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December 22, 2014

Posts in "Taxes"

December 16, 2014

Tax Extenders Vote a Bipartisan Affair

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Wyden was one of a bipartisan group opposing the tax extenders package. (Bill Clark/CQ Roll Call File Photo)

The final vote on the $41.6 billion tax extenders package was, like the cromnibus last week, a very bipartisan affair.

Handing out mostly corporate tax breaks and adding to the debt to do it has proven to be a popular thing for Congress. Democrats including President Barack Obama spent the better part of 2013 trying to get Republicans to agree to more revenue as part of a budget deal, but are now signing on to deficit expansion for the sake of tax breaks that will expire, again, in two weeks.

Usually, these tax breaks — which range from the R&D tax break to breaks for NASCAR, racehorse owners and wind farms — are touted as incentives — and indeed some senators called them that Tuesday. But it’s hard to retroactively incentivize anything — a point made on the Senate floor by outgoing Finance Chairman Ron Wyden, D-Ore., who voted no and said the tax bill didn’t even have the shelf life of a carton of eggs. Full story

December 9, 2014

Reid Outlines Endgame, Again Warns of Weekend Work (Video)

reid023 120914 445x296 Reid Outlines Endgame, Again Warns of Weekend Work (Video)

(Tom Williams/CQ Roll Call)

As final preparations seemed to be underway to pass the “cromnibus” funding most of the government for the rest of the fiscal year — and avoid a shutdown — Senate Majority Leader Harry Reid made one more warning about the session extending past Thursday.

“The federal government’s going to run out of money in two days. There’s no reason the government should shut down, and we’re ready to pass a yearlong spending bill to take care of this,” the Nevada Democrat said. “There’s still factions within the Republican party who want extreme measures. You’ve all heard them, just like I have.”

“For the extremists within the Republican Party … there’s always a reason to take a poke at the president. If it’s not one thing, it’s some other thing. The American people certainly shouldn’t be facing another government shutdown, but I guess that’s what we’re facing,” Reid said, noting that almost 100 riders had been at play in the process of crafting the catch-all spending bill. Full story

December 2, 2014

Mark Prater, the GOP’s Tax Policy ‘Kingmaker,’ Is Hunting for a Deal

prater 259 112414 445x311 Mark Prater, the GOPs Tax Policy Kingmaker, Is Hunting for a Deal

Prater speaks with CQ Roll Call in the Finance Committee’s hearing room in the Dirksen Senate Office Building. (Bill Clark/CQ Roll Call)

It may seem ironic that one of the most powerful staffers on big money issues on Capitol Hill has passed up a far more lucrative career on K Street.

But Mark Prater, the Senate Finance Committee’s top Republican tax lawyer, shrugs and gives a wry chuckle when asked why he never cashed out.

“I love this job. It’s a great job … [with] great people,” the self-effacing Prater said in an interview. “It’s a big privilege.”

And while he’s given up the potential for a big payday, he’s gained something else: The chance to do a major rewrite of the tax law, which hasn’t been accomplished since 1986.

“Let’s put it this way, when it comes to tax policy on anything the Finance Committee does, he is the real kingmaker,” said former Senate Finance Chairman Charles E. Grassley, R-Iowa. Full story

November 18, 2014

Cruz: Obama is No ‘Monarch,’ Pushes Short-Term Government Funding (Video)

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Cruz  is in favor of a short-term approach to funding the government. (Tom Williams/CQ Roll Call File Photo)

Sen. Ted Cruz doesn’t know if his effort to push off the debate on funding the government into next year will prove successful, but the Texas Republican is sure making an effort.

“Time will tell,” Cruz said when asked if he thought momentum was building behind using a short-term stopgap spending measure next month. “I think a long-term omnibus or CR makes no sense. It hands over the decision-making authority of Congress to the president. I think what makes sense is a simple short-term CR to get out of the lame duck and into early next year.”

Cruz said the Republican wave was a referendum on the expected executive actions on immigration policy by Obama.

