Europe keeps up the pressure
With help from Heather Caygle and Toby Eckert
YOU WANT FIREWORKS?: Well, hopefully you were in Brussels for Tuesday’s European Parliament hearing featuring Apple and other corporate heavyweights.
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Apple’s case, according to POLITICO Europe’s Nicholas Hirst, as it battles allegations that it has a sweetheart tax deal with Ireland: No one in the world pays more than we do. Julia Macrae of Apple said the company’s worldwide tax bill was around $14.7 billion, though she declined to give a figure for Europe or any individual countries on the continent.
Google and McDonald’s also talked up the size of their tax bills, but members of Parliament seem unimpressed. “Do you exploit to the maximum all the loopholes in legislation?” asked Elisa Ferreira of Portugal.
All in all, it’s another sign that the European tax investigations — which House Ways and Means Chairman Kevin Brady called a “fairly naked revenue grab” this week — are going to continue to put pressure on American policymakers even as the U.S. remains in the throes of the presidential election.
IT’S WEDNESDAY. One more day to get your NCAA bracket in. (Not on company time of course!)
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ABOUT EUROPE: The Business Roundtable, citing an economy it still sees as performing below full throttle in this year’s first quarter, called once more for “modernizing America’s outdated business tax system.” But asked specifically about the current efforts at international tax reform, BRT Chairman Doug Oberhelman brought up the string of corporate inversions in recent months and the difficulties companies have in accessing foreign profits. “We ought to put all the pieces on the table and solve it,” said Oberhelman, the Caterpillar chief executive.
So what exactly does that mean? Remember that Oberhelman brushed aside the idea of international reform last month, while a lobbyist for a BRT member company suggested to Morning Tax on Tuesday the group isn’t doing enough to engage congressional leaders and tax writers on the issue. Matt Miller, a BRT vice president, further clarified to Morning Tax that the “full solution” on taxes needs to be a comprehensive business overhaul, but that the roundtable was also working with the Hill on international matters right now. “We’re not closing any doors,” Miller said. “We’re working with them on everything.”
BUDGET OUTLOOK: Cloudy. Very cloudy, ahead of today’s House committee markup. “The patient is not totally dead – but it’s fair to say the shock plates are firmly implanted on its chest. Top Republicans believe the GOP will be able to advance the 2017 budget out of Rep. Tom Price’s (R-Ga.) Budget Committee, but whether it will ever be able to make it to the House floor is an open question,” POLITICO’s Jake Sherman and Lauren French report. http://politico.pro/1UeHkKH
And about that budget: Ben Weyl and Matthew Nussbaum report it’s pretty boilerplate when it comes to taxes — a general call to arms on the “lowering of rates and a consolidation of tax brackets,” and a move to a territorial system, for instance. http://politico.pro/21uijdz
Finally, a reminder that Ways and Means will be considering the related measures today that, among other things, wring savings out of keeping undocumented workers from claiming the child tax credit.
A JUICY STORY … FROM THE FDIC?: Not an everyday occurrence. But the WSJ reports that the FDIC’s watchdog is knocking the agency for an “abusive” approach that led to three banks no longer offering customers the chance to borrow against their tax refund. The inspector general’s report, to be discussed more fully at a House hearing today, found that one since-departed attorney “abusively threatened” the banks. The FDIC responds that its response was justified due to those loans’ risks. More from WSJ: http://on.wsj.com/1pmpatg
WHAT’S GOING ON WITH THE FAA?: Pro Transportation’s Heather Caygle has the preview of today’s Senate markup, where Commerce Committee leaders from both parties want to escape with little drama. The Senate bill would give the FAA at least a year’s reprieve, and the House stopgap plan to extend aviation taxes for longer than aviation policy could allow for an extension to originate in the Senate, Heather writes.
Senate Finance Chairman Orrin Hatch said Tuesday he could live with any solution from the Commerce Committee. But there are some pockets in the Senate questioning whether pushing back aviation taxes for an entire year and separating the taxes from the policy, like the House does in its stopgap, will put enough pressure on Congress to get a longer-term fix in place.
** A message from Intuit Tax and Financial Center: Across the nation, there’s a growing urgency for a more sweeping overhaul that simplifies the tax system and compliance for individuals, families and small business. Tax simplification should lead the tax reform agenda. It’s in our national interest. More: http://bit.ly/1UsJkO3 **
EXPECT DELAYS: And we’re not talking about the Washington Metro here, people. Every state that has an income tax — and that’s all but seven — are facing delays in sending out refunds, Tax Analysts reported, in just the latest sign that identity theft is only growing as a problem for tax administrators. Those delays haven’t gone unnoticed either, with Tax Analysts noting that hundreds of Twitter users have been complaining online about not getting their refund.
