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Democrats Eye a Major Shift in How Corporations Are Taxed

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WASHINGTON — At the center of the new climate and tax package that Democrats appear to be on the verge of passing is one of the most significant changes to America’s tax code in decades: a new corporate minimum tax that could reshape how the federal government collects revenue and alter how the nation’s most profitable companies invest in their businesses.

The proposal is one of the last remaining tax increases in the package that Democrats are aiming to pass along party lines in coming days. After months of intraparty disagreement over whether to raise taxes on the wealthy or roll back some of the 2017 Republican tax cuts to fund their agenda, they have settled on a longstanding political ambition to ensure that large and profitable companies pay more than $0 in federal taxes.

To accomplish this, Democrats have recreated a policy that was last employed in the 1980s: trying to capture tax revenue from companies that report a profit to shareholders on their financial statements while bulking up on deductions to whittle down their tax bills.

The re-emergence of the corporate minimum tax, which would apply to what’s known as the “book income” that companies report on their financial statements, has prompted confusion and fierce lobbying resistance since it was announced last month.

Some initially conflated the measure with the 15 percent global minimum tax that Treasury Secretary Janet L. Yellen has been pushing as part of an international tax deal. However, that is a separate proposal, which in the United States remains stalled in Congress, that would apply to the foreign earnings of American multinational companies.

Republicans have also misleadingly tried to seize on the tax increase as evidence that President Biden was ready to break his campaign promises and raise taxes on middle-class workers. And manufacturers have warned that it would impose new costs at a time of rapid inflation.

In a sign of the political power of lobbyists in Washington, by Thursday evening the new tax had already been watered down. At the urging of manufacturers, Senator Kyrsten Sinema of Arizona persuaded her Democratic colleagues to preserve a valuable deduction, known as bonus depreciation, that is associated with purchases of machinery and equipment.

The new 15 percent minimum tax would apply to corporations that report annual income of more than $1 billion to shareholders on their financial statements but use deductions, credits and other preferential tax treatments to reduce their effective tax rates well below the statutory 21 percent. It was originally projected to raise $313 billion in tax revenue over a decade, though the final tally is likely to be $258 billion once the revised bill is finalized.

The new tax could also inject a greater degree of complexity into the tax code, creating challenges in carrying out the law if it is passed.

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“In terms of implementation and just bandwidth to deal with the complexity, there’s no doubt that this regime is complex,” said Peter Richman, a senior attorney adviser at the Tax Law Center at New York University’s law school. “This is a big change and the revenue number is large.”

Because of that complexity, the corporate minimum tax has faced substantial skepticism. It is less efficient than simply eliminating deductions or raising the corporate tax rate and could open the door for companies to find new ways to make their income appear lower to reduce their tax bills.

Similar versions of the idea have been floated by Mr. Biden during his presidential campaign and by Senator Elizabeth Warren, Democrat of Massachusetts. They have been promoted as a way to restore fairness to a tax system that has allowed major corporations to dramatically lower their tax bills through deductions and other accounting measures.

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According to an early estimate from the nonpartisan Joint Committee on Taxation, the tax would most likely apply to about 150 companies annually, and the bulk of them would be manufacturers. That spurred an outcry from manufacturing companies and Republicans, who have been opposed to any policies that scale back the tax cuts that they enacted five years ago.

Although many Democrats acknowledge that the corporate minimum tax was not their first choice of tax hikes, they have embraced it as a political winner. Senator Ron Wyden of Oregon, the chairman of the Senate Finance Committee, shared Joint Committee on Taxation data on Thursday indicating that in 2019, about 100 to 125 corporations reported financial statement income greater than $1 billion, yet their effective tax rates were lower than 5 percent. The average income reported on financial statements to shareholders was nearly $9 billion, but they paid an average effective tax rate of just 1.1 percent.

“Companies are paying rock-bottom rates while reporting record profits to their shareholders,” Mr. Wyden said.

The Treasury Department had reservations about the minimum tax idea last year because of its complexity. If enacted, Treasury would be responsible for crafting a raft of new regulations and guidance for the new law and for ensuring that the Internal Revenue Service could properly police it.

