Week in Insights: Boosting the Semiconductor Credit Is Pointless

The Senate proposal to raise the semiconductor investment credit from 25% to 30% may seem like a smart move. But the credit itself expires in 2026—and coupled with the timescale involved in building chip fabrication plants, this renders the 5% increase functionally pointless.

Semiconductor manufacturing isn’t like opening a fast-food restaurant. Facilities take years of planning, permitting, equipment design and acquisition, and workforce training.

We need policy built on timescales measuring in decades, not election cycles, to ensure production resilience—and reshoring of semiconductor manufacturing from other countries into the US. (The CHIPS Act originally made some overtures toward a long-term policy game, pairing tax credits with grants and loans.)

Without regulatory streamlining and policy stability, even a 50% credit isn’t going to convince firms to sink tens of billions of dollars into building American facilities. This is doubly true when President Donald Trump himself has stated his desire to eliminate the CHIPS Act altogether.

Any policy that expires in 2026, regardless of how generous the credit is, will have limited efficacy. It likely will do little more than reshuffle some spending on chip fabrication plants that were already in the works.

And no serious firm is going to bet its future on US chip fabrication plant construction—especially not when Taiwan, South Korea, and even Germany offer comparable incentives without comparable risk.

—Andrew Leahey

A student washes a semiconductor chip diced from a wafer at the Inter-university Semiconductor Research Center at Seoul National University.

Photographer: Anthony Wallace/AFP via Getty Images

Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts analyzed the GOP tax bill’s implications for high-tax states, Republicans’ plans to shutter the PCAOB, and more.

The Exchange—It’s where great ideas on tax and accounting intersect.

Insights

Senate’s Tax Bill Picks Winners and Losers in Litigation Finance

Vanderbilt Law’s Brian Fitzpatrick writes that the Senate approving a 41% tax on litigation finance investors is discrimination that helps big businesses.

GOP’s Big, Beautiful Bill Poses Disadvantages to High-Tax States

Anchin experts say modifications to pass-through entity tax deductibility, tax code Section 199A, and the SALT cap would reduce tax revenue and represents a “seismic shift” in the tax code.

German Transfer Pricing Rulings Can Be a Win for Multinationals

Freshfields attorneys explain that two recent court rulings have created a shift in how multinational enterprises operating through permanent establishments in Germany may be taxed.

Carbon Capture Business Case Requires Showing Strategic Value

Former Assistant Energy Secretary Charles McConnell says that carbon capture doesn’t face major new obstacles—companies instead must ensure such projects are commercially viable.

Demolishing PCAOB Would Increase Risks of Fraud, Investor Harm

Hofstra University’s Jack Castonguay says although the Public Company Accounting Oversight Board needs reforms, dismantling its structure would be counterproductive.

Companies Using Cryptoassets Must Prepare for India’s Tax Shift

Khaitan & Co’s Raghav Bajaj says multinationals should review their data systems now as India adapts its tax law to integrate cryptoassets into its regulatory framework.

Smart Tax Planning Helps Middle Market Companies Manage Tariffs

CBIZ’s Mark Baran and Jan Smallenbroek explain how businesses can lessen the impact of tariffs and maintain competitiveness by using foreign trade zones, duty drawback programs, and an array of other tax strategies.

Columnist Corner

Technically Speaking design by Jonathan Hurtarte/Bloomberg Tax

Illinois’ amnesty program for remote sellers helps lower barriers to voluntary sales tax compliance and provides a roadmap for other states to follow and improve on, Andrew Leahey says in his latest Technically Speaking column.

Similar initiatives could “act as policy recon missions” by requiring sellers that come forward to disclose what sales suppression tools they used and how they obtained them, Andrew writes. Read More

News Roundup

Senate GOP’s ‘Revenge Tax’ Still Packs Punch Despite Changes

The Senate version of the “revenge tax” has key differences from the House proposal, but still provides the Trump administration significant leverage to pressure countries to eliminate what it calls “unfair” foreign taxes.

PwC Shifts Advisory to Meet Moment of ‘Unparalleled Change’

PwC’s newly minted and vastly expanded advisory structure is fit to address evolving client needs in a time of “unparalleled change” defined by artificial intelligence integration and US shifts in regulation like tariff policies, the firm’s US advisory leader said.

Justice Department to Eliminate Tax Unit as Workforce Shrinks

The Justice Department plans to eliminate its tax division and transfer the enforcement work to the respective criminal and civil divisions as part of a broader reorganization of the department.

AbbVie’s $1.6 Billion Break Fee Sidesteps Capital Loss Limit

AbbVie Inc. need not treat a $1.6 billion fee payment to Shire plc as a capital loss for tax purposes after scuttling their merger, the US Tax Court ruled Tuesday.

Tax Management International Journal

How to Utilize Advance Pricing Agreements Under United States Law

In this fifth article of a multi-part series comparing US and Dutch transfer pricing methodologies, Patrick Beattie presents a primer on US advance pricing agreements.

Tax Management Memorandum

How Staking Rewards Are Taxed Under a Proof of Stake System

Staking cryptocurrencies may sometimes be taxable even before the cryptocurrencies are sold from a taxpayer’s wallet, says a Sonecha & Amlani practitioner.

Career Moves

Derek Young joined Bracewell as a partner in its tax department in New York.

Mackenzie McNaughton joined Jones Day as of counsel in its health-care and life sciences practice in Minneapolis.

Robert Hallman joined EisnerAmper as a partner in its international tax services group in Minneapolis.

Paul McCord joined Bodman as a partner in its business tax practice group in Grand Rapids, Mich.

Jeff Korenblatt joined Norton Rose Fulbright as a partner in its tax practice in Washington.

If you’re changing jobs or being promoted, send your submission to TaxMoves@bloombergindustry.com for consideration.