Congressional Democrats are cracking down on multinational corporations
The highway funding deadline could stretch well past October 29.听The Transportation Department says current听. That could give Congress an extra six months to finalize a long-term infrastructure funding plan鈥攂ut also remove the pressure for lawmakers to act any time soon. Senate Finance Committee Chair Orrin Hatch and Majority Leader Mitch McConnell oppose using corporate tax reform to pay for highway projects. House GOP tax writers, however, continue their work on international tax reform to pay for road improvements. As top House Ways & Mean Democrat Sander Levin told听The Hill,听鈥淯nfortunately the highway bill remains very much unresolved鈥� Very much unresolved.鈥�
As for cracking down on multinational corporations鈥�听tax practices: Congressional Democrats say the time has come.听In a letter,听听Secretary Jack Lew to publicly list multinationals that have moved their mailboxes abroad to reduce their tax bills. They also want Treasury to bar inverted companies from getting federal contracts, and demand executive action against听 foreign companies that load tax-deductible debt onto US subsidiaries鈥攁 practice known as earnings stripping.
The Senate Finance Committee has a bipartisan bill to fight tax fraud, among other things.听The Senate Finance Committee holds an听听on the measure. The听听raise about $286 million over ten years. It would require the IRS to inform taxpayers that their identity has been has been stolen and to ease some filing requirement if it has. It would require more鈥攁nd more secure鈥攅lectronic filing, give the agency new authority to regulate tax preparers (power that it lost in a recent court case), and increase penalties for identity theft. The measure would also make it possible for taxpayers to avoid having to file amended returns for small mistakes.
The European Union moves ahead on new tax rules.听EU Economics Commissioner Pierre Moscovici hopes members will solidify an agreement on the听听on European countries tax rulings by October 6. And so far, eleven European Union countries are willing to introduce a听. But a commission proposal for a Common Consolidated Corporate Tax Base could face opposition from some member nations and business groups. They see it as an attack on competition and national autonomy.
Childcare tax subsidies aren鈥檛 helping many poor parents, but they are helping wealthier families.听TPC鈥檚 Elaine听听new Treasury data on the Child and Dependent Care Tax Credit and the employer-provided childcare exclusion. The tax subsidies will deliver $5.3 billion in benefits to 6.9 million families in 2015. But only 20 percent will have an adjusted gross income under $40,000, and they鈥檒l only receive 15 percent of the subsidies. Meanwhile, 40 percent of families tapping the subsidies will have an adjusted gross income of at least $100,000. They鈥檒l receive 52 percent of the benefits.
Two new TPC papers shine a light on state finances.听鈥淭he Growth Mirage: State Tax Cuts Do Not Automatically Lead to Economic Growth,鈥� by William G. Gale, Aaron Krupkin, and Kim Rueben, shows how听听could instead force punishing spending cuts, as revenues fall and states confront borrowing constraints. They also show how recent state cuts have done little to drive economic growth. 鈥淕overning with Tight Budgets: Long Term Trends in State Finances,鈥� by Norton Francis and Frank Sammartino, examines the听. It gives special attention to the effects of the last recession. Both papers will be available at Thursday鈥檚 TPC and State and Local Finance Initiative听听at the Urban Institute.
Interested in subscribing to the Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day鈥檚 tax news?听听to get the Daily Deduction delivered to your inbox every morning. If you鈥檇 like to tell us about a new research paper or have any comments about our feature, write us at dailydeduction 鈥渁t鈥�听taxpolicycenter 鈥渄ot鈥�听org.
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