United States: Tax Policy Update - June 30, 2015

NUMBER OF THE WEEK: 65 percent.

The top estate tax rate under Democratic presidential candidate Bernie Sanders' proposal to tax the wealthiest Americans and narrow income inequality in the U.S. The proposal splits the estate tax into four brackets:

Estate Value Proposed Tax Rate
>$3.5 million 45%
>$10 million 50%
>$50 million 55%
$1 billion or more 65%

This ambitious and aggressive proposal would receive little attention in the Republican-controlled Congress, however. Republicans in both chambers have made no secret of their desire to repeal the estate tax entirely. The House of Representatives has already passed legislation to repeal the tax back in April. Nevertheless, Sanders' proposal may push other presidential candidates to put forth their own ideas to address the income inequality problem—especially Democratic frontrunner Hillary Clinton. Among the Republican hopefuls, Senator Marco Rubio was the first to announce his support for repealing the estate tax. Read more here.


The Road Goes on Forever...But the Funding's About to End. Lawmakers will return from recess next week with just over three weeks left to come up with a funding solution for the Highway Trust Fund (HTF), which is set to run dry at the end of July. Finding the necessary offsets for a long-term bill has proved exceedingly difficult, with deep intra-party divides over options like raising the gas tax or incentivizing the repatriation of multinationals' foreign earnings via a one-time "tax holiday." The Senate Finance and House Ways and Means Committees held a total of four hearings this month to examine various aspects of the funding question, but none of those hearings appear to have moved the needle toward agreement on a solution.

In an ideal world, Senate Republicans would like to find enough offsets to pay for a two-year extension of the HTF, but that would require coming up with around $35 billion. House Republicans think a one-year extension with a price tag of roughly $19 billion is more feasible, but, even then, lawmakers are struggling to cobble together enough offsets. For now, Republicans have reportedly identified a broad assortment of tax compliance and administrative changes that raise some revenue, though not enough for even a one-year extension. Republicans are looking to Senate Democrats to come up with either revenue changes or spending cuts they could live with to get an agreement across the finish line.

Permanent Extension of Bonus Depreciation Introduced in Senate. Senator Pat Roberts (R-KS) introduced a bill (S.1660) last week that would permanently extend bonus depreciation, allowing businesses to deduct half the cost of new equipment and property expenses immediately. "This legislation will provide much needed certainty in the tax code so businesses can better plan investments that create more jobs and growth in our communities," Roberts said in a press release. Based on a 2014 Joint Committee on Taxation estimate of a similar proposal, Roberts' bill would cost more than $250 billion over 10 years. The permanent extension of bonus depreciation has attracted its fair share of supporters and detractors. Opponents argue that a permanent extension would eliminate its short-term incentive for investment, and therefore, weaken its effectiveness. Supporters, such as the Tax Foundation and Heritage Foundation, argue that permanent extension would actually boost economic output.

Roberts' bill is not expected to get far in the legislative process this year. A similar bill (H.R. 2510) was introduced in the House in May by Congressman Pat Tiberi (R-OH) but has not received any further action. Senate Finance Chairman Orrin Hatch (R-UT) is generally reluctant to address permanent extenders outside of tax reform.

Baldwin, Levin Introduce Legislation to Close "Carried Interest Loophole." Senator Tammy Baldwin (D-WI) and House Ways and Means Ranking Member Sandy Levin (D-MI) have teamed up to put an end to the capital gains treatment of carried interest. Baldwin and Levin introduced the Carried Interest Fairness Act of 2015 (H.R. 2889) which would treat carried interest compensation as ordinary income for tax purposes, rather than at the 20 percent capital gains rate. According to a fact sheet prepared by the Ways and Means Committee Democratic Staff, the legislation would not affect capital gains income earned from direct investments: "The capital gains rate will continue to apply to the extent that a manager's allocation of capital gain income represents a return on capital they have actually invested in the partnership." Read more here.

Proposed changes to carried interest treatment have popped up in the President's budgets and in the tax reform proposal released by former House Ways and Means Chairman Dave Camp (R-MI) last year. The Joint Committee on Taxation scored the President's proposal as raising more than $17 billion over the 10-year budget window, while Camp's pared-down proposal was projected to raise only $3.1 billion.


Update on the Forthcoming IRS and Treasury Guidance Projects. Officials at the IRS and Treasury Department recently discussed the agencies' priority guidance projects. The rules on qualifying income of publicly traded partnerships and rules on determining distributive shares when there are changes in a partner's interest are near completion, according to Curtis Wilson, IRS associate chief counsel of the Passthroughs & Special Industries division. Proposed rules on partnerships remain a continued interest for the IRS and Treasury, but disguised partnership sales and tax treatment of partnership liabilities remain in developmental stages. Gerson indicated that the New York State Bar comments on the latter project will be adopted "in one form or another." The letter from May 2014 can be found here.

European Parliament to Probe Further Into Tax Agreements. A special tax committee of the European Parliament will soon meet with executives of multinational companies on the tax benefits received from Luxembourg. Company executives from Airbus, BNP Paribas and Total, will discuss how they pay corporate taxes and whether base erosion and profit shifting restrictions are needed. Executives from many other well-known multinational corporations have declined to meet with the tax committee. The committee was initially established when it was uncovered that Luxembourg entered into over 300 tax agreements with multinational corporations. A final report is expected from the committee in conjunction with its plan, announced last week, to bring about a common, consolidated corporate tax base.

EU Study Indicates Patent Box Coupled with Modified Nexus is Best. As the U.S. considers intellectual property tax incentives, a study released by the European Union provides that a patent box "[does] not necessarily serve the goal of boosting R&D activity." The OECD expects to use a modified nexus approach in its recommendations, much like the agreement adopted between the U.K. and Germany. The modified nexus requires a certain level of R&D to be conducted with in the country to enjoy the tax benefits of a patent box regime. U.S. lawmakers have recently shown increasing interest in developing a patent or innovation box regime, and we expect to see some variation of the idea proposed in international tax legislation expected later this summer from Rep. Charles Boustany (R-LA).


  • Senate Finance Ranking Member Ron Wyden (D-OR) introduced the Offshore Reinsurance Tax Fairness Act aimed to prevent abuse of the passive foreign investment company rules. Read more here.
  • Congressman George Holding (R-NC) introduced the Tanning Tax Repeal Act of 2015, which would eliminate the 10 percent excise tax on indoor tanning services. Read more here.
  • The Senate Finance Committee's Tax Reform Working Groups are now expected to deliver their recommendations on July 7. Recommendations from the working groups were originally due at the end of May, but the deadline has been extended twice already. Of the five working groups, the international tax group reportedly will offer the most substantive policy offerings.


Wednesday, 7/1

International Tax Dialogue — Paris
The European Commission (EC), Inter-American Development Bank (IDB), International Monetary Fund (IMF), Organization for Economic Co-operation and Development (OECD), World Bank Group and Inter-American Center of Tax Administrations (CIAT) host the International Tax Dialogue initiative, July 1-3. The ITD aims to encourage and facilitate discussion of tax matters among national tax officials, regional tax organizations, international organizations and other key stakeholders. Read more here.

Have a Happy and Safe Fourth of July!

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.

In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

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.


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.


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 by clicking here .

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.


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.


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.


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.


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 .


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.