On The Hill

Tax Extenders Still Up in the Air

While tax extenders discussions are ongoing, contents of an extender package – and if one will materialize before Congress returns home for the holidays – remain unclear. The Work Opportunity Tax Credit (WOTC) is on the shortlist of the extenders favored by Democrats. WOTC was previously extended in 2015, along with the New Markets Tax Credit. While the “mere date change” path is favored by Senate Finance members in both parties, House Democrats do not appear to approve of a package that they believe benefits corporations and the wealthy. House Democrats are also insistent that refundability for the child tax credit and “green energy” provisions (tax credits for electric vehicles, wind and solar energy, etc) be a part of the extenders package. However, Senate Republicans will not accept any refundable credits in the deal. With little agreement, it is possible extenders discussion may be pushed into 2020; a prospect that bodes ill for the 2017-2018 extenders and the CFC look-through rule that are now two years expired. With the holidays approaching and a vote on impeachment early next week there will likely be a resolution soon.

SALT Legislation to Get Floor Time

Legislation lifting the federal deduction limit on state and local taxes (SALT) may get a floor vote next week, according to House Ways and Means Chairman Richard Neal (D-MA). On Wednesday (Dec 11), the bill, which suspends the $10,000 SALT cap for two years, passed out of committee 24-1, largely on party lines. Rep. Stephanie Murphy (D-FL) was the sole Democrat to vote against the bill; in the past, Murphy has argued for altering the SALT cap as part of a larger rework of the 2017 Tax Cuts and Jobs Act (TCJA). Rep. Tom Reed (R-NY) also crossed the aisle and voted in favor of the legislation.^[1] The bill would raise the top individual tax rate from 37 percent to to its pre-TCJA level (39.6 percent) for six years in order to offset the two-year suspension and will not be considered in the Senate.

Canada Moves Forward on Digital Tax

Canadian Finance Minister Bill Morneau says Prime Minister Trudeau plans to move ahead with his digital tax plan, despite Trump’s threats to place new tariffs on French products for introducing a similar tax. “We want to make sure that digital companies pay their fair share of taxes in our country,” Morneau said Monday (Dec 9).^[2] Morneau also noted support for the Organization of Economic Cooperation and Development’s (OECD) approach to a “consensus-based solution” for digital taxation, and said Trudeau’s government will work to achieve whatever standards the body sets.

References

^[1] Lorenzo, Aaron “House leaders looking at floor vote for SALT relief bill next week” Politico Pro, 12 Dec 2019 https://subscriber.politicopro.com/article/2019/12/house-leaders-looking-at-floor-vote-for-salt-relief-bill-next-week-3974984

^[2] Blatchford, Andy “Morneau: Trudeau to ‘move forward’ om digital tax” Politico Pro, 09 Dec 2019. https://subscriber.politicopro.com/article/2019/12/morneau-trudeau-to-move-forward-on-digital-tax-1841099