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YOU FEEL IT: It’s pretty noticeable – senior tax officials in Europe are extremely confident that at least a public digital tax deal will come off this year.
Here is just one example: “It is very likely that we will achieve the success we are working so hard for,” German Finance Minister Olaf Scholz told CNBC last week when the final round of talks on the Organization for Economic Cooperation and Development took place completed.
Scholz added that the Biden government has announced that they “understand the need for agreement in this area and will work with all of us to find solutions.”
The German finance minister may have tried a little harder, but his comments are similar to those made by Scholz’s colleagues in the UK, France and elsewhere.
But is this trust justified? American tax professionals who are closely monitoring the situation have their doubts, especially with June 30th being the self-imposed deadline for closing a deal.
“There are still very real challenges in reaching consensus on the digital business taxation part and I don’t see why it got easier, especially given that it will be some time before the Treasury Department even set up a negotiating team The clock is ticking, “said one of these tax professionals.
More on that shortly, but already in February, right? Nobody has shown you the pandas frolicking in the snow video yet, have they? (Of course they have.)
Yes, but what is your Sunday like? Today 91 years have passed since The Times (that is, London) published its first crossword puzzle – a good dozen years before the New York Times followed suit.
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So what’s going on here? As Morning Tax noted, it is still fairly early in the honeymoon for the Biden and other world governments hoping for more multilateral engagement after four years of former President Donald Trump.
In this sense, it is entirely possible that the Europeans will flatter each other in order to get the Biden government to become even further involved in the OECD process. But these tax experts, overseeing affairs from here in the US, suggest these European officials are losing sight of the bipartisan interest – at least since the Obama administration – to protect the US tax base from outside tax collectors.
Treasury Secretary Janet Yellen was certainly positive about the OECD talks, but there is also the slight problem of getting Congress to approve a deal.
“Countries with parliamentary systems don’t appreciate the challenges of getting this stuff through Congress and take Yellen’s positive statements about the job (especially the minimum tax proposal that is part of the job) as much more than she does.” said the same tax professional.
However, it is not clear whether there are major disadvantages for European officials if the OECD talks fall short, even if they sounded so confident. (After all, many governments have already said what they would do if this happened – enforce unilateral digital taxes, which could potentially spark further retaliation from the US – even if that’s an outcome almost everyone wants to avoid.)
THE WEEK AHEAD: Congressional Democrats are expected to get the ball rolling this week to possibly tackle further coronavirus relief on their own by passing budgetary decisions that would allow them to take advantage of the reconciliation process that is only a simple majority in the Senate requires.
A group of 10 Senate Republicans, led by Maine Senator Susan Collins, made one final plea to convince the Democrats of this way over the weekend, our Burgess Everett reported – by asking to meet President Joe Biden and one Plan about a third the size of the $ 1.9 trillion currently being sought by the White House.
Republicans got this meeting, but it doesn’t seem like Senate Majority Leader Chuck Schumer is only interested in what the GOP Senators are offering. “You should negotiate with us and not make a take-it-or-leave offer,” Schumer told the New York Daily News, noting that the Republican framework did not include any additional funding for states and localities.
So what now? Biden and his team have repeatedly said how soon they want to get more Covid-19 aid, but they don’t seem to lose too much by listening to Republicans this week – especially when budgets are on a parallel route on the EU adopted hill.
And it’s another reminder that many of the tax and revenue ideas thrown around for further pandemic relief aren’t the kind of low hanging fruit with potentially great support from both parties.
As Schumer noted, there is increased aid to state and local governments, but also proposals to expand the tax credit for children and the tax credit for earned income.
For example, Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, recently dwarfed the potentially larger child loan – and suggested to reporters that Democrats should work on the CTC extensions to the 2017 GOP Tax Act extend. HR 1 (117). (Brady also claimed that the IRS would have real problems managing monthly loan payments, one of the ideas that Democrats floated.)
BUCKLE UP: Eswatini, the African country formerly known as Swaziland, is trying to revise its tax laws, not least because Bloomberg deviates in large amounts from accounting by about two-fifths of the country’s gross domestic product, reports. According to Finance Minister Neal Rijkenberg, this has increased the government’s interest in consumption taxes. (Eswatini may also put less weight on corporate financial statements when calculating their tax charges.) On the income tax side, the government is considering raising the highest income tax rate from 33 percent to 36 percent, while increasing the amount, from which point people pay taxes to tackle income inequality. Eswatini is already working on a corporate tax cut – from 27.5 percent to 12.5 percent – to expand investment in the country. This lower rate should be rolled out gradually over a four-year period, but Eswatini may need to keep it longer as the coronavirus has damaged the country’s revenue collections.
BUCKLE UP: Taxes will play a huge role in Nevada’s legislative session starting today, reports The Associated Press – much like in many other states. Democrats have tight majorities in both houses of Nevada lawmakers, which means they cannot collect taxes themselves – that requires two-thirds of the majority in both the House and Senate. Still, Democrats say they will consider proposals to raise taxes to avoid spending cuts, despite concerns that would harm an economy still feeling the effects of the coronavirus. On the ideas on the table at this session: Local government supporters want to change the property tax cap so cities and counties can charge more; Urban core lawmakers want higher mining taxes (rural Republicans not so much); and the idea of raising the gambling tax to nearly 10 percent to help public schools angered the hospitality industry.
There’s always an angle – NYT: “So you’ve made a lot of money with GameStop. There’s a catch: taxes. “
Probably no surprise, but: The editorial page of the Wall Street Journal supports New Hampshire in its work on the tax dispute with Massachusetts.
The New York judge tells tax attorneys who have worked with the Trump Organization to turn more documents over to the attorney general.
King Mswati III Announced in 2018 that Swaziland would change its name to Eswatini, also because people mistook the country for Switzerland.