Michael J. Graetz, a tax law professor at Columbia University, acknowledged that calculating minimum taxes was complicated and that introducing a new tax base would add new challenges from a tax administration perspective, but he said that he did not view those obstacles as disqualifying. He noted that the current system had created opportunities for tax shelters and allowed companies to take losses for tax purposes that do not show up on their financial statements.

“If the problem that Congress is addressing is that companies are reporting high book profits and low taxes, then the only way to align those two is to base taxes on book profits to some extent,” Mr. Graetz, a former deputy assistant secretary for tax policy at the Treasury Department, said.

A similar version of the tax was included in a 1986 tax overhaul and allowed to expire after three years. Skeptics of revisiting such a measure have warned that it could create new problems and opportunities for companies to avoid the minimum tax.

“The evidence from the studies of outcomes around the Tax Reform Act of 1986 suggest that companies responded to such a policy by altering how they report financial accounting income — companies deferred more income into future years,” Michelle Hanlon, an accounting professor at the Sloan School of Management at the Massachusetts Institute of Technology, told the Senate Finance Committee last year. “This behavioral response poses serious risks for financial accounting and the capital markets.”

Other opponents of the new tax have expressed concerns that it would give more control over the U.S. tax base to the Financial Accounting Standards Board, an independent organization that sets accounting rules.

“The potential politicization of the F.A.S.B. will likely lead to lower-quality financial accounting standards and lower-quality financial accounting earnings,” Ms. Hanlon and Jeffrey L. Hoopes, a University of North Carolina professor, wrote in a letter to members of Congress last year that was signed by more than 260 accounting academics.

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Business groups have pushed back hard against the proposal and pressured Ms. Sinema to block the tax entirely. The National Association of Manufacturers and Arizona Chamber of Commerce and Industry released on Wednesday a poll of manufacturing workers, managers and advocates in the state that showed a majority opposed the new tax.

“It will make it harder to hire more workers, raise wages and invest in our communities,” said Chad Moutray, the chief economist of the manufacturing association. “Arizona’s manufacturing voters are clearly saying that this tax will hurt our economy.”

Ms. Sinema has expressed opposition to increasing tax rates and had reservations about a proposal to scale back the special tax treatment that hedge fund managers and private equity executives receive for “carried interest.” Democrats scrapped the proposal at her urging.

When an earlier version of a corporate minimum tax was proposed last October, Ms. Sinema issued an approving statement.

“This proposal represents a common sense step toward ensuring that highly profitable corporations — which sometimes can avoid the current corporate tax rate — pay a reasonable minimum corporate tax on their profits, just as everyday Arizonans and Arizona small businesses do,” she said. In announcing that she would back an amended version of the climate and tax bill on Thursday, Ms. Sinema noted that it would “protect advanced manufacturing.”

That won plaudits from business groups on Friday.

“Taxing capital expenditures — investments in new buildings, factories, equipment, etc. — is one of the most economically destructive ways you can raise taxes,” Neil Bradley, chief policy officer of the U.S. Chamber of Commerce, said in a statement. He added, “While we look forward to reviewing the new proposed bill, Senator Sinema deserves credit for recognizing this and fighting for changes.”

Emily Cochrane contributed reporting.

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A journalist since 1994, he also founded DMGlobal Marketing & Public Relations. Glover has an extensive list of clients including corporations, non-profits, government agencies, politics, business owners, PR firms, and attorneys.

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MAN ON A MISSION: Jackson State Football Coach Deion Sanders

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(JACKSON, MS) – His name is being heard all over the football world. This time, he’s not the star player. This time, Deion Sanders is the coach. And he is the coach at an HBCU, Jackson State. The school’s history goes back to 1877 in Natchez, Mississippi.

Natchez has a wicked history. Thousands of Blacks were buried there in a mass grave now covered by peaches.

Nonetheless, it is simply wonderful that Coach Sanders has lent himself to such a worthy effort. His sharing of his expertise with the young people in the football program speaks volumes.

