#gilti tax

[citizenshipsolutions]

Monte Silver's Lawsuit Opposing The Procedural Aspect of #GILTI Regs Lives On

In summary – Monte Silver’s lawsuit against GILTI lives on! On April 19, 2024 the U.S. Court Of Appeals released a decision which included: Plaintiffs had objected before the district court that the Anti-Injunction Act did not apply in light of South Carolina v. Regan, 465 U.S. 367 (1984), because they had no other way to litigate their claims. The defendants argued that the Act barred the suit…

[capitalism-and-analytics]

Some highlights from the proposed bill for those interested:

Highest Personal Income Tax Rate Since 1986 (combined Federal Tax rate of 45%)

Highest Capital Gains Tax Since 1978. A rate over twice as high as China’s capital gains tax rate.(nearly doubles rate from 20% to 39%)

Corporate Tax Rate Higher than Communist China. (A 31% increase, from 21% to 28%)

Unconstitutional Wealth Tax on Unrealized Gains

Quadrupled Tax on Stock Buybacks. This tax will hit every American with a 401K or IRA or union pension.

$31 Billion Tax on American Energy

32% Increase to Medicare Taxes

Carried Interest Tax on Capital Gains

$23 Billion Retirement Tax

$24 Billion Cryptocurrency Tax

Real Estate Tax Hike (wants to end 1031 Like-Kind Exchanges)

Doubles the Global Minimum Tax (Global Intangible Low-Tax Income (GILTI) from on U.S. multinational corporations from 10.5 to 21 percent, which after the disallowance of foreign tax credits would provide a top rate of 26.25 percent)

[gary232]

Joe Biden’s Proposed Budget for Fiscal Year 2024:

Business Taxes:

Increase the corporate income tax rate to 28 percent.

Raise the global intangible low-taxed income (GILTI) tax rate from 10.5 percent to 21 percent and repeal the reduced tax rate on foreign-derived intangible income (FDII).

Repeal the base erosion and anti-abuse tax (BEAT) and replace it with an undertaxed profits rule (UTPR) consistent with the OECD/G20 global minimum tax model rules.

Expand the net investment income tax to nonpassive business income.

Raise taxes on the fossil fuel industry.

Capital Gains and Dividend Taxes: Tax long-term capital gains and qualified dividends at ordinary income tax rates for taxable income above $1 million.

Tax unrealized capital gains at death above a $5 million exemption ($10 million for joint filers).

Tax carried interest as ordinary income.

Impose a minimum effective tax rate of 20 percent on an expanded measure of income, including unrealized capital gains, for households with net wealth above $100 million.

Credits, Deductions, and Exemptions: Make the Child Tax Credit permanently refundable.

Increase the Child Tax Credit to $3,600 for young children and $3,000 for older children (temporarily).

IRS Funding:

The Biden administration proposes an additional $29.1 billion in funding for the Internal Revenue Service (IRS). This investment is expected to increase compliance and enforcement, resulting in an extra $105 billion of revenue on the net and $13.4 billion from reducing the tax gap12.

Modernization Goals:

Despite a $20 billion cut to the IRS modernization fund in FY 2024, the agency still has roughly $60 billion

[adelitawilliam]

Unpacking The Latest Tax Law Changes: What They Mean For Your Business

Tax law changes can have significant implications for businesses, impacting their tax liabilities, reporting requirements, and overall financial strategies. Staying informed about the latest tax law changes is crucial for businesses to ensure compliance and optimize their tax positions. Here's a breakdown of the latest tax law changes and what they mean for your business:

Corporate Tax Rate Reductions: One of the most significant recent tax law changes is the reduction in corporate tax rates. In many jurisdictions, including the United States, corporate tax rates have been lowered to stimulate economic growth and encourage business investment. For businesses subject to corporate income tax, lower tax rates can result in reduced tax liabilities and increased after-tax profits.

Pass-Through Deduction: Another notable tax law change is the introduction of the pass-through deduction, which allows certain pass-through entities, such as partnerships, S corporations, and sole proprietorships, to deduct up to 20% of their qualified business income from their taxable income. This deduction can provide significant tax savings for eligible businesses and may influence business structuring decisions.

Bonus Depreciation and Expensing: Recent tax law changes have expanded bonus depreciation and expensing provisions, allowing businesses to deduct the cost of qualified property purchases immediately or over a shorter period. These provisions incentivize businesses to invest in capital assets and equipment, stimulating economic growth and productivity.

Changes to Deductions and Credits: Tax law changes may also impact deductions and credits available to businesses. For example, changes to the deductibility of business expenses such as entertainment, meals, and travel may affect business spending and expense management practices. Similarly, modifications to tax credits, such as research and development credits or energy efficiency incentives, can influence businesses' investment decisions and financial planning strategies.

International Tax Reform: Recent tax law changes have introduced significant reforms to international tax rules, particularly aimed at preventing profit shifting and tax avoidance by multinational corporations. These reforms include provisions such as global intangible low-taxed income (GILTI) and base erosion and anti-abuse tax (BEAT), which may impact the tax treatment of foreign income and transactions for multinational businesses.

State and Local Tax Changes: In addition to federal tax law changes, businesses must also consider state and local tax law changes that may affect their tax liabilities and compliance obligations. State and local tax laws vary widely across jurisdictions and may include changes to income taxes, sales taxes, property taxes, and other levies that impact businesses operating in those jurisdictions.

Compliance and Reporting Requirements: Tax law changes often result in new compliance and reporting requirements for businesses. It's essential for businesses to stay updated on these requirements and ensure timely and accurate filing of tax returns and related documentation. Failure to comply with new tax reporting obligations can result in penalties and fines for businesses.

Tax Planning Opportunities: While tax law changes may pose challenges for businesses, they also present opportunities for tax planning and optimization. Businesses can work with tax advisors and accountants to assess the impact of tax law changes on their operations and identify strategies to minimize tax liabilities, maximize deductions and credits, and optimize their overall tax positions.

In conclusion, accounting companies in Oklahoma City OK play a crucial role in helping businesses navigate the complexities of tax law changes. By leveraging their expertise and insights, businesses can adapt to recent tax reforms, optimize their tax planning strategies, and ensure compliance with evolving tax regulations.