Full story

October 16, 2014

Durbin Hopes Tide Turning Against Corporate Inversions

durbin003 061714 445x299 Durbin Hopes Tide Turning Against Corporate Inversions

(Tom Williams/CQ Roll Call File Photo)

Senate Majority Whip Richard J. Durbin, D-Ill., is hoping the tide is turning against corporate inversions — a practice aimed at minimizing U.S. taxes by merging with overseas firms.

After taking to the Senate floor to shame Chicago-based pharmaceutical company AbbVie into changing it’s plans to merge with an Irish firm, Durbin welcomed news of AbbVie’s waffling.

“I’m encouraged by reports that AbbVie will reconsider its decision to move its tax address out of the United States,” Durbin said in a release.

AbbVie’s initial decision to merge was spurred by a provision in the tax code — known as a corporate inversion — that permits companies to join with foreign, and often times smaller, firms. The resulting new companies then base themselves abroad, where taxes can be lower than in the U.S., and thereby avoid paying taxes that U.S.-based firms would have to pay. Full story

By Humberto Sanchez Posted at 10:01 a.m.
Taxes

October 7, 2014

IRS Warns Senate Tax Refunds Could Be Delayed

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Wyden says the IRS has warned him refunds could be delayed if Congress doesn’t act quickly on tax extenders. (Tom Williams/CQ Roll Call File Photo)

There’s another reason to be displeased with congressional gridlock.

IRS Commissioner John A. Koskinen is warning Congress that passing tax legislation reviving expired tax breaks — known as tax extenders — in December or later could delay refunds for millions. And if the legislation is passed retroactively in 2015, it could force millions to file amended tax returns, he warned in letters to top lawmakers. He urged them to pass the legislation by the end of November.

Senate Finance Chairman Ron Wyden, D-Ore., seized on the letter Tuesday to push for swift passage of his two-year tax package known as the EXPIRE Act.

The Finance Committee passed the package in April but it stalled on the floor in May after Finance Committee ranking member Orrin G. Hatch, R-Utah, sought to attach a provision repealing the medical device tax, which helps fund the Affordable Care Act.

“It has been over six months since the Finance Committee passed the EXPIRE Act with strong bipartisan support,” Wyden said. “As the 2015 filing season begins to loom large, it is more urgent than ever that Congress moves in a decisive and bipartisan way to renew expired tax provisions that will give taxpayers the certainty they need to plan their finances.”
Full story

By Humberto Sanchez Posted at 4:59 p.m.
Taxes

September 15, 2014

Wyden Cites Oregon Wine in Effort to Spark Extenders Action

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(Bill Clark/CQ Roll Call File Photo)

Oregon wine grapes could go unpressed and it’s Congress’ fault, said Senate Finance Committee Chairman Ron Wyden on Monday.

In a release urging congressional action on a package of expired tax breaks known as tax extenders, the Beaver State Democrat uses the state’s wine industry as an example of why Congress should act.

“For example, because Congress has not renewed increased expensing limits under Section 179, industrious Oregon wine makers will be forced to pay more for a new wine press needed today to expand their business, or they may be forced to choose between new equipment and hiring new employees,” Wyden said. Full story

By Humberto Sanchez Posted at 5:02 p.m.
Taxes

September 11, 2014

Senators Push Against Burger King Tax Inversion

A handful of members of the Senate Democratic caucus are calling on the leadership of Burger King to abandon the idea of using inversion for tax purposes as part of the merger with a Canadian coffee and doughnut chain.

“In August you and the Board of Directors of Burger King announced an agreement to purchase Canada-based Tim Hortons and move its corporate address to Canada, which will allow Burger King to avoid paying millions in U.S. taxes. We urge you and Burger King’s Board of Directors to reverse your plans to invert and to weigh the long-term consequences this move, known as a corporate inversion, would have on a company that relies on U.S. taxpayers to profit and thrive,” the senators wrote to Burger King CEO Daniel S. Schwartz.

