Key Takeaways
- Tax Legislation
- Global Minimum Tax
- Tariffs
- Raising Rates
- ERC
- Executive Orders
- In the Courts
- Fintastic Friday
Tax Legislation
House Taxwriters Wrap Meeting Without Clear Path Forward on SALT – Cady Stanton & Katie Lobosco, Tax Notes ($):
Ways and Means Committee and SALT Caucus member Nicole Malliotakis, R-N.Y., said May 8 she expected the panel to work through the issue after some back-and-forth between members of the caucus and House taxwriters ahead of a May 13 target date for marking up the party's tax bill.
House Tax Bill Markup Tentatively Set for May 13 – Doug Sword, Tax Notes ($). “The House Ways and Means Committee is planning to mark up a likely smaller-than-advertised tax title for Republicans’ reconciliation bill May 13, setting up what could be a dayslong session of amendments and debate.”
Fight Over ‘Green New Scam’ Complicates Trump’s Tax Plans – Richard Rubin, Wall Street Journal:
House Republicans could release detailed tax proposals within days—revealing decisions on tax rates, the state and local tax deduction and corporate taxes—and push that plan through a committee next week. House leaders hope to pass the broader tax-and-spending bill—which would also reduce Medicaid spending and expand border enforcement—this month and get it to Trump’s desk by July 4.
House Plans to Severely Cut US Green Credits, GOP Lawmaker Says – Ari Natter, Bloomberg ($):
Some of the credits will be phased out over time, as opposed to being eliminated immediately, said Representative Darin LaHood, from Illinois. He serves on the House’s tax committee.
“There has been a thoughtful, and I would say reasonable, approach with a number of those,” LaHood told reporters on Thursday. “We don’t want to pull the rug out from particular industries.”
Republican Agenda Hits Familiar Obstacle: State and Local Taxes – Andrew Duehren, New York Times:
After all, the deduction, often called SALT, has long had the potential to cause a political standoff. Many G.O.P. lawmakers abhor it and, in 2017, imposed a $10,000 limit on the amount of state and local taxes Americans can write off on their federal returns. But to pass a tax bill this year, the party will need the support of a motivated clutch of Republicans who have made lifting that cap the animating promise of their political careers.
Those lawmakers, who represent high-tax states like New York and New Jersey where the deduction is cherished, say they are willing to tank the package over the issue. Representative Nick LaLota, Republican of New York, can already visualize voting against the bill.
US House Committees to Begin Debate on Trump Tax Cuts on Tuesday – Erik Wasson & Billy House, Bloomberg ($):
The Ways and Means Committee and the Energy and Commerce Committee will begin on Tuesday considering their respective portions of the bill on tax cuts and reductions to Medicaid. Both panels are key to pushing Trump’s legislative agenda through the narrowly divided House.
The scheduled date, confirmed by several people familiar, comes as Republicans are still hotly debating key details, including expanding the state and local tax deduction and restricting the estate tax.
GOP Eyes Pharma Tax Hike, Nixing Drug Price Deal for Trump Bill – Rachel Cohrs Zhang, Bloomberg ($). “House Republicans are considering nixing a Medicaid drug pricing plan floated by President Donald Trump and fiercely opposed by the pharmaceutical industry as the party pushes to strike a massive tax and spending deal in the coming days.”
Companies Push Back on Stock Buyback, Executive Pay Tax Plans – Chris Cioffi, Bloomberg ($):
GOP lawmakers seeking revenue and messaging that they aren’t favoring the rich are leaning toward tightening deduction rules around a company’s highest-paid executives and dialing up the stock buyback excise tax. The gambit, though, doesn’t have unanimity within the GOP conference as opponents blast it as a Democratic idea that’s overly complicated and an economic drag.
GOP fight over state and local tax deduction slows Trump’s ‘big, beautiful bill’ – Jacob Bogage & Marianna Sotomayor, Washington Post:
House Speaker Mike Johnson (R-Louisiana) and a band of moderate Republican rebels are at loggerheads over how to handle changes to the state and local tax deduction, often called SALT. That provision allows individuals or married couples to subtract the amount they paid in state taxes from their federal tax bill, but it’s been capped at $10,000 — well below what many taxpayers owe, especially in high-cost-of-living areas — since 2017.
Johnson Says Republicans Discussing Raising SALT Cap to $30,000 – Billy House, Emily Birnbaum, and Erik Wasson, Bloomberg ($). “House Speaker Mike Johnsonsaid Republicans are discussing raising the state and local tax deduction cap to $30,000 — among other options — as the party seeks to resolve disagreements on the details of President Donald Trump’s tax package.”
Global Minimum Tax
US Seeks Full Separation of Its System from Global Minimum Tax – Lauren Vella, Bloomberg ($):
Deputy Assistant Secretary for Tax Policy Kevin Salinger said the US has a long history of combating companies’ shifting of profits overseas to pay less tax, and that includes a minimum tax enacted by Republicans in 2017 on global intangible low-taxed income, or GILTI.
Tariffs
States Seek Halt of Trump Administration’s Tariffs During Suit – Andrea Muse, Tax Notes ($):
In a May 7 motion for preliminary injunction in Oregon v. Trump, the states argue that they are likely to succeed on the merits of their claims because the International Emergency Economic Powers Act (IEEPA) doesn't authorize the president to impose tariffs or duties and, even if it did, the tariff orders do not satisfy the IEEPA’s requirements.
