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Biden’s plan to overhaul tax code would close offshore tax loopholes

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President Joe Biden’s tax plan would hike the corporate tax rate to bring in $2.5 trillion over 15 years to fund the sweeping $2 trillion infrastructure proposal unveiled last week, according to details released Wednesday by the Treasury Department.

Ambitious in scope by any means, the Made in America Tax Plan would raise the corporate tax rate from 21 to 28 percent, establish a sort of alternative minimum tax for high-earning corporations and attempt to close loopholes around offshoring profits.

The plan would capture $2 trillion that otherwise would “flow out of the country,” according to a Wall Street Journal op-ed written by Treasury Secretary Janet Yellen.

There is clear support among voters for making behemoths in retail, technology, manufacturing and finance pay more tax.

In a speech on Wednesday, Biden said his tax plan would be more fair for middle-class Americans — a message likely to resonate with the electorate. There is clear support among voters for making behemoths in retail, technology, manufacturing and finance pay more. A recent survey by data firm Morning Consult found that roughly 60 percent of American adults think companies should be paying more in taxes — and nearly one-third of those say they “strongly agree” with higher corporate taxes.

At 28 percent, the U.S. corporate tax rate would be higher than the average statutory tax rate of 23.51 percent among Organization for Economic Cooperation and Development nations. State taxes could push the effective rate even higher, some policy experts said.

“Increasing the rate to 28 percent, when combined with state corporate taxes, would lead the combined U.S. rate to 32.34 percent, which would be the highest among OECD and G-7,” said Ben Koltun, director of research at Beacon Policy Advisors.

Advocates who want to see the Tax Cuts and Jobs Act wholly or partially reversed, though, argue that these percentages are moot because even after the Tax Cuts and Jobs Act lowered corporate taxes to 21 percent in 2017, many companies pay far less than that — if they pay anything at all. The share of taxes U.S.-based multinationals pay on their domestic profits is less than 8 percent, according to the Treasury Department.

But that doesn’t mean big business would pay that amount.

“Now the effective tax rate will be lower for a lot of these companies because of deductions they can take,” Koltun added.

Eric Toder, institute fellow at the Urban-Brookings Tax Policy Center, suggested the existing corporate tax structure has room for improvement.

“My view — shared by many tax experts — has always been that it is best for the government to define the measure of taxable income it thinks is appropriate instead of relying on accounting rules that were developed for a different purpose,” he said.

Some policy observers suspect the administration never intended for 28 percent to be the final number anyway, noting that Biden said, “I’m willing to negotiate that” on the percentage.

Critical Senate swing vote Joe Manchin, D-W.Va., has said he doesn’t want the corporate tax rate to be raised higher than 25 percent, and Republicans have been united in their opposition.

“[This is] leading us to believe that the final plan may look quite different from the current one,” said Eric Diton, president and managing director of The Wealth Alliance.

According to a recent report by the Institute on Taxation and Economic Policy, at least 55 of America’s biggest companies paid nothing in federal taxes for 2020, despite earning a collective $40.5 billion in pretax income. To address these kinds of discrepancies, the president’s plan would impose a minimum tax of 15 percent on firms with income of more than $2 billion and what the Treasury called “large discrepancies between income reported to shareholders and that reported to the IRS.” This minimum tax would affect, the agency estimated, fewer than four dozen companies.

This is a considerably more business-friendly stance than the version Biden proposed on the campaign trail, which would have set the threshold for the minimum tax at $100 million rather than $2 billion.

Even with this higher floor, the Treasury report makes the argument that the tax plan “reorients corporate tax revenue toward historical and international norms.” Supporters of the Tax Cuts and Jobs Act, which slashed the corporate tax rate from 35 percent to 21 percent in 2017, contend that paying more into federal coffers robs companies of cash they would otherwise spend on capital investment, wage gains and other activities that facilitate economic expansion. But numerous analyses in the ensuing years have found that post-tax-cut investment failed to live up to expectations.

Capturing income that companies have been able to keep out of reach is a key tenet of President Joe Biden’s promise to look out for the middle class.

Instead, stock buybacks soared, dividends rose and corporate profits hit record highs. While good news for shareholders, growing concern has been voiced among policymakers and even corporate executives about the deleterious effects of widening income inequality caused, in part, by these changes.

Supporters of the 2017 tax overhaul said dropping the U.S. tax rate to 21 percent would induce American companies to move profits back onshore, but this didn’t solve the fundamental problem, said Bill Smith, managing director of the national tax office for CBIZ MHM.

“There were numerous attempts to get repatriation … in the Tax Cuts and Jobs Act, but we didn’t really change the underlying efficacy of keeping money offshore,” he said.

The Treasury’s report also said foreign investors accrued much of the benefit of the Tax Cuts and Jobs Act’s corporate tax cuts, owing to the popularity of U.S. equities worldwide.

A bigger problem than the foreign vs. domestic question, Smith said, is that so much of the benefit went to investors in the first place, rather than wage-earning workers.

“Ma and Pa don’t have a million dollars in the market,” he said.

Even with the much narrower scope for minimum tax requirements and a willingness to haggle over the 28 percent rate, this focus on capturing income companies have been able to keep out of reach of the tax man by exploiting loopholes is a key tenet of Biden’s promise to look out for the middle class.

“He’s crusading not to let big corporations get away with it,” Smith said.

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Boris Johnson given 'final warning' to reach new deal with EU to stop Belfast riots

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BORIS Johnson has been given a “final warning” to reach a deal with the EU by the former leader of the Conservative Party William Hague.

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As GOP sticks with Trump, grassroots energy on the right has gone missing

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WASHINGTON — Tax Day 2009 was the start of the Tea Party protests against Barack Obama’s agenda.

