With significant heavy lifting having taken place at the end of last year, the agenda of the Senate Finance Committee and the House Ways and Means Committee in this election year session of Congress is primarily to pave the way for potential Tax Reform in 2017. To be sure, Congress must take care of some urgent business, such as funding the Federal Aviation Trust fund by the end of March, a date that will probably be extended. Ways and Means Committee Chairman Kevin Brady, however, had made clear his intention of passing a bill through his Committee that will reform the way multinational corporations are taxed. While Chairman Brady and Senators Charles Schumer and Portman from the Senate Finance Committee have common ground on their approaches to international tax reform, significant differences stand in the way of the enactment of legislation. Not the least of these is the treatment of repatriated corporate earnings.
On the Senate side, Finance Committee Chairman Orin Hatch intends to introduce a “discussion draft” in March which proposes a dividends paid deduction (“DPD”) approach to ending the double taxation of corporate earnings. The Hatch “corporate integration” proposal, if enacted, could have a significant impact on tax expenditures. Although Chairman Hatch has indicated his desire to pass his corporate integration plan this year, the odds against enactment are long. Indeed, one element of the proposal would raise considerable opposition: the taxing of corporate dividends paid to tax exempt entities, such as charities and pension funds.
Most recently, the Obama Administration released its FY 2017 Budget which contains major tax increases which the Republicans in Congress have already said are DOA.
James F. Miller
Tax Legislative Solutions, LLC
Phone: 202 489 3711