Today (11/16/2017) the floor of the House passed the House tax reform bill. The earlier version is here .
Today also the Senate Finance committee passed the Senate tax reform bill. See link
Do not yet have the final versions of either bill but suspect that we are not helped in the bills. Will post here final versions when they become available.
Listen to the C-span clip found by BB in which Residence-based taxation is mentioned by Golding and Brady in the House tax bill debate — none of this however, appears to have been incorporated into the House or Senate bills passed on 11/16/2017
Republicans Overseas (RO) continues to press on, to make changes in the final tax package that will help us. The fight is not yet over, but it continues, right from the beginning, to be an uphill battle — and the odds don’t seem very good right now. RO says: “Again we need to focus on the Senate side since this fight is far from over.”
Personally, it makes no sense to me to blame Solomon and the handful of people at Republicans Overseas for trying to make a change and, so far, failing. Yesterday a friend reminded me that there was this Ismene, who kept telling her sister Antigone that it was pointless to even “try”: “…but you’re bound to fail…No sense in starting a hopeless task…Go then, if you are determined, to your folly, etc. etc.” Antigone responded: “When I have tried and failed, [then] I shall have failed.”
@Karen
It would be computed based on “The Call Of The Condor” – no doubt in the most punitive way possible. It will be paid ONLY by those whose tax advisors pressure (“It’s U.S. law”) to pay.
Also, if it were paid it would have to paid in “after tax” income. This means that the 12% payment would actually be equal to 25% erosion of capital + capital gains tax payable on what was sold to free the capital to pay the tax. So, this would be:
1. 12% tax
plus
2. the cost of after tax income (a second 12% at a 50% tax rate)
plus further capital gains tax on the gain on the securities sold to sell the asset.s
So, say 1,000,00 of retained earnings:
Step 1 – You must pay the Homeland 120,000
Step 2 – This represents 240,000 of before tax capital
Step 3 – You then have to pay the capital gains tax to free the 120,000 – say the securities have doubled. This would be a 60,000 capital gain – 30,000 subject to tax at 50% which would be an extra 15,000.
Plus compliance fees.
The moral of the story is:
“Resist The Call Of The Condor!”
Resist “the call of the condor” – my husband and I just about busted a gut laughing at that (we desperately needed some comic relief right about now, thanks USCA). So far the only condor squawking about this tax is suggesting renunciation. I suppose each renunciation equates to something with 5 years of tax compliance, Streamlined, blah, blah, blah. CHA-CHING!
Sense any cynicism on my part? Fool me once…
#NotPayingThis
That 12% is perhaps calibrated to large multinationals such as GE and Nike that pay nil tax anyway.
In Australia for a small company it used to be 30% tax on the first dollar of profit, now 27.5%.
So we see the classic of the small company pays all the tax while the larger multinationals pay nil.
Bubblebustin, I can trade a shirt made in North Korea for your company made in Canada. It’s a business shirt so it won’t suit you, but it might suit your husband if he’s moderately tall, but you don’t want to find out. If you want to do the opposite trade after you get a CLN for reporting your treasonous act to your local US consulate, you have to return the shirt unworn.
There needs to be exemption for nonUS companies, and exemptions for smaller companies.
TTFI does not appear to be in the manager’s amendment. WSJ journo took a photo of the summary.
https://twitter.com/siobhanehughes/status/928692517406760960 (archived https://archive.is/TE6xW )
29 pages long in total. Ways & Means is in recess for 20 minutes to give the Democrats time to review it.
@Eric
The picture appears to say that there will modifications in the transition rules for treatment of deferred income. Although NOT territorial for individuals, this is an issue of huge significance!
@USCitizenAbroad: yes, from the summary: https://waysandmeansforms.house.gov/uploadedfiles/summary_of_chairman_amendment_2.pdf
Full text of amendment (provision mentioned above is at page 12): https://waysandmeansforms.house.gov/uploadedfiles/chairman_amendment_2.pdf
At page 24 there’s also some changes to the 20% excise tax on foreign related-party payments
Eric and USCA,
The increase in the transition tax from 12 and 5% to 14 and 7% is because more revenue has to be found somewhere to pay for the tax reform deficit — and because American homelanders will perceive no real harm done by going after “foreign” (but “local” to us) income?
