Congressional leaders have reached an agreement on a year-end tax package that would extend temporary perks, address some errors in the 2017 tax law, and offer tax relief to victims of natural disasters.
Congressional tax writers have spent most of the year looking for a legislative vehicle to address some of their priority issues and appear to have succeeded in advance of a Friday deadline to fund the federal government.
The agreement, in the form of an amendment intended to be attached to one of the funding measures, would extend more than two dozen incentives through 2020, including an excise tax break for beer, wine, and spirits producers that was established in the 2017 tax law.
The tax package also would retroactively renew and extend the $1-per-gallon credit for biodiesel producers through 2022, a victory for Senate Finance Committee Chairman
The deal was announced following a late-night meeting between Treasury Secretary
Read more from Colin Wilhelm, Laura Davison, and Jennifer A. Dlouhy.
No Electric Vehicle Expansion: One measure that isn’t expected to be part of any agreement is an expansion of the electric vehicle tax credit. Last week Rep. Dan Kildee (D-Mich.), who supports an expanded credit, acknowledged that Republican opposition would make it difficult to reach a deal on that issue.
That fear carried over into the final stages of the year-end talks: backers of the popular tax break say President
“There has been extreme resistance from the president,” said Sen.
Health, Retirement Provisions
Earlier yesterday, lawmakers released a pair of government funding bills that already contained some tax provisions, which were negotiated separately from the year-end tax bill. To avoid a shutdown, the two funding packages must pass both chambers and be signed by President
The House Rules Committee signed off on the ground rules for consideration of the funding packages early on Tuesday. The rule, obtained by Bloomberg Tax, allows for one hour of debate on each of the omnibus bills.
The funding deal would repeal several taxes established in the Affordable Care Act, including the 2.3% excise tax on medical devices and the 40% “Cadillac tax”, an excise tax on the most expensive employer-sponsored health insurance plans.
Also making the cut is the SECURE Act (H.R. 1994), a retirement bill that includes a fix for a 2017 tax law error. The bill’s “Gold Star fix” would shield military families from a tax hike on some survivor benefits.
Read more from Erik Wasson and Laura Davison.
Perk for Small Businesses
Bonus depreciation, a perk of the 2017 tax law, likely matters more for small companies than large, publicly traded ones. That is because public corporations can use access to public markets to raise money for major expenses.
Small, private companies don’t have that same luxury.
Bonus depreciation, also known as expensing, allows for a full or larger upfront write-off of capital expenses rather than a series of piecemeal tax breaks over time. It was one of the reasons Republicans said the tax law would spur business investment.
“I think the evidence is larger, publicly traded corporations are less responsive to bonus depreciation, but they’re still responsive,” said Eric Ohrn, an assistant professor at Grinnell College.
Lydia O’Neal has more.
Corporate Tax Bills: Profitable U.S. companies in 2018 paid an average effective tax rate of 11.3%, far lower than the statutory 21% rate, according to a report released yesterday by the Institute on Taxation and Economic Policy.
Nearly 100 companies, including Amazon.com Inc., didn’t pay federal income taxes on their 2018 U.S. income, according to the report.
Amazon said in a statement that the company pays all the taxes it is required to pay in the U.S. and the other countries where it operates. The company paid $2.6 billion in corporate taxes over the last three years, according to the statement.
Increasing the statutory rate isn’t a sufficient reform, the report said.
“The harder, and more vital, work will be done when lawmakers show more courage than they did in 2017 and pare back the billions of dollars in tax giveaways that lard the tax code presently,” it said.
IRS Whistleblower
A whistleblower is urging the IRS to strip the investment arm of the Church of Jesus Christ of Latter-day Saints of its status as a tax-exempt organization, the Washington Post reported yesterday.
The complaint was made by a former employee of Ensign Peak Advisors, which is registered as a supporting organization and integrated auxiliary of the church, according to the Post. The complaint, filed with the IRS in November, alleges that Ensign should owe billions in taxes over around $100 billion in funds that the organization has stockpiled.
A spokesman for the church didn’t respond to the Post’s questions about the complaint, citing a policy that the church doesn’t provide information about specific financial decisions.
Redistricting Could Boost Dems
Redistricting in North Carolina will boost the Democratic party’s chances of adding two House seats that would have been otherwise in doubt.
Rep.
What to Watch Today
SALT Conference: The New York University School of Professional Studies will continue its conference on state and local taxation in New York City.
Impeachment: The House Rules Committee will meet on articles of impeachment against Trump.
Opioid Crisis: The Senate Judiciary Committee will hold a hearing on a “whole-of-government approach” to tackling the opioid crisis.
Beyond the Beltway
State Fiscal Health: A record economic expansion has allowed state governments to use tax revenue to build their reserves, according to a new report from the National Association of State Budget Officers.
That means states would be better prepared to handle a recession. Read more from Fola Akinnibi.
Tourism Tax Perks: West Virginia Gov.
The House passed the measure yesterday. It was among several items that lawmakers considered during a special session.
Read more from Andrew M. Ballard.
Tax Break for NFL: More than a dozen NFL venues are in opportunity zones, areas where investors can defer or reduce capital gains tax liabilities. The perk, created in the 2017 tax law, was meant to spur investment in low-income areas, but has drawn scrutiny.
Stadiums in the zones include: Denver’s Empower Field at Mile High, where the Broncos play, and the Las Vegas stadium being built for the Raiders.
Read more from Noah Buhayar and Jesse Hamilton.
—with assistance from Colin Wilhelm and Patrick Ambrosio
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