Full story

By Niels Lesniewski Posted at 12:24 p.m.
Democrats, Taxes

September 9, 2014

Reid Doubts Senate Will Vote on Inversions in September

reid 090 090914 445x288 Reid Doubts Senate Will Vote on Inversions in September

(Bill Clark/CQ Roll Call)

Senate Majority Leader Harry Reid said he doesn’t expect the Senate to vote on legislation revamping corporate inversions this month.

“I kind of doubt it,” Reid said when asked if there would be a vote in September. When asked why not, Reid only chuckled as he walked into the chamber after his weekly Tuesday press conference.

The Senate has a packed schedule and only plans to be in session through Sept. 23, the day before the Jewish High Holidays begin.

Congress and the Treasury Department have been exploring ways to stem the growth of inversions, the growing trend of American companies buying foreign competitors, often times smaller businesses, then re-incorporating overseas in order to pay less in U.S. taxes. Forty-seven U.S. corporations have reincorporated overseas through corporate inversions in the past 10 years, far more than during the previous 20 years combined, according to the Congressional Research Service.

Secretary Jacob J. Lew said Monday in a speech at the Urban Institute that his agency could act soon.

“The Treasury Department is completing an evaluation of what we can do to make these deals less economically appealing, and we plan to make a decision in the very near future,” Lew said in his speech. “Any action we take will have a strong legal and policy basis, but will not be a substitute for meaningful legislation — it can only address part of the economics. Only a change in the law can shut the door, and only tax reform can solve the problems in our tax code that leads to inversions.”

Senate Finance Committee Chairman Ron Wyden, D-Ore., said he has been in contact with Lew and that he continues to work with ranking member Orrin G. Hatch, R-Utah, on the issue, which he said voters have concerns.

“At community meetings around my state when people would ask about inversions this summer, I said look, if you erode the business tax base, what happens is working families and other businesses have to pick up the freight,” Wyden said.

“What I’m doing is using every single day, and have now for weeks, focused on trying to produce a bipartisan effort,” Wyden added. “We’ve talked about it with Sen. Hatch. Our staffs have been at it day after day now for weeks … and I’m encouraged.”

Wyden said that the environment in the Congress remains highly partisan, which has made it difficult to reach a bipartisan solution to the inversion problem, but not impossible.

“I think it’s important to have a bipartisan stop-gap measure to plug the inversion loophole, and I believe that is consistent to do in line with major tax reform,” Wyden said.

Sen. Charles E. Schumer, D-N.Y., is expected to unveil his own proposal next week that is would further limit the amount of interest an inverted corporation can deduct from its taxable income.

In August, three Senate Democrats called on Obama to use executive action to address the issue.

Bridget Bowman and Katy O’Donnell contributed to this report.

 

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August 5, 2014

Durbin, Reed, Warren Seek Executive Action to Combat ‘Inversion’

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Warren is among Democrats urging the president to take executive action on corporate inversions. (Tom Williams/CQ Roll Call File Photo)

A trio of liberal Senate Democrats want President Barack Obama to make use of his “pen and phone” to cut down on corporate “inversions.”

In a new letter, Sens. Richard J. Durbin of Illinois, Jack Reed of Rhode Island and Elizabeth Warren of Massachusetts seek executive action to reduce or eliminate tax preferences that come along with the business practice, in which a U.S. company will acquire an overseas company and then be based in the foreign country, at least on paper. The practice has increased in popularity as a tax-avoidance strategy.

Full story

By Niels Lesniewski Posted at 12:42 p.m.
Democrats, Taxes

July 23, 2014

Internet Sales Tax Bill Dealt a Blow; Wyden Cheers

wyden 009 040114 445x308 Internet Sales Tax Bill Dealt a Blow; Wyden Cheers

(Bill Clark/CQ Roll Call)

Majority Leader Harry Reid is quietly stepping back from his intention to bundle an Internet tax moratorium with a more contentious proposal to allow states to collect online sales taxes, at least for now.