Vox is saying that the Senate bill is expected to propose delaying the corporation tax cut until 2019. Something to keep an eye on: if a bill eventually passes, a delay in the tax cut might mean a delay in the transition tax – giving those who want to renounce more time to organize their affairs for a seemly and uncovered exit.
https://www.vox.com/policy-and-politics/2017/11/9/16620798/gop-factions-fighting-out-the-tax-bill
Well, it’s a done deal – for this stage, the House bill has passed.
As far as I am aware, there was nothing added concerning us and the 12%/5% business remains.Section 4004 – Treatment of deferred foreign income upon transition to participation
exemption system of taxation
The amendment provides for effective tax rates on deemed repatriated earnings of 7% on
earnings held in illiquid assets and 14% on earnings held in liquid assets.
It’s only cleared the Ways and Means Committee. House vote next Thursday.
“…the 12%/5% business remains…”
Now the 14%/7% business, unfortunately. See Eric’s post above.
I will post the bill after mark-up when available.
The Hill says:
“The only changes made to the bill during the markup were from amendments offered by Ways and Means Committee Chairman Kevin Brady (R-Texas).
Thursday afternoon, Brady made a number of changes to the bill which included restoring the adoption tax credit, additional tax relief for pass-through businesses and higher tax rates on repatriated foreign earnings. Brady also offered an amendment on Monday.
Brady said the amendment “takes action on three crucial priorities — helping American families, providing tax relief to Main Street startups and increasing American competitiveness.”
“Americans deserve a new tax code for a new era of prosperity, and today we deliver,” Brady added.”
http://thehill.com/policy/finance/359663-gop-tax-bill-clears-hurdle-heads-to-house-floor
Stephen I have a link for you for the summary
http://citizenshiptaxation.ca/ways-means-tax-bill-summary/
Sadly it looks like the bill, even with markups, is still a nothin’ burger with no ketchup, no mustard, no mayo, served with a 14% helping of burnt fries. The Senate version is likely no better. I wonder how many more lines to the tax code all this will bring. (Remember tax reform 1986 brought in PFICs.) I don’t know what RO can do now but I hope it’s something. All we can do is thank them for trying and focus on litigation in progress. Perhaps the pending repatriation or transition tax will provide additional standing to our plaintiffs’ case.
Wow! We got nothing. Less than nothing. We’re actually worse off. If a predominantly republican house won’t do anything for us, then I can’t see a barely republican senate doing anything either.
I am thinking why are they going for the smallest company. They may apply warped logic as if there were an exemption for small companies that a larger company does not retrospectively divide up all their retained earnings into smaller companies to avoid this tax. What a contortionist undertaking virtually impossible under the laws of the various countries.
There appears here a big worry not to miss even $1 of tax revenue. They are so used to the big multinationals running rings around them that they plan to clamp down hard and the clamp will go onto small companies (who did not run rings around them and who do not hide and transfer to other countries their profits). And yet again they will let the multinationals get away, and Congress lets countries such as Ireland have a 5% corporate tax rate when the country could change its laws under threat of bankruptcy from the U.S.
This illiquid asset sounds ominous. I think that they are thinking multinational IP or patents – the usual justification for multinationals absconding with profit to double dutch sandwich structures. For a small company this could be local plant and equipment. Depending on the laws of a country that might have been expensed as a business expense, and thus shielded from local country tax. But the U.S. will now say we want a percentage of that. Some companies might have quite a lot of this illiquid asset.
Once again here we have a Congress oblivious to compliance costs. There needs to be an enshrined this taxpayer right: reasonable compliance cost.
Of course it fails on the justification of taxation grounds of not providing local services in exchange or protection of local rights and property in exchange for the claim of tax jurisdiction.
It is a direct tax on the economies of the world.
Republicans Overseas just said on the RO FB site:
“TTFI update: TTFI is not in Chairman Brady’s markup revision on Thursday due to the fact that the Joint Committee on Taxation hasn’t completed TTFI’s scoring in time. We asked if JCT could use ACA’s RBT score to speed up its TTFI scoring process. No. ACA’s revenue neutrality is through an exit tax for expats working overseas. We want to close a tax loophole for foreign billionaires to pay for TTFI, not to make expats to pay a new exit tax.”
I replied by asking:
“RO, it is still important for us to know for planning purposes whether the 12% (now unfortunately upped to 14% in amended House tax bill) transition tax applies to tiny US-person owned businesses overseas. Can you please press again the House W&M legislative assistant for an explicit answer asap and let us know the answer or whether there is no response to your question? Thanks.”