According to the Tigers’ website: “Deion Sanders has always been a game-changer. In his tenure as Head Football Coach of Jackson State University, Sanders has again changed the game for Tiger Football, the Department of Athletics, the University as a whole, the Southwestern Athletic Conference, College Football, and the Nation.

An unprecedented calendar year of 2021 showed the power of the influence of Sanders and the brand of Jackson State University coming together as one, seemingly in perfect alignment.

As the Southwestern Athletic Conference played a spring 2021 football season due to the coronavirus, the number 21 Sanders donned on his way to a Pro Football Hall of Fame career became immersed at JSU.

Sanders, named as the 21st head coach in the proud history of JSU football on September 21, 2020, led the Tigers in his first game as head coach on February 21, 2021. A 53-0 win began the Coach Prime era that was a touch point of the elevation of JSU football and the University into becoming one of the most impactful and recognizable brands nationwide.” READ MORE

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Team Dream: 82 AND 77-YEAR OLD BLACK FEMALE SWIMMERS MAKE HISTORY AFTER COMPETING IN NATIONAL SENIOR GAMES

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(PLANTATION, FL) – Ann Smith (age 82) and Madeline Murphy Rabb (age 77) are two African American swimmers who recently competed in the 2022 National Senior Games and were the only Black women to compete in their age group.

Their love for swimming is deep and is a part of a documentary film profiling their passion for swimming as girls who didn’t let barriers to swimming stop them from seeking their sports dreams. Their story is a reminder of the days of segregation where Blacks often could not swim in pools saved for whites.

A documentary short called Team Dream from award-winning filmmaker Luchina Fisher follows their story and will debut at Martha’s Vineyard African American Film Festival in August (and then on BET in the fall) thanks to Procter & Gamble’s initiative Widen the Screen and Queen Collective.

Despite being omitted from the history books, Africans and African Americans have a long history of swimming. Team Dream sheds light on the lack of access to pools for Blacks during segregation that resulted in fewer Blacks learning how to swim.

About the Director
Luchina Fisher is an award-winning writer, director, and producer whose work is at the intersection of race, gender, and identity. She can discuss why this film is important to her, how she found Ann and Madeline, and the importance of breaking down the stereotype that “Blacks can’t swim.”

About Widen The Screen
Widen The Screen is an expansive content creation, talent development, and partnership platform that celebrates creativity and enables Black creators to share the full richness of the Black experience. “Only when we Widen The Screen to Widen Our Views can we all broaden the spectrum of images we see, the voices we hear, the stories we tell, and the people we understand.”

About Queen Collective
In 2018, P&G, Queen Latifah, Flavor Unit Entertainment, and Tribeca Studios launched the Queen Collective, a mentoring and talent development program designed to give women filmmakers of color a platform to share important stories from their unique perspectives. Now in its fourth year, the Queen Collective is enabling a record number of female directors and other creatives to produce their original documentaries and scripted pieces to share their perspectives through film.

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Liz Cheney Is Ready to Lose. But She’s Not Ready to Quit.

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CHEYENNE, Wyo. — It was just over a month before her primary, but Representative Liz Cheney of Wyoming was nowhere near the voters weighing her future.

Ms. Cheney was instead huddled with fellow lawmakers and aides in the Capitol complex, bucking up her allies in a cause she believes is more important than her House seat: Ridding American politics of former President Donald J Trump and his influence.

“The nine of us have done more to prevent Trump from ever regaining power than any group to date,” she said to fellow members of the panel investigating Mr. Trump’s involvement in the Jan. 6 Capitol attack. “We can’t let up.”

The most closely-watched primary of 2022 has not become much of a race at all. Polls show Ms. Cheney losing badly to her rival, Harriet Hageman, Mr. Trump’s vehicle for revenge, and the congresswoman has been all but driven out of her Trump-loving state, in part because of death threats, her office says.

