With help from Aaron Lorenzo
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— House Democratic tax writers say they’re putting the finishing touches on a green energy tax bill. But then what?
— Senate Democrats will force a vote today seeking to overturn Treasury Department rules dealing with the tax law’s limit on the federal deduction for state and local taxes, but it’s not clear that they will lure any Republicans to their side.
— Mark your calendars: The Office of Information and Regulatory Affairs has finished reviewing a Treasury Department “pre-rule” on earnings stripping.
HELLO, WEDNESDAY — where all this talk of the diplomat Bill Taylor reminded Morning Tax of Bill Taylor, Lois Lerner’s lawyer. (Who knew that would be a common name?)
If an iPod were human, it could now vote: Yes, today marks 18 years since Apple introduced its handheld digital music player.
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GREEN ENERGY LANDSCAPE: Remember when House Ways and Means was going to mark up a package including incentives for electric vehicles and renewables shortly after the August recess?
Rep. Dan Kildee (D-Mich.), a champion of expanding the electric vehicle credit, said Tuesday that a legislative package is nearly complete, though it currently doesn’t have any offsets — which basically dovetails with what Morning Tax has heard from the advocacy world.
So then what? The expectation is that Democrats would release the bill, essentially laying a marker for the bicameral negotiations over passing tax priorities by the end of the year. But with the next potential legislative vehicle less than a month away — there’s a government funding deadline on Nov. 21 — both Kildee and people closely watching the issue off the Hill said it might not make any sense for Ways and Means to hold a markup.
“Timing has been an issue,” said Kildee. “My goal from the beginning was get it done this fall. It may be the cooler section of this fall.” As for what a package might look like outside of the electric vehicle credit, incentives for solar, onshore and offshore wind, and energy storage all appear to be in the mix.
And offsets? Rep. Kevin Brady of Texas, the top Republican on Ways and Means, said he fully expected House Democrats to target oil and gas incentives, which would be more for messaging and have zero chance of ending up in a final deal.
Across the Rotunda: Staff for Senate Finance Chairman Chuck Grassley (R-Iowa) briefed Republicans on the panel on tax extenders Tuesday morning. Grassley, who is himself a fan of some alternative energy incentives, has been pushing to retroactively restore the temporary preferences that expired at the end of 2017 for a couple years (i.e., for the next two months). “I can’t give you the details because we’re negotiating,” he said.
TO THE FLOOR: Senate Democrats only need to cobble together a majority vote today to pass a measure that would strike down the Treasury rules that undercut blue-state efforts to bypass the $10,000 cap on SALT deductions in the Tax Cut and Jobs Act, H.R. 1 (115), as Pro Tax’s Brian Faler reported.
But remember also that the GOP lawmakers who expressed concern about the SALT cap when the tax law was passed in 2017 came almost solely from the House, and not from the Senate — where very few Republicans hail from higher tax states. (Not to mention that many of those House Republicans are now out of Congress, too.)
Perhaps the Republican to watch on S.J. Res. 50 (116) is Sen. Lindsey Graham of South Carolina, who said Tuesday that he didn’t yet know how he planned to vote after expressing some reservations about the rules’ impact on a state economic development arm called the South Carolina Research Authority. Graham, who has asked Treasury Secretary Steven Mnuchin to help find relief for the organization, said he needed to discuss the vote with staff. But Graham’s home state colleague, Sen. Tim Scott (R-S.C.), who helped write the TCJA, said he planned to vote against it. In any event, Democrats believe they’re putting Republicans in a bind. “I think Republicans from red states are going to have trouble describing why they’re hurting their state charities,” said Sen. Ron Wyden of Oregon, the top Democrat on the Finance Committee.
LET’S TALK SECTION 385: Opponents of the Obama-era rule that took aim at earnings stripping by reclassifying some debt as equity, one part of a broader effort to make it more difficult for companies to trim their U.S. tax obligations, hope that this Treasury pre-rule is a preamble to repeal.
The issue for now: It’s not clear what’s in the pre-rule that OIRA has now finished examining. Opponents and supporters alike believe the department might revoke the rule, though Treasury could be proposing a modification. Most recently, Treasury and the IRS offered guidance telling taxpayers to rely on current regulations beyond the rule's expiration later this month.
FULL FREAK OUT STAGE: That’s where corporate America has reached on Sen. Elizabeth Warren (D-Mass.), as Morning Money’s Ben White reports. Taking on Wall Street has certainly played a big role in Warren’s rise, and executives there understand that it only really helps the Massachusetts Democrat when they call her out. Still, the specter of a wealth tax — as unlikely as that is to become law even if Warren wins next year — has some spitting mad. “I believe in a progressive income tax and the rich paying more. But this is the f------ American dream she is s------- on,” as one former Goldman Sachs executive put it.
THE OLD RING FENCE: Nigeria might seek to ensure that a hike in the country’s value-added tax goes solely to areas like education and health, to stave off any political backlash, Bloomberg reports. The Nigerian budget office has floated a 7.5 percent VAT rate in its 2020 budget, up from the current 5 percent, as the government seeks an influx of badly needed revenue. Nigeria, Africa’s largest oil producer, hasn’t hit its earnings projections since 2016, and Finance Minister Zainab Ahmed said at the recent International Monetary Fund and World Bank meetings that Nigerians have gotten used to not having to pay taxes because the country is rich in natural resources. Because of that, Ahmed said that it would “give people comfort and assurance” if Nigeria specified how exactly the government would use the increase in the VAT.
ACCORDING TO PLAN: Chicago made an effort a couple years back to ease the property tax load for some of its poorest residents — and as our colleagues at Illinois Playbook report, it looks like they largely succeeded, with those living in more affluent parts of town facing higher property taxes. What those 2017 changes didn’t do was affect commercial properties, and the data that Illinois Playbook found out from a Freedom of Information Request from Cook County is that property taxes for business owners pretty much increased across the board. More than three in five commercial properties saw a tax hike between 2017 and 2018, including about 80 percent of businesses in the neighborhoods where Boeing and United are headquartered. But even in the low-income neighborhoods in the South and West sides, at least two-thirds of businesses had tax hikes, too — which is something for Mayor Lori Lightfoot to chew on as she considers using the property tax to help close an $838 million budget gap.
House passes landmark shell company disclosure bill.
AP: “‘Just too much’: Meet the uber-rich who want a wealth tax.”
What Canada’s Liberal government might do on taxes after retaining power.
Bartolomeo Platina's "De honesta voluptate et valetudine" (On honest indulgence and good health) is considered the first cookbook ever printed, having been released in the late 15th century.