit-Shifting:
The hearing will examine different tax planning strategies used by multinational corporations to shift income out of the United States and into low-tax jurisdictions. The hearing also will consider when profit shifting truly is eroding the U.S. tax base and when companies are shifting profits amongst different foreign jurisdictions without affecting U.S. tax collections. (Hearing Advisory)
- Pascal Saint-Amans (Director, Centre for Tax Policy and Administration, OECD)
- Edward Kleinbard (Professor of Law, USC) (Testimony)
- Paul Oosterhuis (Partner, Skadden, Washington, D.C.)
Friday, June 7, 2013
This document is the eighth in a series of papers compiling tax reform options that Finance Committee members may wish to consider as they work towards reforming our nation’s tax system. This compilation is a joint product of the majority and minority staffs of the Finance Committee with input from Committee members’ staffs. ... The paper notes that tax reform provides an opportunity "to rationalize the patchwork of inconsistent rules regarding the taxation of income, investments, and tax structures."
The paper lists the following broad principles for reform in this area:
- Simplify the law in order to reduce the cost to businesses and individuals of complying with the tax code;
- Make the tax code more neutral by reducing or eliminating differences in overall tax burdens across different types of entities, owners, and income; and
- Reduce or eliminate differences in the tax treatment of debt and equity
The following reform options are listed with more specific proposals detailed for each:
I. TAXATION OF DIFFERENT TYPES OF INCOME AND ENTITIES
- Treat all or most types of income the same, while maintaining the two levels of tax on the earnings of C corporations
- Fully integrate the corporate and individual income taxes through one of the following approaches
- Partially integrate the corporate and individual income taxes
- Redraw line between passthroughs and C corporations
- Simplify other rules related to types of income and entities
II. CORPORATE FINANCE DECISIONS
- Expand thin capitalization rules to limit deductions attributable to excessive debt financing
- Further limit deductions associated with exempt or deferred income
- Create greater parity between debt and equity financing for C corporations
- Create greater parity between retaining and distributing earnings for C corporations and reduce lock-in incentives
- Reform treatment of carried interest and other partnership interests received in whole or in part in exchange for services
- Reform treatment of S corporation income received in whole or in part in exchange for services
IV. FINANCIAL PRODUCTS
- Harmonize the tax rules governing most or all derivatives
- Reform mark-to-market treatment (section 475)
- Reform rules governing certain futures and other contracts (section 1256)
- Simplify and expand hedging treatment
- Reform treatment of debt
- Reform “wash sales” rules
Thursday, June 6, 2013
J. Richard (Dick) Harvey (Villanova), Apple Hearing: Observations from an Expert Witness, 139 Tax Notes 1171 (June 3, 2013):
The US Senate Permanent Subcommittee on Investigations held a highly publicized hearing on May 21, 2013 to discuss Apple’s international tax planning. As the first expert witness (testimony here), I had a ring-side seat to the hearing and Apple’s international tax planning.
One purpose of this article is to clearly identify the two key tax policy issues that need to be addressed by policymakers both in the US and internationally. Because the discussion at the hearing was very U.S. centric, these two issues may have been lost in the rhetoric.
- Should the US and the rest of the world allow Apple to record approximately two-thirds of its global income in an Irish entity that has few or no employees and little or no real activity?
- Assuming the answer is “no”, where should the income be recorded? Should it be the US, other countries, or some combination?
Another purpose is to discuss arguments made at the hearing by Apple and Sen. Johnson to support Apple’s allocation of only 30% of its global income to the US. These arguments were not fully explored during the hearing and warrant additional discussion. In short, Apple should not be able to argue one thing to support its US income allocation and then argue something different for allocating income to foreign countries.
Finally, the article briefly discusses several items, including: Apple’s effective tax rate, and whether they used tax gimmicks.
All Tax Analysts content is available through the LexisNexis® services.