Yet for Ms. Cheney, the race stopped being about political survival months ago. Instead, she’s used the Aug. 16 contest as a sort of a high-profile stage for her martyrdom — and a proving ground for her new crusade. She used the only debate to tell voters to “vote for somebody else” if they wanted a politician who would violate their oath of office. Last week, she enlisted her father, former Vice President Dick Cheney, to cut an ad calling Mr. Trump a “coward” who represents the greatest threat to America in the history of the republic.

In a state where Mr. Trump won 70 percent of the vote two years ago, Ms. Cheney might as well be asking ranchers to go vegan.

“If the cost of standing up for the Constitution is losing the House seat, then that’s a price I’m willing to pay,” she said in an interview this week in the conference room of a Cheyenne bank.

The 56-year-old daughter of a politician who once had visions of rising to the top of the House leadership — but landed as vice president instead — has become arguably the most consequential rank-and-file member of Congress in modern times. Few others have so aggressively used the levers of the office to attempt to reroute the course of American politics — but, in doing so, she has effectively sacrificed her own future in the institution she grew up to revere.

Ms. Cheney’s relentless focus on Mr. Trump has driven speculation — even among longtime family friends — that she is preparing to run for president. She has done little to dissuade such talk.

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At a house party Thursday night in Cheyenne, with former Vice President Dick Cheney happily looking on under a pair of mounted leather chaps, the host introduced Ms. Cheney by recalling how another Republican woman, Maine Senator Margaret Chase Smith, confronted Senator Joseph McCarthy when doing so was unpopular — and went on to become the first female candidate for president from a major party.

The attendees applauded at the parallel, as Ms. Cheney smiled.

In the interview, she said she was focused on her primary — and her work on the committee. But it’s far from clear that she could be a viable candidate in the current Republican Party, or whether she has interest in the donor-class schemes about a third-party bid, in part because she knows it may just siphon votes from a Democrat opposing Mr. Trump.

Ms. Cheney said she had no interest in changing parties: “I’m a Republican.” But when asked if the G.O.P. she was raised in was even salvageable in the short term, she said: “It may not be” and called her party “very sick.”

The party, she said, “is continuing to drive itself in a ditch and I think it’s going to take several cycles if it can be healed.”

Ms. Cheney suggested she was animated as much by Trumpism as Mr. Trump himself. She could support a Republican for president in 2024, she said, but her redline is a refusal to state clearly that Mr. Trump lost a legitimate election in 2020.

Asked if the ranks of off-limits candidates included Gov. Ron DeSantis of Florida, whom many Republicans have latched onto as a Trump alternative, she said she “would find it very difficult” to support Mr. DeSantis in a general election.

“I think that Ron DeSantis has lined himself up almost entirely with Donald Trump, and I think that’s very dangerous,” Ms. Cheney said.

It’s easy to hear other soundings of a White House bid in Ms. Cheney’s rhetoric.

In Cheyenne, she channeled the worries of “moms” and what she described as their hunger for “somebody’s who’s competent.” Having once largely scorned identity politics — Ms. Cheney was only the female lawmaker who wouldn’t pose for a picture of the women of Congress after 2018 — she now freely discusses gender and her perspective as a mother.

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“These days, for the most part, men are running the world, and it is really not going that well,” she said in June when she spoke at the Ronald Reagan Presidential Library in Simi Valley, Calif.

In a sign that Ms. Cheney’s political awakening goes beyond her contempt for Mr. Trump, she said she prefers the ranks of Democratic women with national security backgrounds to her party’s right flank.

“I would much rather serve with Mikie Sherrill and Chrissy Houlahan and Elissa Slotkin than Marjorie Taylor Greene and Lauren Boebert, even though on substance certainly I have big disagreements with the Democratic women I just mentioned,” Ms. Cheney said in the interview. “But they love this country, they do their homework and they are people that are trying to do the right thing for the country.”

Ms. Cheney is surer of her diagnosis for what ails the G.O.P. than she is of her prescription for reform.

She has no post-Congress political organization in waiting and has benefited from Democratic donors, whose affections may be fleeting. To the frustration of some allies, she has not expanded her inner circle beyond family and a handful of close advisers. Never much of a schmoozer, she said she longed for what she recalled as her father’s era of policy-centric politics.

