Bramwell's Lunch Beat: Cadillac Tax, Transit Tax Break, FATCA Suit Update

Bipartisan senators raise pressure on Obamacare ‘Cadillac tax'
A new bipartisan effort to cancel Obamacare's so-called “Cadillac tax,” the 40 percent levy on high-cost health insurance plans, adds a wrinkle to an impending fight in Congress, wrote Richard Rubin of Bloomberg. The repeal bill unveiled on Thursday in the Senate by Sen. Dean Heller (R-NV) and Sen. Martin Heinrich (D-NM) stands little chance of becoming law soon, especially with Barack Obama in the White House. Yet it demonstrates lawmakers' frustration with the tax, which takes effect in 2018. “I have not seen a piece of legislation that brings more sides together,” Heller said, invoking a coalition of business groups and unions opposed to the tax. “I think we're going to see a breakthrough.” The tax applies to family healthcare coverage exceeding $27,500 and individual coverage exceeding $10,200, with low inflation adjustments intended to capture more people over time.

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FedEx says pilot union contract has ‘Cadillac tax' clause
FedEx Corp. has a plan to adjust its new pilots union contract if the “Cadillac tax” takes effect during the six-year contract, wrote Emily Chasan of CFO Journal. The company says it agreed with pilots that it would have a “process that will be used between the company and the union” if the Cadillac tax would impact the contract, FedEx General Counsel Christine Richards said during the company's first-quarter earnings call on Wednesday. “I expect there to be a lot of conversations and a lot of discussion about what's actually going to happen before the tax goes into effect in 2018, and this agreement specifically allows the flexibility for FedEx and the pilots to take advantage of whatever benefit might come from those larger national discussions,” Richards said. FedEx's pilot union endorsed a tentative contract agreement last month after years of negotiation that increased hourly pay.

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House panel clears tax breaks
The House Ways and Means Committee on Thursday cleared seven separate bills to either permanently restore temporary tax breaks or tweak Obamacare, most on party-line votes, wrote Bernie Becker of The Hill. The five tax breaks include incentives to allow companies to more quickly write off investments, preferences for multinational corporations on certain offshore incomes, and a deduction for teachers that use their own money for school supplies. All five incentives expire at the end of 2015 and are among the more than 50 temporary tax breaks known as extenders around Washington. Extending the five breaks permanently would pile more than $410 billion onto the federal debt. More than two-thirds of that total, roughly $280 billion, comes from a provision known as bonus depreciation that allows companies to write off half of certain purchases immediately.

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Reps push to increase transit tax break
A bipartisan group of 52 House members is pushing to double the amount of money that public transit riders can set aside from their paychecks for a tax break on their commutes each month, wrote Keith Laing of The Hill. The lawmakers said the transit tax benefit, cut from $245 to $130 last year by Congress, should be made equal to the $250 that US drivers are currently allowed to put aside pre-tax for parking rates. “As Congress seeks to improve our economy and create jobs, helping people get to work must be a priority,” the lawmakers, lead by Reps. Dan Lipinski (D-IL) and Pete King (R-NY), wrote in a letter to leaders of the House Ways and Means Committee. The reduction in pre-tax benefits came at the beginning of 2014 over the objection of public transit advocates who argued that a similar tax break for drivers who park in garages was left unchanged. Congress returned the transit tax break to its original levels during the lame-duck session after last November's election, but only for the few weeks that remained in 2014.

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Canada court dismisses tax suit against government
Canada's Federal Court has dismissed a lawsuit brought against the Canadian government for its role in implementing the US Foreign Account Tax Compliance Act (FATCA), a law designed to clamp down on tax evasion, wrote Rita Trichur of the Wall Street Journal. The lawsuit, which was filed by two American expatriates in Vancouver last year, had sought to challenge the Canadian constitutionality of a Canada-US intergovernmental agreement that forces Canadian banks to comply with FATCA. In their initial statement of claim, the plaintiffs had alleged that the Canada-US intergovernmental agreement violated certain provisions of the Constitution Act of 1867 and the 1982 Canadian Charter of Rights and Freedoms. But the Federal Court ruled on Wednesday that the collection and disclosure of personal and accountholder information by Canadian authorities didn't run afoul of the law.

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Quick Links

• CFOs weigh in on the Federal Reserve's decision to leave interest rates unchanged (CFO Journal)
• Carried interest tax break divides again, after Trump revives the issue (New York Times)
• Jeb Bush and tax: Good ideas come with familiar baggage (The Economist)
• Taxing times for Yahoo! and its Alibaba shares (Bloomberg)
• Italy's tax dodgers hide in a Swiss tax loophole (Bloomberg)
• Puerto Rico businesses fret tax hikes will erode profits (Reuters)
• EU widens corporate tax investigation (Wall Street Journal)