[tempobowl0]

Reporting Foreign Real Estate Rental Income

This form is due by 15th day of the 3rd month after the end of the trust’s tax year. irs form 8865 U.S. citizens and U.S. residents who are the tax owners of a Foreign Disregarded Entity are responsible for filing Form 8858, Information Return of U.S. U.S. persons with assets located outside the United States may be subject to additional reporting. Starting in tax year 2013, the form had to be filed by any individual who had a PFIC value that exceeds the specific exemption/exclusion amounts. The U.S Government takes a very heavy hand against taxpayers on issues involving the reporting of foreign mutual funds. If you are out of compliance for failing to report foreign assets to the IRS, IRS Offshore Voluntary Disclosure is one of the best and safest methods for getting back into compliance. Finally, do keep in mind that the value of these specified foreign (non-Canadian) properties need to be reported both in Canadian dollars and in the foreign currency. The exchange rate to be used to convert from the foreign currency to Canadian dollars should be based on the exchange rate in effect at the time of the transaction. That is, at the time the income was received from the property, or the exchange rate on the date the property was purchased. For income received from the specified foreign property an average exchange rate may be used. However, while you should be careful with your FBAR filing, do not let the process intimidate you. Consider consulting a tax expert, especially one with experience in international tax compliance. It is also worth noting that the due date for the FBAR recently changed. The term “offshore accounts” is often used as shorthand to suggest that such account holders are trying to dodge tax responsibilities. Individuals can file the form electronically for the 2014 taxation year. The T1135 for a corporation cannot yet be filed electronically with the tax return, but must be sent by mail. It can be attached to the tax return or partnership information return, and mailed to your tax centre, or can be mailed separately to the Ottawa Technology Centre. Individuals can file the form electronically for the 2015 taxation year. The tax calculation on unreported PFIC income is both onerous and complicated. Expats with foreign real estate rental income are required to report their rental income as part of their worldwide income on form 1040. Previously, the form was only filed if income was actually received. In addition, the revised form seeks information on first year of receipt of FDI/ODI and disinvestment. The foreign asset reporting requirement extends to trusts outside India where the ROR is a trustee, a settlor or a beneficiary. As with bank accounts, details for each investment and/ or investment account needs to be reported separately. Schedule FA also specifically requires reporting of details in relation to bank accounts where the individual has a signing authority. The reporting requirement for bank accounts include name and address of the bank, account number, name of the account holder, date of opening, peak balance during the year and interest earned. Owning shares of a passive foreign investment company, or PFIC, subjects U.S. taxpayers to a complicated set of rules enacted in the 1980s in order to eliminate beneficial tax treatment for certain offshore investments. Under the current rules, in most cases PFIC distributions are taxed as ordinary income, rather than as long-term capital gains or dividends. Judging by the sheer number of questions on the Intuit website regarding foreign interest income this amendment would be time well spent. Again, thanks to TTML for the helpful clarification and explanation. A trust is a collection of assets that are handled by a third party, the “trustee,” whose objective is to manage the assets on behalf of the trust fund’s beneficiary. The difference between a domestic trust and a foreign trust is that a foreign trust is neither under the jurisdiction of a U.S. court, nor do U.S. persons control major decisions about the trust. Further, a domestic trust can become a foreign trust after its establishment. (I suspect that what the wording meant to say is "later" in a different section, not in the current 1099INT section). Even the "learn more" link for 1099INT does not mention that foreign interest income should be input in this section. The 1099INT section has a graphic image of the top of a 1099INT form as well as questions about various boxes on the 1099INT form, all of which creates the impression that without a 1099INT you are in the wrong place. The other alternative was to assume that foreign interest income might be input into the field for "foreign accounts" but again the TT software does not allow you to do this . The easy solution would be to amend the wording on the 1099INT page to state that even without a 1099INT, foreign interest income should be added in this section. It seems quite simple to correct this (time consuming!) impression with a few extra words or some additional info in the "learn more" link. This is because the IRS wants to make sure they get their chance to tax the foreign mutual fund in accordance with the PFIC anti-deferral of tax regime. A foreign trust with a U.S. owner must file Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Can something be done to amend the TT software to remove the confusing and misleading language? When entering interest income the website says that if you have interest from something else - which would clearly seem to include foreign interest which is not on a 1099INT - it will be added later. Despite this statement, the software does not provide the option to add foreign interest later. Previously, he worked in the corporate accounting department at Motorola where he oversaw financial reporting and tax preparation for the firm’s mobile division of Eastern Europe. The form will seek investor-wise direct investment and other financial details on fiscal year basis as hitherto, where all reporting entities are required to provide information on FATS related variables . Curious about how the recent Tax Cuts and Jobs Act of 2017 impacts FBAR? Largely, foreign reporting requirements remain unchanged, despite tax reform. Kunal helped us with a successful streamlined filing disclosure of foreign assets. He came across as very knowledgeable and answered all our questions…He was efficient and quick in completing the process after we had put together all our documentation. Peak balance refers to the maximum account balance during the year and not the balance at the end of the year. Even where an ROR does not have any taxable income in India, a tax filing requirement arises if the individual has any assets outside of India. Foreign financial accounts maintained on a United States military banking facility. in which the U.S. person has a greater than 50% direct or indirect present beneficial interest in the trust’s assets, or receives 50% of the income. While the Foreign Account Tax Compliance Act has provided U.S. persons with foreign assets guidance on how to get compliant with the IRS since 2009, the Treasury Department has demanded their compliance via the Banking Secrecy Act since 1970. In addition to the penalties already discussed, if you fail to file Form 8938, fail to report an asset, or have an underpayment of tax, you may be subject to criminal penalties. Do all of these foreign account disclosure rules and regulations seem unnecessarily burdensome or duplicative? However, these same rules and regulations define the present state of "foreign" account disclosure and reporting required, as a function of United States law. Passive Foreign Investment Companies sound like an exotic and highly specialized investment and it’s easy to assume that you don’t own any. However, this conclusion would be a mistake as PFICs include hedge funds, money market accounts, mutual funds, private equity funds and a long list of other foreign investments.

[citizenshipsolutions]

Part 45 - "Some" examples where the U.S. creates unrealized "foreign income" before a realization event in the source country

Let There Be Income And There Was Income! The United States has an increasing propensity to create “deemed income” in circumstances where the taxpayer has received no income to pay the tax. In some cases the “deemed income” created is “foreign source” income. In other cases it is purely domestic source. When the “deemed income” is “foreign source” income over which the other country has primary…

[corporatetaxaccountant]

Global Intangible Low-Taxed Income and Canadian Corporations

If you are a U.S. person and shareholder of a Canadian corporation, especially Canadian controlled private corporation (CCPC) or professional corporation, you might be struggling around GILTI.

What is GILTI?

How is GILTI calculated?

How to avoid GILTI?

If you are having all these questions, you are not alone! Let’s simplify the GILTI for you. If you need a more detailed but simplified understanding of GILTI and how it affects the U.S. shareholders of Canadian corporations, read here.

GILTI is a complex tax topic and ideally should be dealt by a cross border tax accountant in Toronto. However, you can avoid the GILTI altogether by one simple decision – Pay yourself Salary from your Canadian corporation!

