House Judiciary Committee to vote on Internet tax bill
On the Hill, a vote on internet tax freedom.聽The House Judiciary Committee聽聽to prevent states and cities from taxing internet access tomorrow. The 鈥溾�� has bipartisan support in both the House and Senate. State and local internet taxes have been prohibited since 1998, but聽. This bill does not curb the ability of states to tax online retail sales.
Overseas, there are two trillion untaxed dollars.聽Bloomberg News鈥櫬�聽that US companies have about $2 trillion in profits kept off shore. Once repatriated, or brought back to the US, the profits would be subject to the US corporate income tax rate of 35 percent. To avoid this many US companies are taking over companies in countries with far lower corporate tax rates:聽 鈥淚nversions鈥� have grown over the last two decades. They represented an average of 7 percent of overseas transactions worth $250 million or more between 1995 and 2010. Since then, they represent 15 percent of those deals.
But Medtronic says it鈥檚 not about the taxes.聽Minnesota-based Medtronic is the聽聽to set up an inversion with its $42.9 billion purchase offer for Ireland-based Covidien. With an Irish legal address, Medtronic鈥檚 $20.5 billion in untaxed offshore earnings would be accessible without US repatriation and taxation. Medtronic鈥檚 CEO Omar Ishrak says the company is not trying to avoid higher taxes: 鈥淲hat we will have is access to the cash generated outside the US. We鈥檒l use that to invest much more aggressively in the US.鈥� Covidien, by the way, is not run from Ireland but from Mansfield, Massachusetts. It incorporated in Ireland in 2009.
On Thursday: an IRS-TPC Research Conference.聽鈥淎dvancing Tax Administration,鈥� a day-long conference on June 19,聽聽taxpayer compliance costs and tax administration, innovative enforcement strategies, tax uncertainty and corporate compliance, and taxpayer behavior. If you鈥檙e not an IRS employee,聽. If you are, register by email to the NHQ Office of Research. The IRS email link and the link to the event鈥檚 live聽.
