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Disagreement over the House Republican plan to tax imports and exempt exports continues to bubble up.
Currency appreciation would offset negative effects like higher consumer costs caused by the proposal, called border adjustability, the Tax Foundation’s Kyle Pomerleau said in a Dec. 15 blog post.
Au contraire, according to a Dec. 14 draft of a research paper by Reuven S. Avi-Yonah, a law professor at the University of Michigan, and Kimberly Clausing, an economics professor at Reed College. They questioned the exchange rate benefit to the overall House Republican plan—called the blueprint—noting first that the House GOP plan’s export subsidy would treat companies differently based on the labor content of their goods, among other uncertainties.
“Second, exchange rate markets are very large, exchange rate movements are not well predicted by economic fundamentals, and many countries fix their exchange rates, all factors that would reduce hopes of smooth countervailing exchange rate adjustment,” Avi-Yonah and Clausing wrote.
The potential 20 percent tax on imports under the blueprint could prove “detrimental to retail,” analysts at KeyBanc Capital Markets Inc. wrote in a Dec. 13 research note. In addition, Avi-Yonah and Clausing said the blueprint’s border adjustability provision appears to violate existing tax treaties as well as global standards set by the World Trade Organization.
Pomerleau, director of federal projects at the Tax Foundation, agreed that the proposal could cause trade challenges, but wrote that economic worries are overblown. Lawmakers in favor of the proposal, led by House Ways and Means Committee Chairman Kevin Brady (R-Texas), remain firmly entrenched on border adjustability.
The 20 million individuals who have health insurance under the Affordable Care Act won’t lose their coverage on Inauguration Day, Jan. 20, 2017, Brady said at a Dec. 15 news conference.
When pressed on whether lawmakers were considering a four-year transition period after repealing the health-care law, Brady said lawmakers haven’t made a final decision. “It really depends upon the full development of the plan and the timing for it. Those are all being weighed,” he said.
Ways and Means Committee members held a two-day meeting this week to hash out tax overhaul and ACA repeal plans.
Scrapping the law would be a boon for high-income taxpayers, according to a new analysis from the Tax Policy Center. Those in the top 0.1 percent would get a cut of about $197,000, according to the data.
Ditching the premium subsidy and coverage penalties will hurt middle-income families, according to the analysis. Repeal of the 40 percent excise tax on the part of high-cost health plans that exceed certain limits, the much-loathed “Cadillac tax,” would cut taxes on average by $90.
President-elect Donald Trump should toss out rules restricting the use of intracompany debt, Rep. Mark Meadows (R-N.C.) said.
Opponents have said the final rules (T.D. 9790) issued in October give the Internal Revenue Service too much sway in reclassifying a company’s debt as stock equity. Meadows, chairman of the House Freedom Caucus, said in a Dec. 14 report that the IRS estimates compliance costs would rise $8,900 per company, on average, in current dollars.
In addition, the IRS should repeal information reporting requirements tied to the Foreign Account Tax Compliance Act, Meadows said. He also called for scrapping proposed rules on valuing stakes in corporations and partnerships for inheritance tax purposes.
The American Institute of CPAs sent a wish list of tax code simplifications and technical changes for lawmakers to consider as Congress debates a possible tax overhaul next year.
The suggestions, in a Dec. 14 letter addressed to the chairmen and ranking members of the two tax-writing committees, requested that Congress revise the tax code so there is one consistent definition of “small business” and “modified adjusted gross income.” The group also asked for harmonization of the rules governing similar but separate tax-related provisions, including different types of retirement accounts and education tax credits.
The list is one of what is expected to be a slew of requests from business and industry groups for Congress to address in the coming months. Brady has pledged to move quickly on a tax revamp, but is encouraging all factions to provide feedback on the plan his committee released earlier this year.
To contact the editor responsible for this story: Meg Shreve at firstname.lastname@example.org
The 2017 AICPA Compendium of Tax Legislative Proposals is at http://www.aicpa.org/Advocacy/Tax/DownloadableDocuments/2017-AICPA-Compendium-of-Tax-Legislative-Proposals.pdf.
The Tax Policy Center analysis is at http://www.taxpolicycenter.org/taxvox/repealing-affordable-care-act-would-cut-taxes-high-income-households-raise-taxes-many-others.
The research paper by Avi-Yonah and Clausing is at http://src.bna.com/kMR.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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