Senate Finance Committee press release, Baucus Welcomes Kara Getz as New Tax Counsel:
Senate Finance Committee Chairman Max Baucus (D-Mont.) today named Kara Getz as Tax Counsel for the committee where she will work on taxation and pension issues. ... Getz joins the committee from the Office of Congressman Richard Neal (D-MA) where she served as tax counsel and legislative director, advising the congressman on taxation, pension and budget issues. Prior to joining Congressman Neal’s office, she was Chief Counsel for the Senate Special Committee on Aging for Chairman Herb Kohl (D-Wis). Before that, she served as tax counsel for Senator Gordon Smith (R-OR) for almost four years. Getz also has experience in the private sector.
(Hat Tip: Steven Sholk.)
Thursday, May 30, 2013
Congressional Budget Office, The Distribution of Major Tax Expenditures in the Individual Income Tax System:
A number of exclusions, deductions, preferential rates, and credits in the federal tax system cause revenues to be much lower than they would be otherwise for any given structure of tax rates. Some of those provisions—in both the individual and corporate income tax systems—are termed “tax expenditures” because they resemble federal spending by providing financial assistance to specific activities, entities, or groups of people. Tax expenditures, like traditional forms of federal spending, contribute to the federal budget deficit; influence how people work, save, and invest; and affect the distribution of income.
This report examines how 10 of the largest tax expenditures in the individual income tax system in 2013 are distributed among households with different amounts of income. Those expenditures are grouped into four categories:
- Exclusions from taxable income—
- Employer-sponsored health insurance,
- Net pension contributions and earnings,
- Capital gains on assets transferred at death, and
- A portion of Social Security and Railroad Retirement benefits;
- Itemized deductions—
- Certain taxes paid to state and local governments,
- Mortgage interest payments, and
- Charitable contributions;
- Preferential tax rates on capital gains and dividends; and
- Tax credits—
- The earned income tax credit, and
- The child tax credit.
- Accounting Today, Congressional Report Finds Tax Expenditures Skewed Toward Wealthy
- Bloomberg, Income Extremes Reap Most Benefit From Tax Breaks: CBO
- Bloomberg, Tax Reformers Must Kill Subsidies for the Rich
- Fox News, CBO: Tax Breaks Cost $1.2 Trillion Over Decade
- L.A. Times, How 10 Major Tax Breaks Benefit the Rich -- and the Poor
- L.A. Times, Tax Breaks Benefit Rich Households the Most, Report Says
- Mother Jones, Tax Expenditures Favor the Rich—But Probably by Less Than CBO Says
- Wall Street Journal, CBO: More Than Half of Biggest Tax Breaks Go to Top Quintile of Households
- Washington Post, CBO Study: Wealthy Win Lion’s Share of Major Tax Breaks Like Mortgage Interest Deduction
- Wall Street Journal, Give Us a Break: The Congressional Budget Office's Misleading Report on "Tax Expenditures"
Tuesday, May 28, 2013
Congressional Budget Office, Effects of a Carbon Tax on the Economy and the Environment:
Lawmakers could increase federal revenues and encourage reductions in emissions of carbon dioxide (CO2) by establishing a carbon tax, which would either tax those emissions directly or tax fuels that release CO2 when they are burned (fossil fuels, such as coal, oil, and natural gas). Emissions of CO2 and other greenhouse gases accumulate in the atmosphere and contribute to climate change—a long-term and potentially very costly global problem.
The effects of a carbon tax on the U.S. economy would depend on how the revenues from the tax were used. Options include using the revenues to reduce budget deficits, to decrease existing marginal tax rates (the rates on an additional dollar of income), or to offset the costs that a carbon tax would impose on certain groups of people. This study examines how a carbon tax, combined with those alternative uses of the revenues, might affect the economy and the environment.
Friday, May 24, 2013
This document is the seventh in a series of papers compiling tax reform options that Finance Committee members may wish to consider as they work towards reforming our nation’s tax system. This compilation is a joint product of the majority and minority staffs of the Finance Committee with input from Committee members’ staffs. ..
