HATCH AND RYAN PRESS TREASURY TO BACK OFF ON BEPS. The two top Republican tax writers in Congress are questioning whether the Treasury Department has the authority to write new regulations for how much information companies have to share about business conducted abroad. Senate Finance Committee Chairman Orrin Hatch (R-Utah) and House Ways and Means Committee Chairman Paul Ryan (R-Wis.) wrote a letter to Treasury Secretary Jack Lew on Thursday asking him to prove that the department has the legal right to move forward with regulations and preempt Congress.
“We are not convinced that Treasury has the authority to require [country-by-country reporting] by certain U.S companies (including sharing the information with foreign governments),” the two wrote. “In addition, the benefits to the U.S. government, businesses, and workers from providing sensitive information in the [country-by-country] reports… is unclear at best.”
The focus on this niche tax issue represents another effort by Republicans to fight back against what they perceive as President Obama’s excessive use of executive authority to enact policy priorities rather than waiting for Congress to take action.
The negotiations over the country-by-country tax reporting requirements are part of an ongoing project led by the Paris-based Organisation for Economic Cooperation and Development (OECD) that aims to craft a series of international tax standards for all countries. The project, known as Base Erosion and Profit Shifting (BEPS), is intended to combat a world-wide trend of large corporations shifting profits between global subsidiaries and gaming each country’s laws to avoid paying taxes.
WOULD TRUMP CUT THE REAL ESTATE TAX BREAK? Republican presidential candidate Donald Trump said this week that he would increase his own taxes to cut rates for the middle class but Bloomberg’s Richard Rubin asks if Trump would also be willing to kill a valuable break for his own biggest business interest–real estate investments.
“The break, known as the like-kind exchange or ‘1031’ for the tax code section it comes from, lets real estate owners sell one piece of property and buy a new one soon afterward without paying any capital gains taxes on the profits from the sale. The result is an ever-increasing pile of deferred capital gains, taxed only whenever there is a final sale or, better yet, never taxed as income at all upon death.”
KEVIN BRADY WANTS DEEPER CUTS THAN THE SEQUESTER. Republicans in the House are generally a fiscal hawk-ish bunch but Rep. Kevin Brady (R-Texas) takes the drive to cut the deficit even further. He wants deeper cuts than even the sequester requires. Marketwatch has a Q&A with Brady, a member of the House Ways and Means Committee and of the Joint Economic Committee:
“Brady is also calling on the White House to negotiate over raising the U.S. debt ceiling —something the Obama administration has said it won’t do. ‘The sooner the White House sits down with Republicans and begins this discussion, I think the more certainty it’ll create going forward,’ Brady said. This week, the Congressional Budget Office said the U.S. would hit the debt limit in mid-November or early December.”