Yes, by paying yourself salary you can remove the earnings from the corporation. The income is reported as an employment income on your Canadian income tax return. Foreign tax credit against the income tax credits paid in Canada are available to apply against US income tax liability of this foreign income. Personal Income tax rates in Canada are generally higher than the U.S. ones so you don’t end up paying taxes in U.S. Another way to optimize your GILTI tax lability is to file section 962 election. This election allows you to treat income of your foreign controlled corporation as a domestic corporation so apply 21% corporate tac rate. The down side is when you take dividends from Canadian corporation, you will pay additional 15% tax on dividend income. However, you will eb able to claim foreign tax credits at both corporation and individual level. BY far this is the best option for many small business owners.

GILTI is taxed at the highest marginal rate for the individuals. For corporate taxpayers, it is taxed at 21% and a sec 250 deduction brings it down to 10.5%.

Maroof HS CPA Professional corporation are cross border tax experts in Canada.

Source: https://uscanadataxaccountant.wordpress.com/2021/04/19/global-intangible-low-taxed-income-and-canadian-corporations/

[calcbench]

GILTI Tax Data: Yeah, We Got That

No branch of financial data is too obscure for Calcbench to go full nerd, and today we demonstrate that commitment by returning to the world of tax data for a look at one of the newest tax disclosures out there.

Today we look at Global Intangible Low Tax Income, otherwise known as the GILTI tax.

GILTI was created by the U.S. tax reform law enacted at the end of 2017. It’s supposed to be a tax on certain types of foreign earnings, to dissuade U.S. companies from relocating their corporate headquarters (or other valuable intellectual property) to low-tax jurisdictions overseas.

Basically GILTI sets a minimum tax of 10.5 to 13.125 percent on the average foreign tax rate U.S. companies pay around the world. Spoiler: in the two years since its creation, GILTI hasn’t quite had that “keep your valuable asses here” effect lawmakers desired — but then, unintended consequences are nothing new to the U.S. tax code.

Calcbench isn’t interested in the perverse incentives stuff anyway. We just wanted to know how one can find GILTI tax data, so you can do whatever research is on your mind.

Here’s what we did.

First, GILTI turns up in a company’s tax reconciliation. That’s the breakdown every company provides explaining the difference between what it’s supposed to pay according to statutory corporate tax rates, and what it actually pays after various deductions and credits. So if you want to find GILTI payments, start there.

We used our Interactive Disclosure database, our Segments and Breakouts page, and our Raw XBRL Query tool to search those disclosures for “GILTI.” We found 27 companies that reported a reconciliation item related to GILTI. Table 1, below, shows the firms that reported an actual GILTI amount.

Here comes the tricky part. Firms can reconcile their tax disclosures in several ways. Some reconcile by dollar amount; others reconcile by tax rate. A few even reconcile both ways, which is nice.

But this does mean if you want a holistic look at all GILTI disclosures, you need to do some calculations. For example, Merck & Co. ($MRK) reported a GILTI tax payment of $336 million in 2019. Laboratory Corp. of America ($LH), meanwhile, reported that GILTI payments were 1.1 percent of total tax payments — so if you wanted to calculate the dollar amount, you’d need to look at what Lab Corp paid in taxes and do some math.

Financial analysts have another issue: U.S. Generally Accepted Accounting Principles don’t have a standard tag to apply to GILTI payments. That is, all firms report revenue using the same XBRL tag — and ditto for operating income, inventory, future lease payments, and so forth. You can easily find all companies’ disclosure of those items by searching for that tag.

GILTI has no such standard tag. Instead, each company still uses its own extension tag, and that can vary from one firm to the next. We found “GILTI tax,” “GILTI expense,” “GILTI net of foreign tax credits,” and lots of other examples.

In the fullness of time, GAAP might define a GILTI tag that applies to all companies. Today, analysts must still search disclosures and XBRL tags for “GILTI” or closely related terms.

That’s OK. Calcbench still has the data, and the database functionality to find those numbers — quickly and accurately.

[dragoni]

99%: “Death and TAXES” #GrabYourWallet #VoteThemOut

1%: Using their free tax money to buy politicians & laws

Taxpayers were upset with the $1.5 Trillion in Republican tax cuts when they should have been MAD AS HELL about the LIFE LONG TAX BREAKS for the Super Rich and corporations. 

To make things worst, the Super Rich are already finding ways to avoid paying taxes according to the new tax laws of “BEAT” and “GILTI”.

BONUS ROUND: Trump’s hand picked head of the IRS, Charles Rettig spent a lifetime fighting the IRS, helping the Super Rich avoid paying taxes and avoid being audited.  ¯\_(ツ)_/¯ Rigging the system from within.

“Racing for a Win”

Dictators Playbook: “5. Using state power to reward corporate backers and punish opponents.“

Republicans were racing to secure a legislative victory during Mr. Trump’s first year in office — a period marked by the administration’s failure to repeal Obamacare and an embarrassing procession of political blunders.

To speed things along, Republicans used a congressional process known as “budget reconciliation,” which blocked Democrats from filibustering and allowed Republicans to pass the bill with a simple majority.

“The overhaul of the federal tax law in 2017 was the signature legislative achievement of Donald J. Trump’s presidency.”  #Corporatocracy  #Kleptocracy

Multinational Corporations and their Lobbyists

The biggest change to the tax code in three decades, the law slashed taxes for big companies, part of an effort to coax them to invest more in the United States and to discourage them from stashing profits in overseas tax havens.

But big companies wanted more — and, not long after the bill became law in December 2017, the Trump administration began transforming the tax package into a greater windfall for the world’s largest corporations and their shareholders. The tax bills of many big companies have ended up even smaller than what was anticipated when the president signed the bill.

“One consequence is that the federal government may collect hundreds of billions of dollars less over the coming decade than previously projected.”

The budget deficit has jumped more than 50 percent since Mr. Trump took office and is expected to top $1 trillion in 2020, partly as a result of the tax law.

The lobbyists targeted a pair of major new taxes that were supposed to raise hundreds of billions of dollars from companies that had been avoiding taxes in part by claiming their profits were earned outside the United States.

The blitz was led by a cross section of the world’s largest companies, including Anheuser-Busch, Credit Suisse, General Electric, United Technologies, Barclays, Coca-Cola, Bank of America, UBS, IBM, Kraft Heinz, Kimberly-Clark, News Corporation, Chubb, ConocoPhillips, HSBC and the American International Group.

“Through a series of obscure regulations, the Treasury carved out exceptions to the law that mean many leading American and foreign companies will owe little or nothing in new taxes on offshore profits”

according to a review of the Treasury’s rules, government lobbying records, and interviews with federal policymakers and tax experts. Companies were effectively let off the hook for tens if not hundreds of billions of taxes that they would have been required to pay.

“It is largely the top 1 percent that will disproportionately benefit — the wealthiest people in the world.”,  Bret Wells, tax law professor

“Shifting Money”

Two of the biggest new taxes were supposed to apply to multinational corporations, and lawmakers bestowed them with easy-to-pronounce acronyms — BEAT and GILTI — that belie their complexity.

The BEAT aimed to make that less lucrative. Some payments that companies sent to their foreign affiliates would face a new 10 percent tax.

The other big measure was called GILTI: global intangible low-taxed income.... the law imposed an additional tax of up to 10.5 percent on some offshore earnings.

Long read - there’s more:

Built-In Loopholes

An Exhaustive Lobbying Campaign

Helping Foreign Banks

Read the top comments chosen by the NYTimes; “NYT Picks”

[phroyd]

Democrats criticized the legislation, originally known as the Tax Cuts and Jobs Act of 2017, but officially called An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, but Republicans defended the law as a necessary overhaul to previous tax laws and a means to provide economic relief for the middle class.

The dueling partisan narratives left many taxpayers with a murky understanding of the law’s impact.

To gain a better grasp on the intricacies of the 2017 Act, professors David Kamin, Lily Batchelder, and Daniel Shaviro—tax law experts from the New York University School of Law—cowrote a paper analyzing the sweeping legislation which appears in the Minnesota Law Review.

According to the authors, “Many of the new changes fundamentally undermine the integrity of the tax code and allow well-advised taxpayers to game the new rules through strategic planning.”

Here, the authors describe how some may take advantage of the new system, and how changes to the tax laws may affect the US economy.

‘CRACKING AND PACKING’

David Kamin: One of the largest tax cuts in the legislation goes to “pass-through” businesses—where income is taxed at the level of the owner rather than the business. But, to be eligible for this tax cut, owners need to meet certain very complex criteria.

For those with higher incomes, this includes being in the “right” line of business. That means being an architect (eligible) and not a lawyer (not eligible). Selling skincare products (eligible) but not being a dermatologist (not eligible). The formalistic and largely arbitrary lines then allow for much gaming, including what we—borrowing from the election law context—call “cracking and packing,” pulling apart and combining businesses.

For instance, a dermatologist office might “crack” apart a skincare products business run out of the same office, share overhead expenses, and then try to assign as much of those overhead expenses as possible to the dermatology practice to maximize profits eligible for the deduction. Possibly abusive? Yes, but very hard for the IRS to catch.

Lily Batchelder: The bill creates large incentives for the wealthy to convert their labor income into business income. This was already an issue in the tax code because of the carried interest loophole and loopholes in the payroll tax. But the bill makes a bad situation much, much worse.

If a wealthy individual hires an elite tax advisor to make their labor income look like pass-through business income, they can cut their marginal tax rate by more than 7 percentage points. And if they don’t need to spend the income anytime soon and treat it as corporate income, they can cut their tax rate by 20 percentage points.

Theoretically, middle class families could engage in the same games but they are much less likely to do so for at least three reasons. First, middle class families would receive much smaller tax benefits from such gaming and in many cases, none. Second, they often have little leverage over their employers to restructure their compensation and, even if they did, probably would have to give up all of their employee benefits in exchange. This includes their health insurance, 401(k), and disability insurance. Last, they are less likely to be able to afford a tax advisor with the expertise to structure this kind of arrangement in the first place!

GAMING THE SYSTEM

Daniel Shaviro: One of the many disappointing aspects of the 2017 act was its failure to address the opportunities for sheltering labor income from tax at full individual rates, through use of the corporate tax. Pre-2017, the top corporate rate was far closer to the top individual rate than it is post-2017. The main rationale for the corporate rate reduction pertained to global tax competition for scarce capital. This has no bearing on the case where the owner-employee of a corporation pays herself far less than the market value of her work.

For example, suppose I create a wildly successful new start-up and pay myself zero salary, despite my becoming, in net worth terms, a billionaire via the stock appreciation. The income that my efforts yield will show up in the corporate tax base, and be taxed at only 21 percent. True, I would face a second level of tax on paying myself dividends or selling my stock, but even this would be at a reduced rate. And what’s more, I may not need to make such payments if I am sufficiently financially liquid, e.g., by reason of borrowing against the value of the stock.

Opinions in the “biz” differ on how frequently taxpayers will find it worthwhile to do this, given the difficulty of extracting funds from one’s company tax-free. What is plain, however, is that Congress in 2017 deliberately did nothing to prevent this from happening. Indeed, the final version of the 2017 Act reduced the efficacy of a provision in the House bill that would have slightly addressed the problem by setting the tax rate for “personal service corporations” (PSCs) at 25 percent rather than just 21 percent. In the final act that rate is just 21 percent, like the general corporate rate, causing the PSC rules to be close to meaningless as a defense against using corporations as a tax shelter for labor income.

Shaviro: In the international realm, the 2017 Act may actually have improved the law marginally. At a minimum, it created a new regime that could be tweaked by future Congresses to yield a better system than the previous one. However, the main new international rules that it added to the code unnecessarily created multiple opportunities for game-playing. Just to give some quick examples without getting too deep into the weeds:

The foreign-derived intangible income (FDII) rules, which provide a special deduction for exports by companies, such as Apple and Facebook, that have valuable intellectual property, create incentives for “round-tripping” goods—e.g., selling them to a foreign taxpayer, then buying them back with just enough bells and whistles to prevent the entire transaction from being disregarded.

Both FDII and the global intangible low-taxed income (GILTI) rules can create incentives to locate business assets abroad rather than at home.

The base erosion anti-avoidance tax (BEAT) can be gamed through such means as restructuring supply chains so one is purchasing sale items for customers from one’s foreign affiliates. The BEAT can also be gamed by adding lots of extra deductions (offset by lots of extra income so the sum total is a wash), so that so-called “base erosion tax benefits” will fall below an arbitrary “floor” (as a percentage of total deductions) that the BEAT imposes for no discernible reason.

VIOLATING THE WTO TREATY?

Shaviro: The FDII rules almost certainly violate the World Tax Organization treaty, of which the US is a signatory. They are expressly an export subsidy, and the WTO makes export subsidies illegal. If other treaty signatories challenge the FDII rules, there is a very high probability that they’ll be held illegal, with the consequence that peer countries will be authorized to respond with targeted provisions of their own.

In the last 30 or so years, the US has enacted illegal export subsidy rules on three separate occasions. Each time the rule was held violative and the US backed down. Why do this again? I think the main answer was cynicism, but ironically the prospect of an overturn makes the US companies that wanted favorable tax treatment more leery than they would otherwise have been of setting up complex structures to take maximum advantage of the FDII rules.

‘AN ARRAY OF MISTAKES’

Kamin: The legislation was written at an extremely rapid clip, leaving an array of mistakes—some minor and some large. An early one to emerge was the “grain glitch.” In attempting to apply the pass-through deduction to businesses organized as cooperatives, especially prevalent in agriculture, legislators wrote in an even larger loophole by accident. Effectively, farmers selling to these cooperatives (think Ocean Spray cranberries) could potentially entirely wipe out their tax liability because of the glitch.

This one was large enough—and was causing sufficient chaos in the agricultural sector—that it was fixed. But most haven’t been. So, take another: one of the largest revenue raisers in the legislation was limiting the deductibility of state and local taxes for individuals to $10,000. However, the letter of the law seems to fail to apply that to another form of cooperative, a housing cooperative.

So, owners of pricey cooperatives in NYC may be able to deduct their property taxes without limit; by contrast, owners of traditional condominiums and houses will not. And the list could go on.

MAJOR TAKEAWAYS

Batchelder: The bill is heavily tilted towards the wealthy. According to the official Congressional budget scorekeepers, this year the average millionaire will get a tax cut of more than $27,000 on their personal tax return, compared to a tax cut of $431 for an average middle-class family earning $40,000 to $50,000. Even as a share of their after-tax income, the tax cut for the average millionaire is three times as large.

It is also a very costly bill. The Congressional Budget Office estimates that it will increase our national debt by $1.9 trillion by 2028, even after including its effects on the economy. These large tax cuts will eventually have to be paid for. If Congress pays for them by raising revenues in proportion to income, the vast majority of middle class and low-income families will end up worse off. These families will be hit even harder if the bill is paid for by cuts to programs like Social Security, Medicare, and Medicaid.

Shaviro: It’s often said that tax legislation should be judged by four main criteria: fairness, efficiency, complexity, and revenue adequacy. The 2017 Act, despite having good particular rules here and there, egregiously failed on all four counts.

It was an act of class warfare benefiting those at the top relative to everyone else, for the most part it reduced economic efficiency by creating perverse incentives and arbitrary distinctions between different activities, it made tax planning more complicated for those who can afford sophisticated tax advice, and it will probably lose on the order of $2 trillion of net revenue over 10 years, even if all supposedly expiring provisions are actually allowed to expire.

It was also the sloppiest, most poorly drafted tax legislation that I have ever seen, despite all the talent and effort deployed by hard-pressed staffers, because the process was so secretive and rushed.

Source: New York University

Phroyd

[logobosskingdom]

How to change foreign rules with fm editor

The amended return must be filed prior to the date of filing the federal income tax return for the following tax year. 481(a) adjustment or, alternatively, amending the prior- year income tax return. 2021- 26 favorably allows taxpayers changing from an impermissible non- ADS method for property placed in service in the tax year immediately preceding the year of change ( one- year property) the option of filing a Form 3115, Application for Change in Accounting Method, with a Sec. As noted, the change applies regardless of whether the present depreciation methods are impermissible or permissible tax methods of accounting. The CFC must own the property at the beginning of the year of change. 168(g) for purposes of determining the CFC's gross and taxable income and E&P. 168(f) to the ADS method, convention, and recovery period under Sec. 2021- 26:Įligible changes: The change permits a CFC to change its method of accounting for depreciation for property described in Sec. Highlighted below are key provisions of Rev. 2021- 26 provides a new automatic change, for a limited period, permitting a CFC on an impermissible non- ADS method as well as a CFC on a permissible non- ADS method to obtain automatic consent to change its method of accounting to the ADS method for certain tangible property used predominantly outside the United States. New temporary automatic ADS method change for CFCs 2021- 26, the focus here, provides the procedural guidance for automatic method changes discussed in the preamble to the final GILTI regulations. The IRS further stated its intention to issue guidance expanding the availability of automatic consent procedures to facilitate such depreciation changes. 9866) issued on June 21, 2019, the IRS noted that CFCs not otherwise required to compute income and E&P using ADS depreciation methods may want to change to the ADS method, given the requirement to use the ADS method to determine QBAI. In the preamble of the final GILTI regulations (T.D. 951A(d)(3) provides that the adjusted basis in any property for purposes of calculating QBAI shall be determined by using ADS under Sec. shareholder determines GILTI using a formula based on certain items of each CFC that the shareholder owns, including tested income, tested loss, and qualified business asset investment (QBAI), if any. (Definitions of relevant terms are found in Sec. shareholder of any controlled foreign corporation (CFC) that owns the CFC's stock for any tax year to include the shareholder's GILTI in gross income for such tax year. shareholders in which or with which such tax years of foreign corporations end. 951A, apply to tax years of foreign corporations beginning after Dec. The revenue procedure also modifies certain special rules applicable to foreign corporations under existing method change procedures.

The automatic procedures are intended to reduce the tax- compliance burden associated with implementing the global intangible low- taxed income (GILTI) final regulations by enabling taxpayers to more easily conform their income, earnings and profits (E&P), and GILTI computations. 2021- 26, which contains procedures for certain foreign corporations to obtain automatic consent to change their methods of accounting for depreciation to the alternative depreciation system (ADS). You will still be able to use the other features of the editor, as this download does not replace anything, as the Advanced Panel is only being activated.On May 11, 2021, the IRS issued Rev. It is situated below the File Panel, which includes the About and Details sub-panels. When you run your editor you will now have access to the Advanced Panel. Open the rar file, and extract all the contents into the default folder (WinRAR sets this to football manager 2010/ tools/editor/data/format' (the format folder tells the editor how to behave)'. Once downloaded, navigate to your installed path for Football Manager (Typically C:/Program Files(x86)/Sports Interactive/Football Manager 2010 OR C:/Program Files (x86)/Steam/steam apps/common/football manager 2010) then navigate to tools/editor/data/, and place the rar file in there. You can either manually edit the xml files to do this, or alternatively you can download this file. If you are thinking about using the advanced panel, you need to activate it first. You can also contribute and ask questions at the thread on the SI forums (registration required) ( click here to view ).Įssential Downloads (How to activate the Advanced Panel) Please ensure you have downloaded the advanced panel file for all settings to be activated ( click here to download ). It is not easy to use, so I am writing this guide to help. The Advanced Panel is a hidden section of the editor that allows you to create competitions using very flexible and advanced rules. This is a guide on how to use the Advanced Panels in the Football Manager editor.

[citizenshipsolutions]

Part 44 - The Moore's, Unrealized Income And The U.S. Extraterritorial Tax Regime

Exporting U.S. taxes, forms and penalties to the residents of other countries "The Little Red Transition Tax Book" – Everything you need to know about the 965bmandatory repatriation tax but didn't know to ask. A horrific abuse of #Americansabroad in a @citizenshiptax and #FATCA world! https://t.co/j7v1Asreek — U.S. Transition Tax – Subpart F and #GILTI (@USTransitionTax) June 26, 2023 In the…

[onlyexplorer]

Why the Global Minimum Tax is Joe Manchin's worst flip yet

Why the Global Minimum Tax is Joe Manchin’s worst flip yet

Manchin also now appears to oppose the increase in US foreign income tax I mentioned earlier from a maximum of 13% to 15%. The tax, known as GILTI (for “Global Intangible Low Tax Income”), targets foreign returns above 10%. It was signed into law under President Donald Trump to discourage companies from moving facilities to low-tax jurisdictions overseas. It did not work. Offshoring under Trump…

[gamburgcpa]

Gamburg CPA, P.C. | International Tax Services New York, NY

To assist foreign MNCs in meeting their business needs while maintaining a competitive effective tax rate, a number of strategies have been discovered, developed, implemented, and documented. In the current hard economic environment, these measures may include tax-efficiently repatriating cash or redeploying money to required areas, avoiding tax expenses on investment exit, and constructing a tax-effective structure.

Our methodology is intended to maximize tax opportunities while identifying and managing negative tax implications. These tactics are intended to ensure that a foreign MNC’s US operation contributes to the group’s global effective and integrated approach to tax planning. These strategies are meticulously crafted to guarantee that targeted tax outcomes are smoothly integrated into business objectives and operations.

International tax compliance can be difficult, whether you are a U.S. corporation looking for prospects abroad or a foreign investment in the United States. If you don’t have the necessary help, you could be putting your company in danger of missing out on opportunities or paying significant fines.

Our international tax specialists in New York, NY can provide full tax planning services to your company. We deliver a variety of options — cross-border transaction planning, strategies to keep your worldwide effective tax rate low, global mobility services, and IC-DISC, FDII, GILTI, and foreign tax credit planning — to help you stay ahead of local, state, federal, and international tax law compliance.

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[patriotsnet]

Why Do Republicans Want Tax Cuts

New Post has been published on https://www.patriotsnet.com/why-do-republicans-want-tax-cuts/

Why Do Republicans Want Tax Cuts

Treasury Says State Tax Cuts Ok If Separated From Virus Aid

Americans Hate The Idea Of Corporate Tax Cuts So Why Do They Keep Voting Republican?

JEFFERSON CITY, Mo. Responding to concerns from state officials, the U.S. Treasury Department said Wednesday that states can cut taxes without penalty under a new federal pandemic relief law so long as they use their own funds to offset those cuts.

Republican governors, lawmakers and attorneys general have expressed apprehension about a provision in the wide-ranging relief act signed by President Joe Biden that prohibits states from using $195 billion of federal aid to either directly or indirectly offset a reduction in net tax revenue. The restriction could apply through 2024.

A treasury spokesperson told The Associated Press that the provision isnt meant as a blanket prohibition on tax cuts. States can still offset tax reductions through other means.

We should not let federal restrictions weigh in on that direction were going as a state, Hutchinson said.

Why Do The Dc Republicans Have Any Credibility

President Biden has introduced his American Jobs Plan which will fund investments in our people and our infrastructure with higher taxes on corporations and individuals who make over $400,000.00 per year. S&P predicts that Bidens infrastructure plan will create 2.3 million jobs by 2024, inject $5.7 trillion into the economy which would be 10 times what was lost during the recession and raise per-capita income by $2,400, Axios reported.

This should come as no surprise to anybody but the sabotage minded D.C. Republicans have come out in opposition to Bidens plan. One of the key talking points from the right is that the proposed tax increases would be job killers. Senator Susan Collins alleged that the proposed 28% corporate tax rate would cause the loss of jobs. Not to be outdone in the pessimism sweepstakes, Senator Tim Scott in the GOP response to President Bidens address to members of Congress last week contended that the plan contains: The biggest job-killing tax hikes in a generation.

Now what I find interesting is that the GOP has been erroneously prognosticating that tax increases on the rich would hurt the economy since way back in 1993. Its like Collins and Scott simply cut and pasted GOP talking points from the Clinton and Obama years. Lets take a little trip down memory lane and see how previous D.C. Republican predictions of doom and gloom played out.

Gop Must Stop Believing In Magic

Im not making a plea for larger government just a plea for economic sanity.;If Congress in its all-seeing wisdom wants to spend $700 billion on the military, billions of dollars on farm subsidies;and so on,;it must either raise enough money in taxes to pay for the programs it authorizes or reduce the size of government.;

Instead, although Republicans controlled the White House, the Senate;and the House from 2017 to 2019, they;chose not to make any substantial cuts to government programs that would balance the revenue lost by their;series of massive unfunded tax cuts.

Unquestioning;and unsubstantiated;belief in the magical power of tax cuts isnt a viable economic policy. The;GOP is putting America on an unsustainable path that is disastrous both for;its;fiscal future and for the hopes of people trying to get ahead.;

Steven Strauss;is a lecturer and;visiting professor at;Princeton University’s;Woodrow Wilson School;of Public and International Affairs, an economic development specialist and a member of USA TODAYs Board of Contributors. Follow him Twitter:;

Also Check: Did Trump Say Republicans Are Stupid

Republicans View 2017 Tax Law The Way Democrats View Obamacare: As A Signature Achievement They Will Fight To Keep

Republicans have taken an aggressive approach to President Bidens plans to finance his roughly $6trillion agenda: Dont mess with their 2017 tax cuts.

Even before Biden formally unveiled his plans, Republicans sent a message that they consider the 2017 law that slashed personal and corporate tax rates as a sacrosanct measure that theyve no intention of gutting.

Sen. Roger Wicker explained this ethos in unusually blunt fashion when he returned to the Capitol on April12 after Biden met with a small bipartisan group of lawmakers involved in infrastructure issues, telling the group he was targeting the very taxes that Republicans slashed four years ago.

Clearly there are parts of his program that are non-starters for Republicans. The pay-for, I view the pay-for as a problem, Wicker told reporters in the Capitol after that meeting. I view the 2017 tax bill as one of my signature achievements in my entire career.

In many ways, Wicker signaled to Biden that Republicans view the 2017 law in the same manner that Democrats regard the 2010 passage of the Affordable Care Act: a signature achievement of domestic policy that they will defend in every way possible.

The two laws obviously had very different goals and very different results, one trying to provide health insurance for millions of uninsured Americans and the other reducing taxes on corporations and the wealthy.

Why Do Republicans Oppose Extending The Payroll Tax Cut

NYT reports that many Republicans are opposed to extending the payroll tax cut proposed by the Obama administration.

The payroll tax cut affects SS and Medicare contributions that employers deduct from their workers paychecks. It would mostly benefit low and middle-income Americans.

Many of the Republicans who oppose extending the tax cut have demanded an extension of the Bush tax cuts for the wealthiest Americans. Why do you think Republicans support extending tax cuts for wealthy Americans while opposing the extension of tax cuts for low- and middle-income Americans?

Recommended Reading: Gop Lapel Pin

Gop Lawmakers’ Education Spending Bump Buys Down Property Taxes

Republicans on Thursday also unveiled a plan to increase state support for public schools. The plan increases state money paid to schools, but doesn’t increase the amount of money schools will have to work with, because it simply replaces school funding previously provided;through property taxes with funding from the state.

Under the plan, the state would:

Buy down property taxes that fund schools by increasing;state general school aid funding by $408 million over two years.

Provide $167 million to replace property tax funding sent to charter schools associated with the City of Milwaukee, University of Wisconsin-Milwaukee, and UW-Parkside.

Spend $72 million on buying down property taxes directed to;the Wisconsin Technical College System.

Overall, the plan would cost $647 million over two years.;

The proposed spending plan is a sizable state spending increase;from the education plan approved by the Republican-controlled budget committee last month, which would have spent $1.4 billion less than Evers proposed on K-12 schools. That;Republican plan spurred concerns from the U.S. Department of Education, which said it could mean the state would fall short of federal requirements for Wisconsin to receive $2.3 billion in school aid under the two most recent coronavirus aid packages.;

According to the Legislatures nonpartisan budget office,;the new school funding proposed Thursday would bring Wisconsin into compliance with the federal requirements to receive the aid.;

An Exhaustive Lobbying Campaign

Almost immediately after Mr. Trump signed the bill, companies and their lobbyists including G.E.s Mr. Brown began a full-court pressure campaign to try to shield themselves from the BEAT and GILTI.

The Treasury Department had to figure out how to carry out the hastily written law, which lacked crucial details.

Chip Harter was the Treasury official in charge of writing the rules for the BEAT and GILTI. He had spent decades at PwC and the law firm Baker McKenzie, counseling companies on the same sorts of tax-avoidance arrangements that the new law was supposed to discourage.

Starting in January 2018, he and his colleagues found themselves in nonstop meetings roughly 10 a week at times with lobbyists for companies and industry groups.

The Organization for International Investment a powerful trade group for foreign multinationals like the Swiss food company Nestlé and the Dutch chemical maker LyondellBasell objected to a Treasury proposal that would have prevented companies from using a complex currency-accounting maneuver to avoid the BEAT.

The groups lobbyists were from PwC and Baker McKenzie, Mr. Harters former firms, according to public lobbying disclosures. One of them, Pam Olson, was the top Treasury tax official in the George W. Bush administration.

This month, the Treasury issued the final version of some of the BEAT regulations. The Organization for International Investment got what it wanted.

Recommended Reading: Snopes Trump Republican Dumb

Csb Bancorp Inc Declares Third Quarter Cash Dividend

But together, Biggs said he’s not sure how well it works. “Those people who do save more than $2,400 may take that figure as a cap and reduce their saving, even if they could benefit from the Roth treatment,” he said. “Moreover, if bosses or human resource managers who decide whether a firm sponsors a plan don’t like the cap, they may be less willing to have a 401 for their employees.”

Money For Roads And Schools

Republican On Why You Don’t Deserve Tax Cuts

The bigger question for Democrats and think tanks like Policy Matters Ohio is whether income tax cuts would be better spent on state services.;

The Senate plan would cut $874 million from Ohio’s budget.;

That’s money Senate Minority Leader Kenny Yuko, D-Richmond Heights,;would rather see spent funding public schools, repairing roads, fixing lead pipes and;increasing internet access in underserved communities.;

“Making our middle class stronger is crucial for a robust economic recovery. However, the majoritys proposed tax cuts will not achieve that goal,” Yuko said in a statement. “For almost 20 years, the General Assembly has prioritized income tax cuts that disproportionately benefit the wealthy, instead of policies that support workers and families.”

Anna Staver is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.

Don’t Miss: Republican Presidential Candidates Summary

Democrats Hope To Undo Many Trump Tax Cuts To Fund Biden’s $35 Trillion Budget Plan

Rep. Richard Neal, D-Mass., chairman of the House Ways and Means Committee, has proposed rolling back much of the 2017 GOP tax cuts to help pay for President Biden’s $3.5 trillion social spending plan.hide caption

toggle caption

Rep. Richard Neal, D-Mass., chairman of the House Ways and Means Committee, has proposed rolling back much of the 2017 GOP tax cuts to help pay for President Biden’s $3.5 trillion social spending plan.

Democrats hope to unwind many of the tax cuts Republicans enacted under former President Donald Trump as a way to pay for the majority of the $3.5 trillion spending bill currently under consideration in Congress.

House Ways and Means Committee Chairman Richard Neal, D-Mass., released details Monday of a plan that includes increasing the top corporate tax rate to 26.5%, up from the current rate of 21%, and restoring the top rate to 39.6% for individuals earning more than $400,000 and married couples earning over $450,000.

The changes are part of the tricky balancing act plaguing Democrats’ efforts to approve the bulk of President Biden’s domestic agenda. Leaders are attempting to prove to skeptics within their own party it is possible to finance a vast expansion of federal spending on everything from housing and health care to financial support for families and climate change all without increasing taxes on everyday Americans.

Republicans Not Biden Are About To Raise Your Taxes

President Trump built in tax increases beginning in 2021, for nearly everyone but those at the very top.

Mr. Stiglitz, a university professor at Columbia, is a Nobel laureate in economics.

The Trump administration has a dirty little secret: Its not just planning to increase taxes on most Americans. The increase has already been signed, sealed and delivered, buried in the pages of the 2017 Tax Cuts and Jobs Act.

President Trump and his congressional allies hoodwinked us. The law they passed initiallylowered taxes for most Americans, but it built in automatic, stepped taxincreases every two years that begin in 2021 and that by 2027 would affect nearly everyone but people at the top of the economic hierarchy. All taxpayer income groups with incomes of $75,000 and under thats about 65 percent of taxpayers will face a higher tax rate in 2027 than in 2019.

For most, in fact, its a delayed tax increase dressed up as a tax cut. How many times have you heard Trump and his allies mention that? They surmised correctly, so far that if they waited to add the tax increases until after the 2020 election, few of the people most affected were likely to remember who was responsible.

