TAX AND LABOR UPDATE
Trump Says Tax Cuts, Health Care And Trade Deals Are Ahead: President Trump says tax cuts, health care and more trade deals are ahead. That's what Trump told FOX Business' Maria Bartiromo during an interview at the World Economic Forum in Davos, Switzerland. "We've done more than anybody in three years," says Trump. "We are going to be doing a middle-class tax cut, a very big one. We'll be doing that. We'll be announcing that over the next 90 days."
• The president said there are great health care initiatives coming. "We've done well with health care. We got rid of the individual mandate. That was a thing people couldn't do, they couldn't afford it, they didn't want it," said Trump. "They were forced to pay a number and not get health care. We are coming up with a plan that is going to be fantastic." Read more here at Fox Business.
IRS willing to consider requests for relief from double taxation related to repatriation The IRS announced today that the agency has become aware of limited circumstances in which it may be appropriate to provide relief from double taxation resulting from application of the repatriation tax under section 965, as amended by the Tax Cuts and Jobs Act (TCJA).
• The IRS has determined that in unique circumstances, such as where a corporation paid an unusual dividend for business reasons, not because of the enactment of TCJA, it may be appropriate to provide relief from double taxation. When the same earnings and profits of foreign corporations are taxed both as dividends and under section 965, double taxation could result.
• The IRS is open to considering relief from such double taxation where there is no significant reduction in the resulting tax by application of foreign tax credits, such that the taxpayer would be required to pay more tax than it would have if the dividend had not been paid. Read the full article at IRS Gov.
Bloomberg Government reports - Democrats’ Tax Plans Leave Revenue Gaps: Revenue from the tax plans proposed by 2020 presidential hopefuls Joe Biden and Bernie Sanders would fall well short of campaign projections, according to the Penn Wharton Budget Model. Biden, who has proposed to increase income tax rates for high earners, would raise about $600 billion to $900 billion less over a decade than his campaign projected, according to the estimate.
• Penn Wharton estimates Sanders’ plan to expand the estate tax would raise an additional $267 billion over a decade on top of the $249 billion the Congressional Budget Office estimates the tax would raise with no changes—way below the $2.2 trillion his campaign estimated. Sanders’ wealth tax would generate $2.8 billion to $3.3 trillion over 10 years, Penn Wharton estimates. The Sanders campaign estimates it would raise $4.35 trillion. Sen. Elizabeth Warren (D-Mass.) has run into a similar problem with her proposed wealth tax. While such proposals can fly on the campaign trail, those gaps would make it hard to follow through on priorites like expanding health care coverage. The plans also would be subject to an estimate from the non-partisan Joint Committee on Taxation if they were going to get serious congressional consideration.
Budget Deficit Topped $1 Trillion in 2019 The federal budget deficit surpassed $1 trillion in 2019, the Treasury Department reported on Monday, as tax cuts and spending increases continued to force heavy government borrowing amid a record-long economic expansion.
• The deficit grew by 17 percent from 2018 to 2019, the Treasury data shows. That was a slowdown from the 28 percent growth in 2018, the first year President Trump’s signature tax cuts were in full effect. Last year’s deficit would have been even larger if not for a series of interest-rate cuts undertaken in 2019 by the Federal Reserve, which helped to push the cost of new government debt down.
• It was the first calendar year since 2012 that the deficit topped $1 trillion. Deficits swelled after the 2008 financial crisis, as lawmakers cut taxes and increased spending in an effort to revive growth. The gap had narrowed through 2015 under a budget agreement between President Barack Obama and Republicans in Congress, which reined in federal spending.
• Total federal receipts rose by 5 percent in 2019, after falling slightly in 2018 after the tax cuts. Spending grew by 7.5 percent in 2019, the fastest rate since 2009. Read the full article at the New York Times