Trump Is Threatening Big Pharma with Tariffs. Tax Changes Might Work Better. – David Wainer, Wall Street Journal:
For pharma, an industry in which gross margins are among the highest in the S&P 500, labor was never really the reason for moving offshore to places like Ireland—it was always about playing the global tax game.
NFTC Warns US Against Tariffs on Semiconductors, Pharma – Jack McLoone, Law 360 ($):
Imposing tariffs, along with other import restrictions, could disrupt already ongoing investments by companies currently working to return semiconductor manufacturing to the U.S., the NFTC said Wednesday in response to a U.S. Department of Commerce investigation into the national security impacts of semiconductor-related imports.
Raising Rates
Trump Revives Push for Higher Taxes on the Rich – Andrew Duehren, New York Times:
Mr. Trump wants to create a new top income bracket for people making more than $2.5 million per year, the people said, and to tax income above that level at a rate of 39.6 percent. The president brought up the idea to Mr. Johnson in a call on Wednesday, one of the people said.
Trump advises against tax hike on wealthy, then says he’d be ‘OK’ with it – Benjamin Guggenheim, Politico. “President Donald Trump in a Truth Social post on Friday said Republicans ‘should probably not’ boost taxes on the nation’s wealthiest people, while nonetheless saying ‘I’m OK if they do!!!’”
Trump Seeks Tax Hike on Wealthy Earning $2.5 Million or More – Erik Wasson, Bloomberg ($):
The president’s proposal calls for creating a new 39.6% tax bracket for individuals earning at least $2.5 million, or couples making $5 million, according to people familiar with the discussion.
Trump tells Congress to raise taxes on the rich in budget bill – Jacob Bogage & Jeff Stein, Washington Post:
Congress is working to extend lower rates for individuals from Trump’s 2017 Tax Cuts and Jobs Act that are set to expire at the end of this year. Trump, in recent conversation with House Speaker Mike Johnson (R-Louisiana), said Congress should raise taxes on some of the highest earners, according to two people familiar with the president’s position who spoke on the condition of anonymity because they weren’t authorized to discuss the issue publicly.
Trump Expresses Openness to Raising Top Income Tax Rate – Alexander Rifaat, Tax Notes ($):
“The President is considering allowing the rate on individuals making $2.5 million or more to revert from 37 percent to the pre-2017 39.6 percent. This will help pay for massive middle and working-class tax cuts, and protect Medicaid,” a source familiar with the president’s thinking told Tax Notes in an email.
Trump Brings Millionaire Tax Idea Back to Life – Richard Rubin, Alex Leary, and Olivia Beavers, Wall Street Journal:
The president, who rejected a “millionaire tax” April 23, is now considering backing a tax structure that would return the top individual income-tax rate to 39.6% from 37% for people making over $2.5 million, people familiar with White House discussions said Thursday.
ERC
Collins Urges IRS to Wrap Up Employee Retention Credit Claims – Benjamin Valdez, Tax Notes ($):
Over 597,000 ERC claims remain in the IRS’s inventory as of early April, including 11,000 unresolved cases submitted through the Taxpayer Advocate Service, National Taxpayer Advocate Erin Collins wrote in a May 8 blog post. The tally reflects progress on the massive backlog, which sat at around 1.2 million in October 2024.
IRS Backlog of Covid-Era Credit Claims Cut to Nearly 600,000 – Erin Slowey, Bloomberg ($):
Thousands of businesses and nonprofits are waiting for the lucrative employee retention tax credit, created to help keep them afloat during the pandemic. The credit plagued the IRS, which struggled to sort out the valid from the invalid claims, resulting in delays that caused some businesses to close their doors.
Executive Orders
Trump Admin Defends Gov't Restructuring as Lawful – Beverly Banks, Law 360 ($). “The Trump administration defended what it says is a lawful executive order looking to reorganize agencies and terminate workers, telling a California federal judge that unions, nonprofits and local governments "waited far too long" to seek a temporary restraining order.”
In the Courts
Widow Says Husband's Estate Liable For $2M FBAR Fines – Kat Lucero, Law 360 ($). “A nonagenarian widow told an Idaho federal court Thursday that her husband's estate — not she — should be liable for more than $2 million in penalties for his unreported foreign accounts, calling the government's attempt to penalize her an unprecedented overreach.”
11th Circ. Judge Frowns on New Arguments in Easement Case – Anna Scott Farrell, Law 360 ($). “An Eleventh Circuit judge disapproved of a Georgia partnership raising new arguments on appeal as it pursues a tax deduction for a conservation easement donation, saying Thursday that perhaps "we wouldn't be here" if the partnership had argued the points before the lower court.”
Taxpayer Can’t Sue IRS for Incorrect Helpline Info, Court Says – Kristen A. Parillo, Tax Notes ($). “A New Jersey man who claims an IRS helpline employee gave him incorrect instructions on how to challenge a math error notice doesn’t have legal grounds to sue for damages from wrongful collection action.”
What Day is it?
It’s Fintastic Friday!! What the heck is that? It’s a day to celebrate Elasmobranchii, a subclass of cartilaginous fish that includes sharks, rays, skates, and sawfish. Elasmobranchii contain five to seven pairs of separately opening gill clefts, inflexible dorsal fins, and tiny placoid skin scales. So dip your toe in and celebrate these special swimmers today!