The Nevada Democrat had said July 16, “I think it’s fair to say the two are going to be together.” The move, backed by Senate Majority Whip Richard J. Durbin, D-Ill., would have constituted a run around Finance Chairman Ron Wyden, D-Ore., who opposes the legislation known as the Marketplace Fairness Act.

But, CQ Roll Call’s Alan K. Ota reported that as of Tuesday, the plan had changed:

Full story

By Niels Lesniewski Posted at 12:27 p.m.
Ron Wyden, Taxes

July 16, 2014

Democratic Leaders Plan to Bypass Wyden on Internet Sales Tax Combo Bill (Video)

durbin 114 021114 445x302 Democratic Leaders Plan to Bypass Wyden on Internet Sales Tax Combo Bill (Video)

Durbin wants states to be able to collect sales taxes on online transactions for out-of-state purchases. (Bill Clark/CQ Roll Call File Photo)

Senate Democratic leaders plan to do an end run around Senate Finance Chairman Ron Wyden and combine House-passed legislation extending a moratorium on taxing Internet access with a Senate-passed proposal to require online retailers to collect sales tax.

“I think it’s fair to say the two are going to be together,” Senate Majority Leader Harry Reid, D-Nev., told reporters Wednesday.

The Internet Tax Fairness Act passed the House Tuesday by a voice vote. The Marketplace Fairness Act passed the Senate last year, shepherded by Majority Whip Richard J. Durbin, D-Ill., and Sen. Michael B. Enzi, R-Wyo.

“There is a deadline, Nov. 1,” Durbin said. “The Internet Tax Freedom Act would expire. States and localities would be able to tax the Internet, which is something none of us want to see; I shouldn’t say none of us, most of us don’t want to see that happen.

“So now we have suggested to the sponsors and supporters of that measure that if they join it with Marketplace Fairness that we have might have a great package to get done on time,” Durbin continued. Full story

June 26, 2014

Bipartisan Patch Job for Highway Bill Coming Together

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The bipartisan deal nixed Wyden’s proposal that would increase taxes. (Tom Williams/CQ Roll Call File Photo)

A big fight over how to best avert a crisis in highway construction projects won’t happen before the July Fourth recess, and there might be a deal to avoid the fight altogether.

Senate Finance leaders decided to pause a markup of a package to avert a shortfall in federal highway funding amid optimism there will be a deal before a deadline later in July.

The leadership of the committee rolled out a $7.6 billion bipartisan package that nixes a piece of an earlier proposal from Finance Chairman Ron Wyden, D-Ore., that would increase taxes on heavy vehicles and makes other tweaks suggested by Republicans, with further changes possible as negotiators work to craft a final agreement with both sides of the Rotunda.

Full story

June 24, 2014

Ahead of Recess, Highway Bill Standoff Gets Political (Video)

tax event010 041014 445x296 Ahead of Recess, Highway Bill Standoff Gets Political (Video)

Norquist’s Americans for Tax Reform says a Democratic highway bill violates the group’s anti-tax pledge. (Tom Williams/CQ Roll Call File Photo)

When the Senate returns from the July Fourth recess, lawmakers will have just about two weeks to fix a shortfall in funds for federally-backed highway projects, with both parties again in a dispute over taxes.

If past is prologue, that means campaign-style events with bulldozers and hard hats will be coming to a city near you, and there still might not be a good solution. The chairman of the Senate Finance Committee has floated plan to keep highway projects from grinding to a halt — but that solution has already drawn the ire of Republicans.

Still, Sen. Ron Wyden, D-Ore., says talks will continue, and he remains open to GOP suggestions, which would clearly include spending cuts.

Full story

June 18, 2014

Murphy, Corker Call for 12-Cent Gas Tax Boost for Highway Bill

corker 049 0601014 445x314 Murphy, Corker Call for 12 Cent Gas Tax Boost for Highway Bill

(Bill Clark/CQ Roll Call)

Updated 2:37 p.m. | Sens. Christopher S. Murphy, D-Conn., and Bob Corker, R-Tenn., are proposing a 12-cent increase in the gas tax to pay for a renewal of highway and transit programs, which could run out of funding by the end of the month.

