United States: Tax Policy Update - June 23, 2015

NUMBER OF THE WEEK: $3 Trillion. The projected addition to the federal deficit over 10 years if Republican presidential hopeful Rand Paul's flat-tax proposal went into effect, according to a Tax Foundation analysis of the plan. Paul has said he would cut spending to prevent deficit increases. His 14.5 percent flat-tax for corporations and individuals has also been criticized for hurting middle-income earners while reducing taxes for those with high incomes. Paul claims it would send the economy into overdrive, helping earners at all levels.

LEGISLATIVE LANDSCAPE

JCT Releases Repatriation Report. The Joint Committee on Taxation (JCT) published a report this week examining the various options for harnessing some cash flow from U.S. multinationals' earnings held abroad ahead of the House Ways and Means subcommittee hearing tomorrow on using a repatriation tax holiday to finance the dwindling Highway Trust Fund. House Republicans seem to be coalescing around repatriation as the short-term answer for propping up the trust fund until a longer-term solution can be developed, but it's unclear if Senate Republicans will go along with the approach. The Senate Finance Committee will explore ways to promote public-private partnerships in its highway funding hearing this week—an approach that has wide-spread support among House members. But, as Chairman Paul Ryan (R-WI) pointed out in last week's Ways and Means hearing on highway funding, there isn't time to implement grand new financing schemes before the trust fund is set to run out at the end of July. The only funding option he ruled out is any increase in the gas tax.

Ryan on Tax Reform: "Don't Fight For the Table Scraps." Chairman Ryan (R-WI) gave some insights into his views on tax reform—along with his dismal prognosis for comprehensive changes while President Obama remains in office—during a panel discussion with the Wall Street Journal last weekend. In addition to expressing serious concerns about international developments in tax policy led by the OECD's base erosion and profit shifting (BEPS) project, Ryan advised the business community to focus on the "broader goal" of lowering the corporate rate rather than "fight[ing] for the little tiny table scraps" of special provisions, or "carveouts." "Maybe your finances are rigged around this particular tax benefit or that particular tax expenditure, but know that at the end of the day here, we just want to get these rates down in the first place," Ryan said. Read and watch more here.

REGULATORY WORLD

CCCTB's Comeback. The European Commission announced that it will re-launch the Common Consolidated Corporate Tax Base (CCCTB) proposal as part of an action plan released last week. The CCCTB proposal would allow multinational corporations to calculate their corporate tax under a single set of tax rules for all EU member states. While the proposal doesn't establish a uniform tax rate across the states, it aims to ensure that there is a "fair payment of tax" where profits are earned and not based simply on where the corporations are located. Read more here.

U.S. Model Tax Treaty Expected Before Year's End. Treasury reinforced its request for comments on the model tax treaty provisions, which were released last month. Many of the provisions released stand inapposite to the recommendations resulting from the Base Erosion and Profit Shifting (BEPS) project. There are differences in defining special tax regimes and designing limitation of benefits provisions without a principal purposes test. International Tax Counsel Danielle Rolfe indicated that they are hoping to release the final revised U.S. Model Tax Treaty by the end of 2015, and that they seek input from the public regarding these provisions.

Risk-Based Audit to Focus on International Issues. Following up from last week's news that the IRS is forgoing the continuous audits of large companies, the risk-based audit approach will focus on international tax issues like transfer pricing. Recently-appointed Large Business & International Commissioner Douglas O'Donnell stated that continuous audits would be ongoing, but those companies under such audits would be based on risk and not just the size of the companies. O'Donnell noted that there would be some formal announcement signaling the end of the CIC program and ushering in guidance on risk-based audits.

EU FTT Design in French Vision. The much-anticipated European Financial Transactions Tax (FTT) may soon be taking form. On June 18, the 11 EU member states that agreed to impose the FTT indicated that the design of the tax is soon approaching. For years, the participants were unable to reach a consensus on which financial products to tax, and how to tax it. French Finance Minister Sapin stated that it "corresponds with the French vision of tax"--one being very broad, on both shares and derivatives, with a low rate. Sapin expects an announcement to come at some point in July. The original plan of implementing the FTT at the outset of 2016 still appears far-off, however.

LINE ITEMS

We've added a new section to the Tax Policy Update! The Line Items section will provide a quick roundup of the most recent and relevant tax news.

  • The House Judiciary Committee has approved the Business Activity Tax Simplification Act (H.R. 2584), Mobile Workforce and State Income Tax Simplification Act (H.R. 2315), and Digital Goods and Services Tax Fairness Act (H.R. 1643). The three bills would affect the ability of states to impose business activity taxes on out-of-state companies, income tax on certain nonresident workers, and multiple taxes on digital goods and services.
  • The Congressional Budget Office, along with the Joint Committee on Taxation, released an analysis of the budgetary and economic effects of repealing Obamacare. According to the report, repealing the law would increase the federal budget deficit by $137 billion. Read more here.
  • In a 280-140 vote, the House passed a bill that would repeal the 2.3 percent medical device excise tax. There is still no agreement on how to offset the cost of the bill ($24.4 billion). Senate Democrats have indicated they would not support the repeal without an offset. Read more here.
  • The European Commission published a list identifying 30 tax havens around the world. The list is updated once a year. In conjunction with the list, the EC also released its consultation document on corporate tax transparency in the European Union. The consultation is open for public comment until Sep 9, 2015. Read more here.

LOOKING AHEAD

Relevant Congressional Activity

Wednesday, 6/24

House Ways and Means Committee
The Subcommittee on Select Revenue Measures holds a hearing on "Repatriation of Foreign Earnings as a Source of funding for the Highway Trust Fund."

Thursday, 6/25

Senate Finance Committee
The full committee holds a hearing on "Unlocking the Private Sector: State Innovations in Financing Transportation Infrastructure."

Other Activity

Tuesday, 6/23

Brookings Institute
Brookings holds a forum on "Promoting Financial Well-Being in Retirement." U.S. Secretary of Labor Thomas E. Perez will deliver keynote remarks. The first panel will discuss a new paper by Professor Wesley Yin of UCLA that seeks to address challenges in the private long-term care insurance market.

Thursday, 6/25

World Bank and IMF
The World Bank and IMF host a seminar on "Macro, Trade, and Finance." For more details, click here.

Friday, 6/26

Extra-Territoriality and Financial Regulation
The Atlantic Council, the Institute of International Economic Law at Georgetown University, the University of Paris II (Assas), and Pennsylvania State University hold the second annual conference of the Journal of Financial Regulation to discuss ways regulators and economic authorities fashion rules that extend beyond their borders to achieve national and international objectives. Read more here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions