Tax Foundation analysis examines impact of corporate tax rate increase

According to the Tax Foundation, the proposed corporate tax increase included in the Build Back Better Act, which was advanced by the U.S. House Ways and Means Committee this week, is higher than it may seem. © Shutterstock In a recent blog post, authors Alex Muresianu and Eric York pointed out while the reconciliation bill […]

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According to the Tax Foundation, the proposed corporate tax increase included in the Build Back Better Act, which was advanced by the U.S. House Ways and Means Committee this week, is higher than it may seem.

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In a recent blog post, authors Alex Muresianu and Eric York pointed out while the reconciliation bill would increase the top federal corporate tax rate from 21 percent to 26.5 percent, most companies would face a higher tax rate than 26.5 percent. This is because most states also levy a corporate income tax.

Including the average state corporate tax rate, they wrote, the U.S. would have an average corporate tax rate of 30.9 percent. This would be the third-highest corporate tax rate in the Organisation for Economic Co-operation and Development (OECD), behind only Colombia and Portugal.

“Under current law, the U.S. is right in line with OECD peer countries, and actually near the middle of the pack as far as corporate taxation goes. Returning to near the top of the OECD in corporate tax rates would be costly for a few reasons: it would disincentivize investment and encourage firms to shift profits and locate elsewhere, resulting in fewer job opportunities for Americans and less tax revenue for the U.S. government,” Muresianu and York wrote.

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Treasury Department report shows child care system overburdens families

A new report from the U.S. Department of Treasury says the child care market in the United States causes undue burden on American families due to high cost and insufficient supply. © Shutterstock The report bolsters President Joe Biden’s Build Back Better agenda which calls for universal preschool for all 3- and 4-year-old children, expands […]

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A new report from the U.S. Department of Treasury says the child care market in the United States causes undue burden on American families due to high cost and insufficient supply.

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The report bolsters President Joe Biden’s Build Back Better agenda which calls for universal preschool for all 3- and 4-year-old children, expands tax credits for child care, and provides access to high-quality child care for low- and middle-income families.

“It’s past time that we treat child care as what it is – an element whose contribution to economic growth is as essential as infrastructure or energy,” said U.S. Treasury Secretary Janet Yellen during an event announcing the study. “This is why the Biden Administration has prioritized the Build Back Better proposals, many of which are now moving through Congress. Enacting them is the single most important thing we can do to build a stronger economy over the next several decades.”

According to the report, existing child care in the United States relies on private financing. The report estimated that the average family with at least one child under the age of five would spend approximately 13 percent of the family’s income on childcare. Often, the report said, this expense comes with the family can least afford it and lacks the ability to borrow against future savings to cover the costs.

Additionally, the report said, the current childcare market often fails to provide children with a high-quality early educational experience.

The administration said adopting their child care plan would cut spending in half for most American families allowing them to spend no more than 7 percent of their income on childcare by creating subsidized care, and extending the expanded child and dependent care tax credit. The plan would address revenue shortfalls while allowing families to contribute more to the nation’s economy, the administration said.

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Lawmaker seeks American Samoa business tax credits

Rep. Uifa’atali Amata (R-American Samoa) is touting the potential benefits of a budget reconciliation bill she said would provide American Samoa businesses with new tax credits.© Shutterstock Amata indicated the legislation would enable deduction of 20 percent of wages and benefits up to $50,000 and 50 percent up to $141,000 for certain qualifying small businesses. […]

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Rep. Uifa’atali Amata (R-American Samoa) is touting the potential benefits of
a budget reconciliation bill she said would provide American Samoa businesses with new tax credits.

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Amata indicated the legislation would enable deduction of 20 percent of wages and benefits up to $50,000 and 50 percent up to $141,000 for certain qualifying small businesses.

“American Samoa will benefit from any extra economic stimulus, including allowing businesses to keep more of their money active here in the local economy,” Amata said. “Businesses will use tax credits for local purchases, equipment, or supplies they need, or adding an employee, but it keeps this money at work in the local economy.”

The proposed tax credit stems from the House Ways and Means Committee, officials noted.

“My focus is seeing that American Samoa is included if this bill goes forward, or if a reduced bill emerges, as I especially support the bill’s inclusion of $120-140 million in hospital funds for American Samoa over ten years,” Amata added, in the wake of some lawmakers expressing the $3.5 trillion measure is too costly in the wake of two years of record federal spending. “I appreciate the attention to fiscal responsibility underway in the Senate and I am communicating American Samoa’s needs with these leaders to be part of any outcome.”

Amata said she would continue focusing on legislation addressing hospital funding, Medicaid extension and road funding.

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FHFA, Treasury suspend some provisions for Fannie, Freddie preferred stock purchase agreements

The Federal Housing Finance Agency (FHFA) and the U.S. Department of the Treasury have suspended certain provisions that had been added to the Preferred Stock Purchase Agreements with Fannie Mae and Freddie Mac on Jan. 14, 2021.© Shutterstock The suspended provisions include limits on Fannie Mae and Freddie Mac’s cash windows, multifamily lending, loans with […]

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The Federal Housing Finance Agency (FHFA) and the U.S. Department of the Treasury have suspended certain provisions that had been added to the Preferred Stock Purchase Agreements with Fannie Mae and Freddie Mac on Jan. 14, 2021.

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The suspended provisions include limits on Fannie Mae and Freddie Mac’s cash windows, multifamily lending, loans with higher risk characteristics, and second homes and investment properties. The two enterprises will continue to build capital under the continuing provisions of the Preferred Stock Purchase Agreements, or PSPAs.

Further, the FHFA will continue to direct the enterprises to operate in a safe and sound manner consistent with their statutory mission. They will also continue to direct them to foster resilient housing finance markets given prevailing housing market conditions, which include elevated demand relative to available inventory.

The FHFA will consult with the Treasury Department on the scope of the review and on any recommended revisions to the PSPA requirements.

“This suspension will provide FHFA time to review the extent to which these requirements are redundant or inconsistent with existing FHFA standards, policies, and directives that mandate sustainable lending standards,” Acting Director Sandra Thompson said.

In addition, the FHFA is reviewing the Enterprise Regulatory Capital Framework and expects to announce further action in the near future.

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GOP House members express concerns about IRS data collection proposal

A group of Republican members of the U.S. House of Representatives have expressed concerns to Congressional leaders and Biden Administration officials about a proposal on Internal Revenue Service (IRS) data collection that would increase tax information reporting requirements on financial institutions.© Shutterstock The proposal would require financial institutions to report certain transaction level data as […]

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A group of Republican members of the U.S. House of Representatives have expressed concerns to Congressional leaders and Biden Administration officials about a proposal on Internal Revenue Service (IRS) data collection that would increase tax information reporting requirements on financial institutions.

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The proposal would require financial institutions to report certain transaction level data as well as information about the outflows and inflows on accounts over $600 to the IRS every year.

U.S. Rep. Tom Emmer (R-MN) said the requirements of the proposal would impose significant compliance costs on banks, credit unions, and related financial institutions. He also said it would infringe on the privacy of millions of Americans.

“Our Main Street financial institutions are already required to report a tremendous amount of data to the IRS, and the IRS has proven time and time again that they cannot protect this sensitive taxpayer information. Privacy is one of the main reasons individuals choose not to open bank accounts. This proposal will further exacerbate the divide between the banked, unbanked and underbanked,” Emmer said.

Emmer was among more than 140 Republican members of Congress who sent a letter on Sept. 13 to House Speaker Nancy Pelosi (D-CA), Ways and Means Committee Chair Rep. Richard Neal (D-MA), Treasury Secretary Janet Yellen, and IRS Commissioner Charles Rettig with their concerns.

“Not only are there serious privacy implications for the taxpayer and compliance burdens for our financial institutions, but there is also no reason to believe that handing more sensitive information over to the IRS will assist in any way in closing the ‘tax gap’ – the difference between taxes paid and taxes owed by law. We should only legislate when it makes sense, and it must protect Americans and our financial system, not focus on raising revenue at the expense of our taxpayers and financial institutions,” Emmer added.

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SEC files complaint against media companies alleging unregistered stock offering

Securities and Exchange Commission (SEC) filed a complaint against a trio of media companies, alleging illegal unregistered offering of common stock.© Shutterstock The SEC recently levied charges against New York City-based GTV Media Group Inc. and Saraca Media Group Inc., as well as Phoenix, Arizona-based Voice of Guo Media Inc., regarding illegal unregistered offering of […]

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Securities and Exchange Commission (SEC) filed a complaint against a trio of media companies, alleging illegal unregistered offering of common stock.

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The SEC recently levied charges against New York City-based GTV Media Group Inc. and Saraca Media Group Inc., as well as Phoenix, Arizona-based Voice of Guo Media Inc., regarding illegal unregistered offering of GTV common stock.

The agency also indicated, per authorities, charges were to be issued against GTV and Saraca for conducting an illegal unregistered offering of a digital asset security referred to as either G-Coins or G-Dollars.

According to the SEC, without admitting or denying the SEC’s findings that they violated Section 5 of the Securities Act of 1933, GTV and Saraca reached an agreement on a cease-and-desist order — resulting in paying disgorgement of over $434 million plus prejudgment interest of approximately $16 million on a joint and several basis. Each entity will pay a civil penalty of $15 million, officials noted.

Voice of Guo agreed to a cease-and-desist order resulting in payment of disgorgement of more than $52 million plus prejudgment interest of nearly $2 million while agreeing to pay a civil penalty of $5 million.

“Issuers seeking to access the markets through a public securities offering must provide investors with the disclosures required under the federal securities laws,” Sanjay Wadhwa, deputy Director of the SEC’s Enforcement Division, said. “When they fail to do so, the Commission will seek remedies that make harmed investors whole, such as an unwinding of the offering and a return of the funds to the investors.”

Richard R. Best, director of the SEC’s New York Regional Office, said the remedies ordered by the SEC would provide meaningful relief to investors.

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Sen. Crapo, Rep. Brady propose tax gap reform bill

U.S. Rep. Kevin Brady (R-TX) and U.S. Sen. Mike Crapo (R-ID) recently introduced a bill that would address the tax gap and initiate reforms within the Internal Revenue Service. © Shutterstock Their bill, the Tax Gap Reform and Internal Revenue Service (IRS) Enforcement Act, H.R. 5206/S. 2721, would require the IRS to provide annual tax […]

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U.S. Rep. Kevin Brady (R-TX) and U.S. Sen. Mike Crapo (R-ID) recently introduced a bill that would address the tax gap and initiate reforms within the Internal Revenue Service.

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Their bill, the Tax Gap Reform and Internal Revenue Service (IRS) Enforcement Act, H.R. 5206/S. 2721, would require the IRS to provide annual tax gap estimates in coordination with the Joint Committee on Taxation. In addition, it would require the IRS to use existing data and tools to improve its corporate audit selection process and increase enforcement against high-income non-filers. Further, it would create an IRS enforcement fellowship pilot program to assist with the agency’s most complex audits and case selection decisions. And it would codify President Joe Biden’s pledge to not increase audits of taxpayers making less than $400,000 per year and prohibits the establishment of new bank reporting requirements.

The bill is in response to a proposal by Democrats to increase IRS funding by $80 billion over the next 10 years to expand enforcement and compliance activities at the IRS, as well as financial account information reporting.

“In light of recent proposals to massively expand the IRS, with unprecedented amounts of mandatory funding, and the IRS’s continued abuses of taxpayer rights and privacy, any additional IRS funding and monitoring of Americans’ private finances must come with guardrails to help protect against abuses,” Crapo, ranking member of the Senate Finance Committee, said. “This legislation places important guardrails around IRS funding to protect taxpayers’ rights and privacy.”

The legislation is supported by the National Taxpayers Union, Americans for Tax Reform and the Center for a Free Economy.

“This legislation is a strong alternative to recent proposals that would write an $80 billion check to the IRS with too little forethought,” Pete Sepp, president of the National Taxpayers Union, said. “If lawmakers move forward with an Internal Revenue Service (IRS) budget boost anyway, these reforms and more should be considered prerequisites for any major proposed increase in the IRS budget, and would both safeguard taxpayers’ rights and support taxpayers’ interest in an effective, modern, and agile IRS.”

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Wyden introduces bill to close tax loopholes for large corporations and wealthy investors

U.S. Sen. Ron Wyden (D-OR) introduced draft legislation to close loopholes that allow wealthy investors and large corporations to use pass-through entities, primarily partnerships, to avoid paying higher taxes. © Shutterstock Wyden’s bill would remove the complexity that exists in current partnership rules by closing certain loopholes. By closing these loopholes, an additional $172 billion […]

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U.S. Sen. Ron Wyden (D-OR) introduced draft legislation to close loopholes that allow wealthy investors and large corporations to use pass-through entities, primarily partnerships, to avoid paying higher taxes.

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Wyden’s bill would remove the complexity that exists in current partnership rules by closing certain loopholes. By closing these loopholes, an additional $172 billion would be generated in taxes, according to the senator’s office.

“The constant theme running through our tax code is paying taxes is mandatory for working people, but optional for wealthy investors and mega-corporations. That’s especially true when it comes to pass-through businesses and partnerships, the preferred tax avoidance tools for those at the top,” Wyden, chair of the Senate Finance Committee, said. “On the one hand, the rules are too complex for working people who don’t have armies of lawyers and accountants. On the other hand, complexity allows the wealthiest individuals and most profitable corporations to decide when, and whether, to pay taxes at all.”

“This proposal simply reduces complexity by closing loopholes that allow those at the top to pick and choose when, and whether, to pay tax. Raising more than $172 billion for priorities like childcare and paid leave by closing off these loopholes is a no-brainer,” he added.

Wyden said the partnership tax rules afford lots of flexibility in the allocation of partnership income and losses among partners. This bill would seek to remove options to decide when and whether to pay tax. This would simplify administration and curtail abuse.

“These proposals are directed to the major areas of abuse or ambiguity in the partnership law dealing with allocations by a partnership to a partner, basis adjustments of partners, and liabilities allocated to partners for tax basis and disguised sale purposes and should help the IRS in auditing more partnerships in an efficient manner. The IRS is behind the curve in terms of auditing partnerships and applying the complex partnership tax law to them, and these proposals will provide much needed simplification to help improve the overall effectiveness of the tax law. Although some flexibility in applying the partnership rules will be curtailed or eliminated, this was a necessary effect of the simplification of the provisions. Sufficient regulatory authority is granted to the Treasury and IRS in the proposals to help interpret and apply the new provisions in a fair and balanced manner to taxpayers who are partners in partnerships,” Monte Jackel, Of Counsel Leo Berwick, who reviewed these proposals in his personal capacity, said.

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Rep. McHenry looks to bring Renter Protection Act to House floor for vote

U.S. Rep. Patrick McHenry (R-NC), the top Republican on the House Financial Services Committee, filed a discharge petition to force consideration of the Renter Protection Act, on the House floor. © Shutterstock This bill, H.R. 3913, seeks to expedite payments from the the $46 billion in Emergency Rental Assistance money so it can be used […]

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U.S. Rep. Patrick McHenry (R-NC), the top Republican on the House Financial Services Committee, filed a discharge petition to force consideration of the Renter Protection Act, on the House floor.

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This bill, H.R. 3913, seeks to expedite payments from the the $46 billion in Emergency Rental Assistance money so it can be used to pay off any outstanding back rent and remove the threat of eviction from COVID-impacted renters. McHenry said it is being brought forth due to the Democrats’ failure to address what he called the Biden Administration’s mismanagement of the Emergency Rental Assistance (ERA) programs.

“Congress promised relief to renters and property owners impacted by the pandemic,” McHenry said. “Due to the Biden Administration’s mismanagement and Congressional Democrats’ inaction, American families have been left twisting in the wind. Republicans have been offering a commonsense solution for months—the Renter Protection Act—to fix the ERA programs, make mom-and-pop property owners whole, and end the threat of eviction. This discharge petition will force Congress to finally keep the promise we made to renters and property owners almost one year ago.”

The Renter Protection Act of 2021 would reform the ERA programs by consolidating them into one unified program with one set of rules. Thus, it would transfer all remaining March 2021 ERA program funds into the original December 2020 ERA program and requires Treasury to disburse the funds within 30 days.

Further, it would require that cities and states with any unused ERA money use those funds to pay off the back-rent debts of COVID-impacted eligible households. Finally, it would reinstate the original Dec. 31, 2021 deadline for cities and states to distribute all ERA funds to COVID-impacted eligible households.

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IRI advocates retirement savings plan measure

Insured Retirement Institute (IRI) officials said the organization supports proposed House Ways and Means Committee legislation that would result in small business workers gaining workplace retirement savings plan access. Per the IRI, the bill would also present employees with the opportunity to choose a protected lifetime income solution within a plan similar in scope to […]

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Insured Retirement Institute (IRI) officials said the organization supports proposed House Ways and Means Committee legislation that would result in small business workers gaining workplace retirement savings plan access.

Per the IRI, the bill would also present employees with the opportunity to choose a protected lifetime income solution within a plan similar in scope to benefits offered by a more traditional pension — adding the proposed legislation is spearheaded by
House Ways and Means Committee Chairman Rep. Richard Neal (D-MA).

“We appreciate Chairman Neal’s steadfast leadership and advocacy of this legislation to help America’s workers, retirees, and their families build economic equity, strengthen financial security, and protect income in a sustainable manner to last throughout retirement years,” IRI President and CEO Wayne Chopus said. “We look forward to working with Chairman Neal and other supporters to enact this important initiative.”

According to the proposed measure, employers with five employees or more would be required to provide or arrange for access to an automatic retirement contribution plan for all full-time and long-term part-time employees.

Additionally, employers would be required to offer employees with at least a $200,000 vested retirement account balance the option to take a distribution of up to 50 percent of savings to purchase a lifetime income solution.

“Policymakers have created numerous incentives, options and mechanisms for employers to offer workplace retirement plans. But too many employees, particularly those who work for small businesses, are still not covered by a plan,” Chopus said. “This puts too many workers in jeopardy of not saving enough for retirement, which can last 20 or 30 years or longer. We need to take additional steps to address the inequitable access to an effective means to accumulate retirement savings and this legislation is a common-sense step to do just that.”

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