A proposal to overhaul tax-code rules for U.S. multinational corporations unveiled Tuesday by Senate Finance Committee Chairman Max Baucus prompted a mix of responses, with little anticipation that the changes could become law anytime soon.
The proposed changes range from setting a minimum tax on the income these companies earn worldwide to imposing a temporary tax of about 20 percent on earnings parked abroad.
Tuesday’s proposal is a response to the general notion that current law creates too many incentives for multinational corporations to invest and create jobs overseas. Roughly $2 billion in U.S. corporate earnings are estimated to reside overseas.
“I agree with Senator Baucus that tax reform should raise significant revenue,” said Rep. Sander Levin, D-Mich., the top Democrat on the House Ways and Means Committee. “As Ways and Means Democrats have repeatedly said, the only path to the needed enactment of tax reform is a bipartisan one in both the House and Senate.”
But Baucus’s plan — the first of three drafts on various aspects of the tax system that the Montana Democrat will release this week — comes after House Republicans last week indicated their tax-reform efforts have been put on hold, at least for the rest of the year. And the prospect of revamping the tax system next year, with a midterm election looming, is seen as unlikely.
Rep. Dave Camp, R-Mich., the chairman of the Ways and Means Committee, who is leading House Republican efforts, did not address the specifics of the Baucus proposal Tuesday, but he said the discussion over fixing “our broken tax code” is “a critical debate that must take place if we are going to get our economy back on track,” adding that “I applaud Chairman Baucus for his continued commitment to advancing tax reform forward amongst his Senate colleagues.”
Baucus’s proposal followed a closed-door meeting with other senators on the Finance Committee. The draft describes some of the plan’s objectives, which include reducing incentives for U.S. and foreign multinationals to invest in or shift profits to low-tax foreign countries; reducing incentives for U.S.-based businesses to move abroad; and simplifying the tax rules so that firms with the most-sophisticated tax advisers are not advantaged.
Under current law, U.S. companies owe taxes at a full federal rate of 35 percent on all income earned worldwide. But they can defer U.S. taxation until they repatriate the money. Baucus’s plan to restructure the system would lower the corporate rate by an unspecified amount.
But the draft includes two options for taxing income from products and services sold into foreign markets.
One would be a minimum tax that immediately applies to all such income at 80 percent of the U.S. corporate tax rate with full foreign tax credits, coupled with a full exemption for foreign earnings upon repatriation. Another is a minimum tax that immediately applies to income at 60 percent of the U.S. corporate rate if derived from active business operations, but at the full U.S. rate if not, coupled with a full exemption for foreign earnings upon repatriation.
Some corporations have been calling for a “tax-repatriation holiday” to bring those stockpiled earnings parked overseas back to the country. The proposed changes outlined in the Baucus draft don’t do that. But earnings of foreign subsidiaries from periods before the effective date of the proposal that have not been subject to U.S. tax would now be subject to the one-time tax at a reduced rate of about 20 percent, payable over eight years — which estimates say could bring a one-time, $200 billion shot into the U.S. Treasury.
The two other draft proposals that Baucus is expected to release this week will touch on tax administration and capital-cost recovery.
Treasury Secretary Jacob Lew said at a Wall Street Journal conference on Tuesday that he had discussed the draft with Baucus, and he praised the chairman for putting forward a plan that “shares some significant characteristics with the president’s framework” while including provisions that he hopes will find support among both Republicans and Democrats.
Lew said that such a plan to “deal with the disparity between the U.S. and international tax rates” could provide a “shot in the arm” to the American economy, and he suggested using that one-time revenue to make critical investments in infrastructure. “It would build a foundation for a strong growth and job-creation economy,” he said.
But not everyone was so positive about the Baucus proposals. In a statement, Business Roundtable President John Engler praised Baucus for his efforts, saying, “Baucus’ goal of increasing the ability of U.S. businesses to compete abroad is critical.”
But he added, “Unfortunately, we do not believe that the staff’s international discussion draft supports that goal because it would make many American companies even less competitive than their non-U.S. counterparts.”
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Before we get to the specifics of this exposé about escorts working the Iowa and New Hampshire primary crowds, let’s get three things out of the way: 1.) It’s from Cosmopolitan; 2.) most of the women quoted use fake (if colorful) names; and 3.) again, it’s from Cosmopolitan. That said, here’s what we learned:
- Business was booming: one escort who says she typically gets two inquiries a weekend got 15 requests in the pre-primary weekend.
- Their primary season clientele is a bit older than normal—”40s through mid-60s, compared with mostly twentysomething regulars” and “they’ve clearly done this before.”
- They seemed more nervous than other clients, because “the stakes are higher when you’re working for a possible future president” but “all practiced impeccable manners.”
- One escort “typically enjoy[s] the company of Democrats more, just because I feel like our views line up a lot more.”
No matter where you stand on mandating companies to include a backdoor in encryption technologies, it doesn’t make sense to allow that decision to be made on a state level. “The problem with state-level legislation of this nature is that it manages to be both wildly impractical and entirely unenforceable,” writes Brian Barrett at Wired. There is a solution to this problem. “California Congressman Ted Lieu has introduced the ‘Ensuring National Constitutional Rights for Your Private Telecommunications Act of 2016,’ which we’ll call ENCRYPT. It’s a short, straightforward bill with a simple aim: to preempt states from attempting to implement their own anti-encryption policies at a state level.”
Much has been made of David Brooks’s recent New York Times column, in which confesses to missing already the civility and humanity of Barack Obama, compared to who might take his place. In NewYorker.com, Jeffrey Frank reminds us how critical such attributes are to foreign policy. “It’s hard to imagine Kennedy so casually referring to the leader of Russia as a gangster or a thug. For that matter, it’s hard to imagine any president comparing the Russian leader to Hitler [as] Hillary Clinton did at a private fund-raiser. … Kennedy, who always worried that miscalculation could lead to war, paid close attention to the language of diplomacy.”
The New Covenant. The Third Way. The Democratic Leadership Council style. Call it what you will, but whatever centrist triangulation Bill Clinton embraced in 1992, Hillary Clinton wants no part of it in 2016. Writing for Bloomberg, Sasha Issenberg and Margaret Talev explore how Hillary’s campaign has “diverged pointedly” from what made Bill so successful: “For Hillary to survive, Clintonism had to die.” Bill’s positions in 1992—from capital punishment to free trade—“represented a carefully calibrated diversion from the liberal orthodoxy of the previous decade.” But in New Hampshire, Hillary “worked to juggle nostalgia for past Clinton primary campaigns in the state with the fact that the Bill of 1992 or the Hillary of 2008 would likely be a marginal figure within today’s Democratic politics.”
At first, “it was pleasant” to see Trevor Noah “smiling away and deeply dimpling in the Stewart seat, the seat that had lately grown gray hairs,” writes The Atlantic‘s James Parker in assessing the new host of the once-indispensable Daily Show. But where Jon Stewart was a heavyweight, Noah is “a very able lightweight, [who] needs time too. But he won’t get any. As a culture, we’re not about to nurture this talent, to give it room to grow. Our patience was exhausted long ago, by some other guy. We’re going to pass judgment and move on. There’s a reason Simon Cowell is so rich. Impress us today or get thee hence. So it comes to this: It’s now or never, Trevor.”