But as we approach April 15, 2021 — even with the tax-filing deadline extended to May 17 — it’s become noticeable just how quiet the conservative grassroots have been during President Biden’s first three months in office.

Part of it is due to the fact that Biden has never been the lightning rod for the right that Obama, Hillary Clinton, Nancy Pelosi and even AOC are.

But another part is the 2020 defeated candidate who decided to stick around: Donald Trump.

In the 21st century, we’ve seen grassroots political movements — whether real, AstroTurf, or activated by cable news — replace defeated presidential candidates and unpopular presidents. (With the previous leadership either politically discredited by the results or voluntarily leaving day-to-day politics, new players rush to fill the vacuum and voters look for signals as to what they should be doing next and how their party can rebrand.)

The anti-war protests during George W. Bush’s presidency blossomed after John Kerry’s loss in 2004.

The Tea Party came alive after John McCain’s defeat in 2008, as well as Bush 43’s exit from the political stage.

And the Women’s March — the day after Trump’s inauguration — came after Hillary Clinton’s 2016 loss.

Sure, conservatives like Marjorie Taylor Greene are raising lots of money.

Also to be sure, there’s always been lots of grassroots energy behind Trump (though that has dissipated after Jan. 6).

But when we’re talking about grassroots movement and energy to bolster a political party and stop the opposition’s agenda, the energy on the right has been largely MIA.

And it’s all taking place in a political environment where Nikki Haley says she won’t run in 2024 if Trump does, as well as where Sen. Rick Scott, the chair of the GOP’s Senate campaign arm, is presenting Trump with a trophy bowl.

Tweet of the day

Data Download: The numbers you need to know today

6: The number of women who developed rare blood clots after receiving the Johnson & Johnson vaccine, prompting federal health agencies to call for a pause on its use.

5: The number of Democratic pollsters who have signed on to a statement acknowledging “major errors” in 2020 polling.

31,401,163: The number of confirmed cases of coronavirus in the United States, per the most recent data from NBC News and health officials. (That’s 70,733 more than yesterday morning.)

566,645: The number of deaths in the United States from the virus so far, per the most recent data from NBC News. (That’s 548 more than yesterday morning.)

189,692,045: Number of vaccine doses administered in the U.S.

20.3 percent: The share of Americans who are fully vaccinated.

16: The number of days left for Biden to reach his 100-day vaccination goal.

Just asking

Another school shooting. Another police officer killing a Black man during a traffic stop.

Why aren’t guns and police reform higher on the political agenda?

Remembering when Ron DeSantis’ own mail-in ballot got rejected

Here’s another angle to the continuing story of GOP-led state legislatures trying to place more restrictions on access to the ballot: There’s no guarantee that GOP skepticism of mail-in voting will be a permanent feature of every election in the future. After all, it wasn’t before 2020.

Case in point: Florida, where Republicans once dominated in mail voting, particularly with older voters — and where both former President Trump and now-Gov. Ron DeSantis made frequent use of the method.

In fact, as Noah Pransky of NBCLX reminds us, then-Rep. DeSantis had his own ballot rejected in 2016 due to a mismatched signature. (Pransky himself reported on the ballot’s rejection back in 2018.)

Pransky writes:

“When then-Congressman Ron DeSantis cast his mail ballot for Florida’s primary election in 2016, election workers in his hometown flagged the signature as a mismatch.”

“When DeSantis provided the canvassing board a new signature as a backup to the signatures already on-file, they determined that handwriting also had “no similarities” to the signature on DeSantis’ ballot and rejected the vote, according to Flagler County elections officials.”

More: “DeSantis’s public voting history — obtained through public records requests from the St. Johns and Flagler supervisors of elections — shows he regularly took advantage of Florida’s no-excuse absentee option, casting votes by mail in six out of seven elections between March 2016 and August 2020. The only time he voted in-person during that period was at a well-choreographed photo opportunity, when he appeared atop the ballot during his 2018 gubernatorial run.”

“Now, DeSantis is leading the charge in Florida to change how voters obtain a mail ballot, as well as how easily they can drop it off at their local elections offices.”

Still More: “[He] is also advocating a change to voter signature-matching that would order elections officials to use only a voter’s most-recent signature to determine authenticity.”

McCrory expected to jump into N.C. Senate race

Former North Carolina Gov. Pat McCrory on Wednesday is expected to announce a bid for the state’s vacated Senate seat next year, and he’ll be joining a potentially crowded GOP field of candidates, NBC’s Leigh Ann Caldwell writes.

The field already includes Rep. Mark Walker, R-N.C., who took a shot at McCrory on Twitter, and it could also include Trump daughter-in-law Lara Trump, as well as Rep. Ted Budd, R-N.C.

ICYMI: What else is happening in the world

Top private law firms are joining forces to form a “SWAT team”-style response to new voting restrictions, NBC’s Jane Timm writes.

The Biden administration is increasingly at odds with Michigan Gov. Gretchen Whitmer over the coronavirus surge in her state.

The NCAA says it won’t hold championship events in states that restrict transgender athletes’ participation in sports.

Ohio Republican Senate candidate Bernie Moreno has cast himself as a big Trump fan. That wasn’t always the case, NBC’s Henry Gomez notes.

Speaking of Trump and GOP candidates, one Republican in Texas is taking an explicitly anti-Trump stance.

Progressive Democrat Charles Booker is mulling a race against Rand Paul.

How much difference would Biden’s proposed new actions on guns actually make?

The New York Times checks in on Andrew Cuomo’s continuing attempts to ride out his scandals.



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Nicola Sturgeon lifts travel ban as Scots to resume meeting outdoors from Friday

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NICOLA STURGEON has lifted Scotland’s travel ban as six adults from up to six households can meet outdoors from Friday anywhere across Scotland.

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