Missouri Legislature overrides Nixon’s tax cut veto
In the most far-reaching move since Republicans took control of the Missouri Legislature 12 years ago, the House mustered the two-thirds majority needed to override a veto by Governor Jay Nixon, a Democrat, giving Missourians their first state income tax cut in nearly a century, Virginia Young of the St. Louis Post-Dispatchreported.
“Today, we lived up to the promise to Missourians, to provide hardworking Missourians some of their money back so they can grow their families, their farms, and their small businesses,” said state House Speaker Tim Jones (R-Eureka), according to the article.
The vote was 109 to 46, with Representative Keith English (D-Florissant) walking into the chamber at the last moment to provide the pivotal vote. The Senate had voted for the override Monday on a straight party-line vote of 23 to 8.
In five annual steps beginning in 2017, the bill will cut the state’s top personal income tax rate to 5.5 percent from 6 percent and provide a new 25 percent deduction for business income reported on individual returns, according to Young.
The cuts will be implemented only if state general revenue grows by at least $150 million a year compared with the high-water mark of the previous three years.
Statements of Administration Policy: HR 4438 American Research and Competitiveness Act of 2014
The Office of Management and Budget released the following statement yesterday in opposition of a House bill that would permanently extend a popular corporate research and development tax credit:
The [Obama] administration supports enhancing, simplifying, and making permanent the research and experimentation credit (R&D credit), and offsetting the cost by closing tax loopholes. Making this credit permanent will increase its effectiveness, since it will allow businesses to make investments and create jobs today confident that they will continue to benefit from the credit in the future. Moreover, four-fifths of the R&D credit is attributable to salaries of US workers performing US-based research – meaning that the credit helps create high-skilled jobs, as well as encouraging new innovations and future productivity.
However, the administration strongly opposes House passage of HR 4438, which would permanently extend and expand the R&D credit without offsetting the cost, adding to long-run deficits.
By making the R&D credit permanent without offsets, HR 4438 would add $156 billion to the deficit over the next 10 years. Moreover, if this same, unprecedented approach of making major traditional tax extenders permanent without offsets were followed for the other traditional tax extenders, it would add $500 billion or more to deficits, wiping out most of the deficit reduction achieved through the American Taxpayer Relief Act of 2013. Last month, House Republicans themselves passed a budget resolution that required offsetting any tax extenders that were made permanent with other revenue measures.
The deficit increase in HR 4438 is more than 15 times the cost of the proposed extension of emergency unemployment benefits, which Republicans are insisting by offset, and more than double the discretionary funding increases for defense and non-defense priorities such as research and development in the Bipartisan Budget Act of 2013, which were offset. House Republicans also are making clear their priorities by rushing to make business tax cuts permanent without offsets even as the House Republican budget resolution calls for raising taxes on 25 million working families and students by letting important improvements to the Earned Income Tax Credit, Child Tax Credit, and education tax credits expire.
The administration wants to work with Congress to make progress on measures that strengthen the economy and help middle-class families, including pro-growth business tax reform. However, making traditional tax extenders permanent without offsets represents the wrong approach.
If the president were presented with HR 4438, his senior advisors would recommend that he veto the bill.
Obama SAP taps “I was for it, before I was against it” mentality: White House’s tax hypocrisy reaches all-time high
As you would expect, the House Ways and Means Committee wasn’t too happy with the statement from the White House and issued its own statement yesterday:
Today, the National Association of Manufacturers, Chamber of Commerce, R&D Credit Coalition, and Biotechnology Industry Organization – representing thousands of small and large US businesses – issued their support for HR 4438, a bipartisan, permanent extension of the research and development (R&D) tax credit. In their call for a permanent R&D credit, these groups note that the legislation will make the United States more globally competitive, create jobs, and allow US companies to innovate and invest in America.
Unfortunately for US companies and their workers, despite the Democrats' support of extensions of the R&D credit since 1981, some are now voicing their opposition.
Today, the White House issued a statement suggesting that President Obama would veto HR 4438 because it has not been paid for by raising taxes. Apparently the White House has forgotten that tax extenders have historically not been paid for. In fact, in both 2006 and 2008, then-Senator Obama voted to extend the R&D tax credit without paying for it. And, in 2010 and 2013 he signed into law unpaid-for extensions of tax extenders. Most recently, the Democrat-controlled Senate Finance Committee recently approved an $85billion tax extender package that was not paid for, a position that Democrats have maintained for years.
White House threatens veto of GOP tax bill
The House is expected to vote Wednesday on the proposed extension of the credit, Bernie Becker of The Hill reported yesterday. It is one of six tax breaks that expired at the end of last year – commonly called extenders because they must be renewed by Congress – that Republicans on the Ways and Means Committee want to extend for the long term.