“What the country needs are serious people who are willing to engage in debates about policy,” Ms. Cheney said.

It’s all a far cry from the Liz Cheney of a decade ago, who had a contract to appear regularly on Fox News and would use her perch as a guest host for Sean Hannity to present her unswerving conservative views and savage former President Barack Obama and Democrats.

Today, Ms. Cheney doesn’t concede specific regrets about helping to create the atmosphere that gave rise to Mr. Trump’s takeover of her party. She did, however, acknowledge a “reflexive partisanship that I have been guilty of” and noted Jan. 6 “demonstrated how dangerous that is.”

Few lawmakers today face those dangers as regularly as Ms. Cheney, who has had a full-time Capitol Police security detail for nearly a year because of the threats against her — protection few rank-and-file lawmakers are assigned. She no longer provides advance notice about her Wyoming travel and, not welcome at most county and state Republican events, has turned her campaign into a series of invite-only House parties.

What’s more puzzling than her schedule is why Ms. Cheney, who has raised over $13 million, has not poured more money into the race, especially early on when she had an opportunity to define Ms. Hageman. Ms. Cheney had spent roughly half her war chest as of the start of July, spurring speculation that she was saving money for future efforts against Mr. Trump.

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Ms. Cheney long ago stopped attending meetings of House Republicans. When at the Capitol, she spends much of her time with the Democrats on the Jan. 6 panel and often heads to the Lindy Boggs Room, the reception room for female lawmakers, rather than the House floor with the male-dominated House G.O.P. conference. Some members of the Jan. 6 panel have been struck by how often her Zoom background is her suburban Virginia home.

In Washington, even some Republicans who are also eager to move on from Mr. Trump question Ms. Cheney’s decision to wage open war against her own party. She’s limiting her future influence, they argue.

“It depends on if you want to go out in a blaze of glory and be ineffective or if you want to try to be effective,” said Senator John Cornyn of Texas, who has his own future leadership aspirations. “I respect her but I wouldn’t have made the same choice.”

Ms. Cheney is mindful that the Jan. 6 inquiry, with its prime-time hearings, is viewed by critics as an attention-seeking opportunity. She has turned down some opportunities that could have been helpful to her ambitions, most notably proposals from documentary filmmakers.

Still, to her skeptics at home, Ms. Cheney’s attacks on Mr. Trump have resurrected dormant questions about her ties to the state and raised fears that she has gone Washington and taken up with the opposition, dismissing the political views of the voters who gave her and her father their starts in electoral politics.

At a parade in Casper last month, held while Ms. Cheney was in Washington preparing for a hearing, Ms. Hageman received frequent applause from voters who said the incumbent had lost her way.

“Her voting record is not bad,” said Julie Hitt, a Casper resident. “But so much of her focus is on Jan 6.”

“She’s so in bed with the Democrats, with Pelosi and with all them people,” Bruce Hitt, Ms. Hitt’s husband, interjected.

Notably, no voters interviewed at the parade brought up Ms. Cheney’s support for the gun control bill the House passed just weeks earlier — the sort of apostasy that would have infuriated Wyoming Republicans in an era more dominated by policy than one man’s persona.

“Her vote on the gun bill hardly got any publicity whatsoever,” Mike Sullivan, a former Democratic governor of Wyoming who intends to vote for Ms. Cheney in the primary, said, puzzled. (Ms. Cheney is pushing independents and Democrats to re-register as Republicans, as least long enough to vote for her in the primary.)

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For Ms. Cheney, any sense of bafflement about this moment — a Cheney, Republican royalty, being effectively read out of the party — has faded in the year and a half since the Capitol attack.

When she attended the funeral last year for Mike Enzi, the former Wyoming senator, Ms. Cheney welcomed a visiting delegation of G.O.P. senators. As she greeted them one by one, several praised her bravery and told her keep up the fight against Mr. Trump, she recalled.

She did not miss the opportunity to pointedly remind them: They, too, could join her.

“There have been so many moments like that,” she said at the bank, a touch of weariness in her voice.



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