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Tax Update (September 4)

Sep 4, 2019 | SHARE  

Capital Gains

As the Administration continues to mull over the viability of indexing capital gains to inflation, they are getting a push from two conservative stalwarts. Senator Ted Cruz (R-TX) and Americans for Tax Reform’s Grover Norquist stated in an op-ed that they are supportive of executive action. Cruz and Norquist argue that there is “untapped potential” in the economy, and that the first way to address this is to eliminate the inflation tax.[1] They also write that indexing capital gains to inflation will continue the progress of the Tax Cuts and Jobs Act, and will spur the growth of new businesses, increase wages, and grow the economy.


Finance Extenders Task Force

The Senate Finance Committee’s Employment and Community Development Task Force released a report on Tuesday (Aug 27). The document is the fourth of six task force summary reports on long-term solutions to temporary tax policy and outlines six temporary tax provisions. Additionally, the report provides a summary of stakeholder views on the provisions and their future, and offers recommendations for action on the Indian employment and American Samoa economic development credits.[2] 

Click here to view the full report.


Digital Service Tax

A new French-US digital tax deal did little to ease concerns that US tech giants would be ready to make their first tax payment in November. Whether the agreement will deter other countries considering their own unilateral digital measure, a key goal of US trade actions against France, remains to be seen. “American companies stand to lose badly under a US-French agreement on the new digital services tax in France,” Senate Finance Committee ranking member Ron Wyden (D-OR) said Monday.[3] Senate Finance Chairman Chuck Grassley (R-IA) has not received an administration briefing on any potential developments thus far, but wants any agreement to avoid new transatlantic barriers to trade. French President Emmanuel Macron said that the three percent revenue tax would be abandoned once a global agreement on cross border taxes is reached.


Sen. Isakson to Retire

Senator Johnny Isakson (R-GA), a highly regarded Finance Committee member and leading voice on tax reform, announced Wednesday (Aug 28) that he will be retiring at the end of the year due to health concerns. “In my 40 years in elected office, I have always put my constituents and my state of Georgia first. With the mounting health challenges I am facing, I have concluded that I will not be able to do the job over the long term in the manner the citizens of Georgia deserve,” Senator Isakson said. “It goes against every fiber of my being to leave in the middle of my Senate term, but I know it’s the right thing to do on behalf of my state.”[4]  Georgia Governor Brian Kemp will appoint a replacement, setting up a special election in 2020 followed by a race for a full term in 2022. Democratic presidential candidates are already targeting Georgia, which will now have two high profile Senate races with David Perdue (R-GA) looking to secure a second term.


References

[1] Ted Cruz and Grover Norquist, “To Keep the Economy Growing, Index Capital Gains to Inflation.” Real Clear Markets, 29 Aug 2019. https://www.realclearmarkets.com/articles/2019/08/29/to_keep_the_economy_growing_index_capital_gains_to_inflation_103886.html

[2] “Employment and Community Development Taskforce on Temporary Tax Policy.” Aug 2019. https://www.novoco.com/sites/default/files/atoms/files/employment_and_community_development_task_force_tax_extenders_report_082719_0.pdf

[3] Aaron Lorenzo, “Wyden calls on Trump to reject French deal on digital tax.” Politico Pro, 26 Aug 2019. https://subscriber.politicopro.com/article/2019/08/wyden-calls-on-trump-to-reject-french-deal-on-digital-tax-3758271

[4] Burgess Everett, “Sen. Johnny Isakson to resign at the end of the year.” Politico, 28 Aug 2019. https://www.politico.com/story/2019/08/28/sen-johnny-isakson-to-resign-at-end-of-the-year-1476655

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