Our Brian Faler looked at this same issue more than a month ago, for those who want a refresher: http://politico.pro/1NUD6PG
NOT A GOOD TIME TO BE VALEANT: The pharmaceutical company, already facing a federal investigation, announced Tuesday that it was changing its tax reporting standards — in a way that will drag down its per share earnings, according to the WSJ. Company officials put on a brave face after saying that Valeant would stop taking into account tax credits when reporting its taxes. But as the WSJ noted, Robert Willens, a tax consultant, said “the move suggests the company is no longer confident in its ability to generate taxable income.” http://on.wsj.com/1XtuIgX
INTERNATIONAL UPDATE —
BLACK GOLD LOSES LUSTER: Kuwait has become just the latest Mideast oil producer to propose sweeping economic reforms as a result of low oil prices, including a 10 percent corporate tax. The proposal is included in a document outlining other reforms, including the privatization of some government-run services, the AP reports. “Government revenue fell by 60 percent last year due to lower oil prices. Kuwait projects a $40 billion budget deficit for the coming fiscal year,” the story noted. The plans surely won’t sit well with the average Kuwaiti. “The reining in of generous benefits is sensitive in the Gulf, where citizens are accustomed to free health care, tax-free incomes and government subsidies that keep prices low.” http://bit.ly/1WolAtI
STATE NEWS —
ROUGH RIDE FOR NORTH DAKOTA: Don’t worry, Kuwait. You’re not alone. An oil industry official is warning North Dakota that more bad news is on the way when it comes to the effects of slumping oil prices on state revenue. Gov. Jack Dalrymple had already ordered budget cuts to help tackle a projected $1 billion shortfall. Now, state tax revenues are more than $6.4 million below projections for January and February, after oil price plunged to $40 a barrel, the Grand Forks Herald reports. Ron Ness of the North Dakota Petroleum Council told lawmakers they’ll soon be dealing with another $10 drop in the price. “I think it’s going to be more dramatic than what we’ve seen, and the next round’s going to be rough,” he said. State Rep. Chet Pollert estimated the state would be facing a shortfall of around $750 million in 2017. “So I guess we’ll have to hang onto the saddle.” http://bit.ly/1pJJx4f
WHAT’S IN A NAME? A lot, according to DraftKings, FanDuel and the Fantasy Sports Trade Association, which are facing an effort in New Jersey to impose the same 9.25 percent tax on their gross revenues that Atlantic City casinos pay on their winnings. The tax legislation doesn’t say whether the sites offer “games of skill” or “games of chance,” which would classify them as gambling, according to CBS New York. “And because of that, the companies oppose the bill, said A.J. Sabath, a representative of the firms and the trade industry. He said the bill as currently written would ‘create a significant level of uncertainty about the future of our industry in New Jersey.’” The bill’s sponsor, state Sen. James Whelan, is a former mayor of Atlantic City. He said he’s “not smart enough to know if it’s gambling or skill.” http://cbsloc.al/1RjEnbl
KILLJOYS: First a soda tax, now a candy tax. Some California lawmakers want to put a sales tax on candy and snack food, the Bay Area’s ABC 7 reports. That would reverse a 1992 proposition that repealed a similar tax. “Supporters suggest that by not taxing candy, the state is a de facto enabler of childhood obesity, diabetes and dental decay.” (Berkeley, of course, is the first — and so far only — city in the nation with a soda tax.) To be enacted, the legislation would not only have to pass the state Legislature with a two-thirds majority. It would also have to be approved by voters, channel 7 says. http://abc7ne.ws/22gSyzE
— New study: A universal child allowance could cut poverty by more than half in the U.S. http://bit.ly/1R1FeYI
— 2015 tax changes bottom line: $652 billion on to the deficit. http://politico.pro/1pn2zwP
DID YOU KNOW? Jamestown, N.D., is home to the world’s largest monument to the buffalo — 26 feet tall, and 60 tons.
** A message from Intuit Tax and Financial Center: There is a strong consensus that better tax policies are needed to encourage economic growth, create more jobs and make the United States more competitive. We agree, but the discussion shouldn’t stop there. Virtually no one believes the bloated tax code is in good shape and doesn’t need to be slimmed down. Its complexity undermines important national economic policy objectives for our country, starting with better financial health for individuals and families. A system that helps all taxpayers and small businesses truly understand their taxes and make better financial decisions will ultimately help grow our economy. An engaged public will also make our system of voluntary tax compliance more successful and effective. Let’s at least start by simplifying tax compliance for the average citizen. It would make a meaningful difference in the lives of every American. More: http://bit.ly/1UsJkO3 **