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Bramwell's Lunch Beat: ‘Cadillac Tax,’ Tax Extenders, BEPS Hearings

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Dec 2nd 2015
Staff Writer and Editor AccountingWEB
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Lawmakers seek late deal to scale back ‘Cadillac tax'
Lawmakers are making a late push to repeal or scale back Obamacare's “Cadillac tax” by the end of the year, eying inclusion of changes in a broader tax package, wrote Peter Sullivan of The Hill. But lawmakers in both parties say the missing piece is hearing from the White House, as it is unclear whether President Obama would veto the whole package, jeopardizing other tax breaks that lawmakers are eager to pass. Sen. Dick Durbin (D-IL), the Senate's No. 2 Democrat, said on Tuesday that he hopes to make changes to the tax, and those modifications could be included in the end-of-year package of tax breaks known as tax extenders. “I hope we can work something out and I don't know what it might be,” Durbin said. “We're waiting to hear from the White House if they're open.” The White House has made it clear that it wants to keep the tax, but the pressure from Congress is building for some sort of compromise.

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A ‘tax extenders' bill that could make fiscal matters worse
The Washington Post editorial board wrote that a pending bipartisan agreement on Capitol Hill to make certain tax provisions permanent would increase the future deficit. But this revenue loss on paper reflects artificial “scoring” rules, not fiscal reality. “You could argue this aspect of the emerging deal helps ensure a future tax reform effort proceeds from more honest budget assumptions,” the Post wrote. “One problem, though, is that lawmakers might make some tax breaks more generous while they acknowledge their permanence. If the deal includes the plus-size research and development credit that passed the Republican-controlled House, the national debt will grow $70 billion more (over 10 years) than it would if the deal simply made the current version of the credit permanent. Fiscal responsibility would require paying for any bill that comes out – if not all of it, then at least the costs of such expansions. At the moment, however, not even that minimal level of responsibility is on the table.”

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Capitol Hill takes fresh look at profit shifting
Emily Chasan of CFO Journal wrote that the Senate Finance Committee and the House Ways and Means Committee's subcommittee on tax policy held hearings on Tuesday to examine the Organization for Economic Cooperation and Development's (OECD) new proposals on tax base erosion and profit shifting (BEPS). The hearings came amid the backdrop of Pfizer Inc.'s planned $150 billion merger with Allergan PLC that would turn the drug behemoth into an Irish company in the largest tax inversion ever. “Inversions like these are some of the clearest examples of base erosion and are largely motivated by tax considerations, as American companies determine that they can reduce their overall operating costs if they become foreign corporations,” said Senate Finance Committee Chairman Orrin Hatch (R-UT). Hatch added that he hoped the Obama administration would work with Congress on negotiations stemming from the BEPS deal.

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McDonald's said to face EU probe into Luxembourg tax deals
McDonald's Corp. faces a European Union (EU) investigation into its fiscal arrangements with Luxembourg, weeks after regulators ordered Starbucks Corp. and a Fiat Chrysler Automobiles NV unit to repay millions of euros of unfair tax subsidies, wrote Aoife White and Gaspard Sebag of Bloomberg. The European Commission is poised to open a formal investigation as soon as Thursday into whether Luxembourg breached state-aid rules. The move would escalate its probe into sweetheart tax deals for companies across the EU that's also embroiled Apple Inc. and Amazon.com Inc. McDonald's tax affairs have come under scrutiny amid a global crackdown on corporate tax avoidance as governments struggle to increase revenue and reduce deficits. The company's French offices were inspected by the country's fiscal authorities in 2013 and the EU inquired about McDonald's taxes in Luxembourg.

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Quick Links:

  • When small accounting firms team up with other accounting firms (Forbes)
  • Why small accounting firms are missing the wealth management opportunity (Forbes)
  • 2016 will be harder on small accounting firms than 2015 (Forbes)
  • IRS poised to veto passports (Forbes)
  • How Jeb Bush's tax plan would help millennials rise (Forbes)
  • 2016 kiddie tax rates, rules and ways around it (Forbes)
  • Defined-benefit plans provide huge tax breaks but require legwork (Forbes)
  • Ghosts of tax shelters past and the return of the listed transactions (Forbes)
  • Wesley Snipes sues IRS over abusive $17.5 million tax bill, false promise of fresh start (Forbes)
  • End the temporary tax break charade (US News and World Report)
  • Why John Kasich worries the GOP's ‘fantasy tax plans' will allow Hillary Clinton to win (Washington Post)
  • A simple fix for big money in politics: Tax campaign spending (Washington Post)
  • Planning to go overseas to beat the tax man? You'd better go now. (Washington Post)
  • Ways and Means chair's call to action on taxes (The Hill)
  • R&D, jobs bear the brunt of Affordable Care Act tax (The Hill)
  • Congress should embrace the international consensus to crack down on corporate tax avoidance (Tax Justice Blog)

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