Top House Democrats have already said that they would urge their colleagues to vote against extending the credit, saying it’s hypocritical for Republicans to allow this measure through without paying for it, Becker wrote. Only one Democrat, Representative Earl Blumenauer (D-OR), voted to extend the credit when the Ways and Means panel considered it last week.
But Becker noted that the vote could also put some Democrats in an awkward spot. Nine Democrats have signed on to co-sponsor the extension of the R&D credit, which was introduced by Representative Kevin Brady (R-TX), a senior Republican on the Ways and Means Committee.
Lawmakers struggle over web tax
Millions of Americans could be threatened with new state taxes on their Internet access this fall, as Congress struggles with how to extend an expiring moratorium on such levies, John D. McKinnon of the Wall Street Journalwrote yesterday.
The 15-year-old Internet Tax Freedom Act prevents most states and local governments from taxing access, and the moratorium enjoys widespread bipartisan support in Congress, he noted.
But the tax reprieve is set to expire on November 1, and so far, lawmakers have taken few concrete steps to re-enact it as they debate whether to combine it with a separate, more controversial bill. That measure would allow states to collect sales tax from out-of-state online merchants.
Proponents hope that combining the two bills will increase pressure on Congress to negotiate a compromise on the long-delayed online sales tax legislation. However, combining the two issues could create a legislative logjam, McKinnon wrote. Anticipating the possibility of a standoff, many telecommunications companies already are preparing to send out notices to their customers in July or August, notifying them that they might have to start paying state taxes on their Internet access if the moratorium expires.
Democrats: No IRS targeting witnesses indicated scandal behind efforts
Josh Hicks of the Washington Postreported yesterday that none of the 39 federal officials and employees who talked to congressional investigators about the IRS’s targeting scandal provided evidence of political motivation or White House involvement in the efforts, according to a new report from House Democrats.
The minority side of the House Oversight and Government Reform Committee said in its analysis that the interviews instead support recent calls for clearer rules on how to deal with politically active tax-exempt groups, which were at the center of the IRS controversy.
Hicks wrote that the report includes 54 pages of excerpts from the committee’s discussions with IRS and US Treasury Department employees, saying the snippets represent all of the publicly released portions of the interviews.
“None of the 39 witnesses reported any political motivation on their part, and none of the 39 witnesses reported ever observing any other individuals involved in the screening process acting on behalf of the White House or out of any political motivation,” the report said, according to the article.
Democrats on the House Oversight Committee have accused the panel’s chairman, Darrell Issa (R-CA), of releasing cherry-picked excerpts from the congressional interviews to suggest that the White House encouraged the targeting campaign as a way of stifling President Obama’s critics during the past two elections, the article stated.
The absurdly simple way to fix the corporate tax system
In his Tax Guycolumn for MarketWatch, Bill Bischoff believes he has an easy way to fix the US corporate tax system – but it would take political courage.
“The solution is as simple as the problem: permanently cut the federal corporate rate to somewhere around 15 percent to encourage American companies to locate more operations, and more employees, right here in the United States,” he wrote. “But wait? Wouldn’t that cripple corporate tax revenues and make the already-huge federal budget deficit even bigger? I doubt it. Corporate tax collections would almost certainly go up, because 15 percent of a big and growing pie is more than 35 percent of a smaller and ever-shrinking pie. Remember: The effective US corporate tax rate was only 12.6 percent in 2010 because corporations do whatever they can to avoid paying taxes here. With a much-lower US tax rate, that behavior could be greatly reduced.
“Plus if we add good-paying jobs in this country, personal federal income tax collections will go up,” Bischoff added.
He also believes that if the tax code was simplified, billions of dollars worth of corporate welfare in the form of “crazy” tax loopholes and subsidies would be eliminated.
Millionaires say inequality a problem, support higher taxes to fix it
Walter Hamilton of the Los Angeles Timeswrote yesterday that a majority of US millionaires think rising income inequality is a “major problem” and almost two-thirds favor increasing taxes on the wealthy and raising the minimum wage to reverse the trend, according to a new survey by CNBC.
However, the views of the wealthy on these hot-bottom topics vary significantly by political affiliation, suggesting millionaires are as split as the rest of the country between Democratic and Republican beliefs.
For example, 51 percent of all millionaires surveyed believe inequality is a problem. But while 86 percent of Democrats are worried about the nation’s sizable income gap, only one in five Republicans share the concern.
Nearly four in five Democrats support higher taxes for the wealthy and a boost in the minimum wage, Hamilton wrote. However, barely three in 10 Republicans favor higher taxes and less than four in 10 approve of a wage hike.
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About Jason Bramwell
Jason Bramwell is a staff writer and editor for AccountingWEB. He has nearly 20 years of experience in print and online media as a journalist and editor.