09 September 2016 EY Center for Tax Policy: This Week in Tax Reform for September 9 Congress in: The House and Senate are in session. House action on the continuing resolution is possible. The Ways and Means Committee could hold a miscellaneous tax bill markup, possibly on September 14, and may also meet with Secretary Lew. Ways and Means Oversight hearing: On September 13 (at 10 a.m.), the House Ways and Means Oversight Subcommittee will hold a hearing entitled "Back to School: Review of Tax-Exempt College and University Endowments," to include discussion of how higher education tuition increases so rapidly and tax-exempt endowments. Congress returns: The House and Senate returned to session following a seven-week summer recess, with a focus on a continuing resolution to extend government funding beyond September 30 — likely into December, when Congress is expected to reconvene for a lame-duck session — as well as funding to combat the Zika virus. The two priorities could be combined into one package. Additionally, the European Commission's recent announcement on taxes owed by Apple and Treasury's proposed Section 385 debt-equity regulations continue to be topics of discussion in Congress, with Secretary Jack Lew reportedly set to meet with the House Ways and Means Committee on the regulations the week of September 12. There are also markups brewing in each of the tax committees, as the Ways and Means Committee prepares to consider legislation to exempt from tax income associated with winning Olympic medals and possibly several other miscellaneous tax proposals, and the Senate Finance Committee plans to consider various pension-related issues. Provisions addressing tax issues like the group of tax provisions expiring at the end of 2016 and technical corrections are unlikely to be included in the near-term continuing resolution, but may be addressed later in the year. "We'll need to wait until lame duck to see any tax legislation," said Ways and Means Committee member Lynn Jenkins (R-KS), Tax Notes reported on September 8. Warren op-ed: Reactions to the European Commission's announcement regarding Apple continued with a September 8 New York Times op-ed from Senator Elizabeth Warren (D-MA), who called the announcement "the latest sign that multinational corporations are running out of places to hide from paying taxes" and an opening for tax reform. Senator Warren said foreign developments are increasing pressure on Congress to cut corporations "a new sweetheart deal" in tax reform, but lawmakers should instead take the opportunity to collect more revenue from corporations and to "level the playing field for small businesses" who have fewer tax planning techniques available to them. She criticized "tax reform proposals that offer a lower permanent tax rate for earnings generated abroad" than for US earnings. "Preferential tax treatment, either through special rates or deferred due dates, creates a huge financial incentive for American companies to build businesses and create jobs abroad rather than in the United States. Our tax code should favor jobs and businesses at home — period," Warren said. More broadly, she said Republican arguments that increasing corporate taxes will push companies out of the United States is weakened as other nations take steps prevent tax avoidance. "We have the leverage to tighten our tax code because these companies want what America offers: the world's wealthiest consumers, the world's best work force, the world's most reliable legal system and the world's deepest capital markets," Warren said. Obama G20 remarks: During a press conference following the G20 summit in China September 5, President Obama said tax avoidance and evasion is an issue that leaders have advocated for attention from the G20 and OECD, and is "a complicated piece of business." The President said G20 leaders did not discuss specific companies during the summit, and explained his concerns with respect to State aid investigations by saying: "The one thing that we have to make sure we do is to move in concert with other countries, because there's always a danger that if one of us acts unilaterally, that it's not just a matter of a U.S. company being impacted, but it may also have an effect in terms of our ability to collect taxes from that same company. And so you might end up with a situation where they pay into Europe, and the U.S. Treasury is shortchanged. So if there is not some coordination between various tax authorities, you get a problem there." More broadly, President Obama said there must be some coordination about other countries "racing to the bottom" in how they enforce their tax policies and leading to "revenue-shifting and tax avoidance" among US companies. "So this is not something that I think is going to be sorted out overnight," he said. Wyden retirement draft: On September 8, Senate Finance Committee Ranking Member Ron Wyden (D-OR) released a discussion draft addressing retirement savings issues, including prohibiting further contributions to a Roth IRA if its total value exceeds $5 million. The draft, which includes some proposals put forward by President Obama, joins discussion drafts released by Wyden earlier this year addressing depreciation and the taxation of derivatives. The Retirement Improvements and Savings Enhancements (RISE) Act draft would also: — allow employers to make "matching" contributions to a 401(k) retirement plan while their employees make student loan repayments; "For years, corporate tax dodgers have taken full advantage of all the benefits of being American companies, while searching out every possible way to avoid paying American taxes. Now that other leading countries are starting to get tough on tax enforcement, these tax dodgers suddenly want to move their money back to the United States. When they do, they should pay their fair share, just as working families and small businesses have been all along." — Senator Elizabeth Warren (D-MA), September 8 New York Times op-ed
Document ID: 2016-1527 | |||||