The paper ... outlines the following potential goals for reform in this policy area:
- Minimize the disruption to business practices and employee expectations inherent in any fundamental tax reform;
- Simplify the taxation of retirement savings and health insurance;
- Increase the number of people with enough resources for an adequate standard of living in retirement, and expand access to health insurance;
- Maximize the bang-for-the-buck of any tax incentives that are retained or reformed; and
- Develop neutral rules regarding compensation and fringe benefits to ensure that business needs and not tax planning drive compensation decisions, while minimizing compliance costs.
The paper lists and expounds upon the following broad policy reform options:
- Limit or eliminate tax preferences for retirement saving;
- Replace deductions, exclusions and credits for retirement savings with a single refundable tax credit;
- Increase retirement savings incentives;
- Attempt to increase effect of tax expenditures for retirement savings on retirement security;
- Simplify process of selecting and administering a plan for employers;
- Establish new plan options for employers;
- Reduce “leakage” from retirement plans;
- Allow more flexibility in distributions from retirement savings accounts;
- Reduce tax expenditures for employer-provided health benefits;
- Modify the Affordable Care Act (ACA);
- Expand the tax benefits for health;
- Expand long-term care benefits;
- Reform excise taxes and other tax provisions that may affect health;
- Reduce tax expenditures for life insurance products;
- Reduce tax expenditures for annuities;
- Limit exclusions for other employee fringe benefits;
- Expand tax preferences for other employee fringe benefits;
- Harmonize employee fringe benefit rules;
- Revise the limits on the deductibility of executive compensation;
- Revise the rules related to non-qualified deferred compensation;
- Revise the rules related to equity-based compensation; and
- Revise the rules related to golden parachute payments to executives upon a change in control.
Thursday, May 23, 2013
One Infinite Loop
United States of America
Or maybe Ireland
Dear Mr./Ms. Apple,
I am writing to you at the request of Senator Rand Paul, who suggested that I apologize to you for investigating your offshore tax planning.
I should note at the outset that I wasn’t sure how to address this letter. Mr. Paul said to apologize to Apple, but I’m not sure if Apple is a person, and if so if you are a boy or a girl. I thought you were a company, but after hearing Mr. Paul tell the story of how you recovered from near death in the 1990s, maybe you are some kind of superhero.
I’m also not really sure where you live. You have an address in California, but your tax returns also claim residency in Ireland, except not really. So I hope this letter gets to you.
I have to say, the whole Ireland thing kind of sounded like a scam. I was relieved when your CEO, Timothy Cook, explained that you don’t use any tax gimmicks. A professor testifying at the hearing yesterday said that he nearly fell off his chair when he read Mr. Cook’s statement, but that’s probably because tax professors are known for being silly and theatrical. You should see what their conferences are like.
So, I apologize. In order to improve our service to you in the future, we are implementing two new changes in our customer service policy.
The first is a promise to do a better job of scheduling. If we have to mention taxes again, I’ll be sure to just add it to the agenda when your lobbyists drop by for a closed-door meeting. And I don’t mean to badger you, but Google and Microsoft spend a lot more money on lobbying, and we do offer special treatment for regular donors.
The second is a promise to stop holding Congressional tax investigations. The IRS never has enough to do, and they are pretty entrepreneurial. I’m sure they are competent to handle all of this on their own without our help or oversight.
Finally, I want to emphasize just how much we appreciate your willingness to comply with your legal obligation to pay taxes. If you think about it, taxes are really just a form of charitable giving. Our goal is to reach a high level of participation from both American and Irish corporations, and your donation in any amount makes a difference. We also welcome any in-kind donations in the form of iPhones and iPads. My daughter knows how to use them.I hope you can forgive us. In hindsight, we were cavalier in our efforts to find out more about how our tax system is or isn’t working. We know now that it’s not really any of our business, and promise to base any future tax legislation on naïve intuition and wild rhetoric instead of facts.
Your humble servants,
The United States SenateP.S. At your earliest convenience, please let us know what stance we should take on immigration policy.
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