“Reaction on the Democratic side has been positive,” said Murphy, who noted he spoke with Senate Majority Leader Harry Reid, D-Nev., and Senate Finance Chairman Ron Wyden, D-Ore., about the plan.

“I think on our side of the aisle we recognize that it’s time to stop talking theoretically and start talking really in practical terms,” Murphy said, adding that bipartisan support is key to getting the plan through the chamber.

But it’s unclear if a substantial number of the Republican Conference will embrace the idea.

“We will see,” Corker said when asked how his GOP colleagues would react.

One big GOP selling point was that the tax increase would not violate the Americans for Tax Reform pledge if it is paired with a provision making some popular tax breaks that are typically part of the tax extenders package permanent.

According to Corker, the list of tax breaks includes: the research and development tax credit; Section 179 expensing, a tax break encouraging small businesses to by business equipment; the deduction of state and local sale taxes; the deduction of up to $250 in classroom expenses that teachers paid for out of their own pocket; a subsidy for mass transit and benefits given for land donated for conservation purposes.

“If you just took those, we do them each year, but you make them permanent; I don’t think there is anybody that disputes making those permanent, by the way, that alone would generate $189 billion in savings over the next 10 years,” Corker said. “So if the Finance Committee chose to link this … with that … you would not be violating the pledge.”

The 12-cent increase would raise $164 billion over 10 years, Corker said.

Using the tax break extension to offset a gas tax increase would, however, take away the ability to use those same tax breaks to buy down tax rates as part of a future tax reform package.

The White House has threatened to veto permanent tax cut extensions, but it’s not clear if they would oppose them if paired with a gas tax hike.

The White House has not backed a gas tax hike previously and has instead proposed using short term revenue from corporate tax reform to pay for the highway bill.

The two senators hope to build support for the plan over the summer, particularly with the Finance Committee, which will draft the funding plan for the highway bill, and the Environment and Public Works Committee, which oversees transportation policy.

“We haven’t introduced it as formal legislation yet because we acknowledge that ultimately this is going to be passed as part of a package coming out of the Finance Committee and EPW Committee,” Murphy said.

They don’t expect any action until after the elections. In the meantime, they believe Congress will pass a short-term patch to keep transportation programs funded through the end of the year.

“The same thing will happen this summer that’s happened the last [few] times,” Corker said. “That is, that some gimmick will be created to make it look like its being paid for when its actually not.”

Along with raising the federal gasoline and diesel taxes by six cents in each of the next two years for a total of 12 cents, the plan would also index the gas tax to inflation, using the Consumer Price Index to ensure that it remains viable into the future.

The plan would raise enough to provide enough funding to offset current MAP-21 spending levels over the next 10 years and replace all of the buying power the federal gas tax has lost since it was last raised in 1993.

“This modest increase will pay dividends in the long run and I encourage my colleagues to get behind this bipartisan proposal,” Murphy said.

Both Murphy and Corker said they didn’t support a possible House plan to use reforming the postal service to fund the highway bill.

“I think it’s a gimmick,” Murphy said. “The point of our proposal is to try to solve this problem for the long-term.”
“Only in Washington would you take money from one insolvent enterprise to fund another insolvent enterprise,” Corker said.

The senators’ bipartisan proposal was criticized by the conservative Club for Growth.

“This is a $164 billion dollar tax increase, plain and simple. A gas tax hike would be both bad policy and terribly anti-growth,” said Club for Growth President Chris Chocola. “It’s not an example of political courage to avoid reforming a broken system. Instead of standing up to the special interests who feast on the chronically bankrupt Highway Trust Fund year after year, Senator Corker and Senator Murphy have essentially decided that throwing more money into a black hole is a good path forward. It’s not. Rather than perpetuate this failed system, Congress should devolve highway funding to the states and let them fund their own infrastructure needs.”

Steven T. Dennis contributed to this report.

By Humberto Sanchez Posted at 2:11 p.m.
Taxes

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