The only difference between the US and Greece is that the US can print its own currency and Creece can not. The US is broke. $20,000,000,000,0000 in debt with somewhere over $50,000,000,000,000 in unfunded mandates and a populace dependent on benies. The US will grab a homeless man by the ankles to shake out whatever lose change he might have, it will look under every stone for coinage long ago dropped. They are broke and the mob wants its bread. They have no choice (in their minds) but to come after us.
“My comments at tax connections were deleted. I guess they were subversive.”
taxconnections.com censoring comments? Tell me it ain’t so. Here, look at two valuable (really) postings by our favourite Taxpayer Advocate:
https://www.taxconnections.com/taxblog/correctible-error-authority-raises-taxpayer-rights-concerns/#.WgTy_phx0-X
https://www.taxconnections.com/taxblog/correctible-error-authority-creates-more-problems-than-it-resolves-part-2/#.WgTy9Zhx0-X
Then look at my comment, quoted below. You can see how diligently they moderate informative, on-topic comments.
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For some years now payers issue a single copy of Form 1099 to a taxpayer and state that payers are reporting the same information directly to the IRS. Payers still issue multiple copies of Form 1042-S but only direct that one is for attachment to a state tax return if any but others are for the taxpayer, and state that payers are reporting the same information directly to the IRS. Forms 1099 and 1042-S do not appear to be required forms for attachment to a US tax return. But even if they were, they would not help.
Government databases are unreliable for tax purposes because IRS employees, including but not limited to those reported by TIGTA, store information in IRS administrative records that differ from what payers reported.
IRS matching programs don’t work because they only compare numbers on a tax return to numbers in government databases when databases show numbers for the same taxpayer who is filing the return. When embezzlers have attributed withholding to thieves’ accounts and deleted information from records of the actual taxpayer’s accounts, IRS matching programs don’t retrieve any numbers at all from a database for comparison to the numbers on a tax return, so the IRS doesn’t issue a Notice CP-2000.
Meanwhile embezzlers have deleted records of the taxpayer’s claims for withholdings that were reported on Forms 1099 and 1042-S, and fabricated claims for large foreign tax credits which have no basis. But still the IRS doesn’t issue a Notice CP-2000, so the taxpayer has no idea of what the IRS has done.
The IRS proceeds to use its power to correct mathematical and clerical errors, not for the purpose of correcting discrepancies created by embezzlers, but to further damage the taxpayer. The IRS still doesn’t issue Notice CP-2000, but freezes refunds, levels penalties, makes accusations framing the taxpayer for fraud and frivolousness, and leaves the taxpayer in the dark about the reasons for the accusations.
I suppose that taxpayers residing in the US can get a clue about what’s going on by following instructions in IRS letters to make toll free telephone calls to the IRS, but the IRS contracts with ATT to block taxpayers in the rest of the world who attempt to follow the same instructions. Of course taxpayers can write to addresses shown in IRS letters, but now the IRS actually keeps a promise writen in its letters: The IRS refuses to enter into any correspondence regarding its accusations.
Is there anything else a taxpayer can do? With some luck, a taxpayer might find the existence of the Taxpayer Advocate Service. TAS sends acknowledgements of letters up to some point, but then stops acknowledging, and never helps. After all, IRS databases show that the taxpayer is frivolous and fradulent, so why would anyone think of trying to help such a person?
A lot of problems would be solved if the IRS would issue Notices CP-2000 when it should. Embezzlement wouldn’t stop, but at least taxpayers would get a clue about what’s happening, and maybe TAS would get a clue about what TAS is refusing to help with.
“Wow! We got nothing. Less than nothing. We’re actually worse off. If a predominantly republican house won’t do anything for us, then I can’t see a barely republican senate doing anything either.”
Hey! Don’t forget what a 100% Republican president will do for you. It’s even in their platform, don’t forget.
Tax Connections: mine never showed up. Perhaps my faux pas was putting brock in the website field.
” The US will grab a homeless man by the ankles to shake out whatever lose change he might have,”
Only if the homeless man lives outside of the US. Also they look for things other than loose change, to get 7% instead of 14%.
I stand corrected.
This “having to pay for” tax cuts is abd has been a troubling concept. Strip all the BS away and it is predicated upon a belief that ALL money belings to the US Gov and what we have have of it is what they determine we should have.