Looking at the analyses of the nonpartisan Congressional Budget Office and the Joint Committee on Taxation at the time the December 2017 tax bill was enacted, we see very clearly how different income groups are affected by the Trump tax plan. And its disturbing.

They must be stopped.

Don’t Miss: Who Is Right Republicans Or Democrats

The Tax Cut Will Pay For Itself

It was an article of faith among Republicans that their tax cut wouldnt just boost economic growth, but would actually generate more revenue than the old, higher tax rates. Not only will this tax plan pay for itself, but it will pay down debt, Mnuchin said. Kevin Hassett, then chair of the White House Council of Economic Advisers, agreed: You dont really need to have a big growth effect to have Secretary Mnuchin be correct. Former Rep. Jeb Hensarling, chair of the House Financial Services Committee, insisted that economic growth would be more than enough to make up for the lower tax rates.

That growth failed to materialize. Unsurprisingly, so have higher tax revenues. Corporate tax receipts plummeted from $240 billion to $140 billion in the first quarter after the tax cut passed, and have stayed at that level ever since.

So what happened to the federal deficit? Republicans lied about the effect of their cut on tax receipts and at the same time they also decided to stop worrying about keeping spending down. As a result, the federal deficit has gone upand thats not even accounting for the COVID-19 stimulus spending. This comes as no surprise to anyone who has heard the same Republican tax arguments for decades and now recognizes them for the fabrications they are.

Who Truly Wants Tax Cuts For Rich

Donald TrumpTexas announces election audit in four counties after Trump demandSchumer sets Monday showdown on debt ceiling-government funding billPennsylvania AG sues to block GOP subpoenas in election probeMORE and Republicans for handing out tax breaks to their wealthy friends and donors. Joe Biden last week at the national convention called Democrats the party for the working class and blue collar Americans. But is that really the case? Let us take a look at the two main tax stimulus proposals in front of Congress.

The plan from Trump would cut the payroll tax over the rest of the year. It would provide 140 million low and middle income Americans a 6 percent tax cut and would lower payroll costs for 30 million small businesses. The typical family with an income of around $60,000 would receive a $1,000 pay raise for the rest of the year. Nancy PelosiNancy PelosiOvernight Energy & Environment Presented by the League of Conservation Voters EPA finalizing rule cutting HFCsDemocrats steamroll toward showdown on House floorPanic begins to creep into Democratic talks on Biden agendaMORE has stated she opposes the idea, even though she supported this when Barack Obama was president. Trump signed an executive order to at least delay the payroll tax for those who make less than $100,000 during the rest of the year.

Stephen Moore is an adviser at Freedom Works and a member of the White House economic recovery task force. Find him on Twitter .

Don’t Miss: Who Is Right Republicans Or Democrats

Why Do Republicans Want To Repeal Obamacare So Much Because It Would Be A Big Tax Cut For The Rich

There are going to be so many tax cuts for the rich, you’re going to get tired of tax cuts for the rich. You’re going to say, Mr. President, please don’t cut taxes for the rich so much, this is getting terrible.

And it will start;when Republicans repeal Obamacare.

This is the Rosetta Stone for understanding why conservatives have acted like subsidized health care was the end of the republic itself. It wasn’t just that it had the word Obama in its name, which, in our polarized age, was enough to ensure that 45 percent of the country would despise it. No, it was that Obamacare was one of the biggest redistributive policies of the last 50 years. The Republican Party, after all, exists for what seems like;the sole purpose of reversing;redistribution.

A quick recap: Obamacare is a kind of three-legged stool. First, it tells insurance companies that they can’t discriminate against sick people anymore; second, it tells people that they have to buy insurance or pay a penalty, so that everyone doesn’t just wait until they’re sick to get covered; and third, it helps people who can’t afford the plans they have to buy be able to. Which is to say that you need to come up with a whole lot of money to make this work money that Obamacare gets by taxing the rich. Indeed, at its most basic level, it raises taxes on the top 1 percent to pay for health insurance for the bottom 40 percent.

Getting tired of tax cuts for the rich yet?

[orbemnews]

U.S. backs a 15 percent global minimum tax on big companies as it tries to enlist other countries. The Biden administration proposed a global tax on multinational corporations of at least 15 percent in the latest round of international tax negotiations, Treasury Department officials said on Thursday, a lower-than-expected offer as the U.S. looks to reach a deal with countries that fear hiking their rates will deter investment. Treasury has been holding meetings this week with a panel of negotiators from 24 countries about the so-called global minimum tax, which would apply to global companies regardless of where they locate their headquarters. The Biden administration hopes to reach an agreement in principle with other countries this summer and is counting on the deal to help sell its plan to raise the corporate tax rate in the United States to 28 percent from 21 percent. Treasury officials said their offer was met enthusiastically and characterized it as a pivotal moment in the negotiations, which have dragged on for more than two years. The negotiations over the global minimum tax are part of a broader global fight over how to tax technology companies and come as the Biden administration is trying to fix provisions in the tax code that it says incentivizes moving jobs overseas. As part of its American Jobs Plan, the Biden administration called for doubling the global intangible low-taxed income (or GILTI) tax to 21 percent, which would narrow the gap between what companies pay on overseas profits and what they pay on earned income in the United States. Under the plan, the tax would be calculated on a per-country basis, which would have the effect of subjecting more income earned overseas to the tax than under the current system. If the 15 percent global minimum tax rate is adopted, it would still leave a gap between that rate and the Biden administration’s proposed U.S. domestic rate. Treasury officials have argued that the new gap would be smaller than the current gap and therefore would not diminish the competitiveness of American companies. Part of the Biden administration’s ability to sell its plan, however, hinges on whether it can reach a deal with other countries on the global minimum tax so that American companies are not at a competitive disadvantage. The finance ministers from France and Germany indicated last month that they were willing to back a 21 percent global minimum tax rate. But countries will have to change their laws to formally make the agreement happen and enforcement of the deal will be complicated. Ireland, which is not a member of the steering committee undertaking the negotiations through the Organization for Economic Cooperation and Development, has a 12.5 percent corporate tax rate and has expressed reservations about such an agreement. Treasury officials said that they never insisted on the 21 percent rate. However, they view the 15 percent level as a floor and will continue to push for a higher rate. They said they believed that other countries were receptive to the idea of adopting higher rate depending on the fate of the changes to the American tax system that are under consideration. Treasury Secretary Janet L. Yellen has warned that a global “race to the bottom” has been eating away at government revenues, and she has adopted a more collaborative approach to the negotiations than the Trump administration employed. Ms. Yellen is expected to continue talks about international tax reform with her international counterparts at the Group of 7 finance ministers meeting next month. Source link Orbem News #backs #Big #Companies #Countries #enlist #Global #minimum #Percent #Tax