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Archive for US Senate Finance Committee

Investigation Into Big Pharma Tax Practices

Investigation Into Big Pharma Tax Practices

Washington, D.C. – Senate Finance Committee Chair Ron Wyden, D-Ore., continued his investigation into Big Pharma’s tax practices, and how loopholes in the tax code have allowed multinational companies to further abuse tax havens and avoid paying U.S. taxes on prescription drug sales. Wyden wrote to Bristol Myers Squibb to request information about their reported use of offshore subsidiaries in Ireland in a manner that may have violated longstanding IRS anti-abuse rules.

“According to public reports, in 2012 Bristol Myers developed a sophisticated tax avoidance strategy where it shifted intellectual property rights for several prescription drugs to a newly created offshore subsidiary to shift untaxed gains and generate amortization deductions. At the time, Bristol Myers’s U.S. operations held patents on several drugs with a fair market value that had already been fully amortized for tax purposes, while an Irish Bristol Myers subsidiary held patents that it had not yet fully amortized and thus would produce tax deductions. Bristol Myers then reportedly formed a new foreign partnership in Ireland by transferring the patent rights from existing U.S. and Irish affiliates to the newly created partnership. Bristol Myers then proceeded to allocate tax deductions from the new partnership structure in a way that would use amortization deductions associated with Irish patents to offset U.S. taxes [while simultaneously shifting untaxed gains of the U.S. affiliates to the foreign affiliate] and substantially lowering its tax rate. This strategy was extraordinarily effective, as Bristol Myers’s effective tax rate declined from 24.7 percent in 2011 to negative 7 percent in 2012,” Wyden wrote.

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Nonpartisan Scorekeepers Confirm True Cost of Tax-And-Spend Bill

U.S. Senate Committee On Finance

Congressional Budget Office And Joint Committee On Taxation Confirm High Price, Long-Term Negative Economic Impact

The Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) have confirmed what other nonpartisan analysts have said: the policies in the Democrats’ tax-and-spend legislation will negatively impact the economy, with economic effects severely worsening when intentions of permanence are taken into account.

“For months, Democrats have been saying they intend for the policies in their social spending bill to be made permanent, yet they’re trying to mask the true cost by frontloading it with inflationary stimulus spending and budget gimmicks,” said Crapo.  “Even with the gimmicks, the bill shrinks the economy, chokes off investment, crushes capital, and loses jobs relative to an economy without the reckless policies.  The desired permanence of these policies is even worse, with CBO, JCT and non-partisan analysts all confirming it will cause significant negative economic effects and ballooning debt.  More spending, combined with job-killing tax hikes, will only accelerate the record-high inflation American families are experiencing every day.”

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Introduction Of Bill To Protect Taxpayer Rights And Privacy

https://www.finance.senate.gov/ranking-members-news/crapo-brady-introduce-bill-to-protect-taxpayer-rights-and-privacy

Tax Gap Reform And IRS Enforcement Act Provides Guardrails Around Proposed IRS Funding  

Washington, D.C.–Seeking to protect taxpayers against Democrats’ campaign to monitor Americans’ bank accounts, place taxpayer finances in a surveillance dragnet, and provide massive, additional mandatory funding to IRS for an army of IRS agents, U.S. Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and U.S. House Ways and Means Republican Leader Kevin Brady (R-Texas) introduced the Tax Gap Reform and Internal Revenue Service (IRS) Enforcement Act.   

“In light of recent proposals to massively expand the IRS, with unprecedented amounts of mandatory funding, and the IRS’s continued abuses of taxpayer rights and privacy, any additional IRS funding and monitoring of Americans’ private finances must come with guardrails to help protect against abuses,”said Crapo.  “This legislation places important guardrails around IRS funding to protect taxpayers’ rights and privacy.”   

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Proposal To Close Loopholes Allowing Wealthy Investors, Mega-Corporations To Use Partnerships To Avoid Paying Tax

Proposal To Close Loopholes Allowing Wealthy Investors, Mega-Corporations To Use Partnerships To Avoid Paying Tax

Senate Finance Committee Chair Ron Wyden, D-Ore., today unveiled draft legislation to close loopholes that allow wealthy investors and mega-corporations to use pass-through entities, primarily partnerships, to avoid paying their fair share of taxes.

Seventy percent of partnership income accrues to the top 1 percent. Current partnership tax rules are too complicated for the IRS to enforce, turning partnerships into a preferred tax avoidance strategy for wealthy investors and mega-corporations. Although computers can check a wage earner’s return, the IRS needs highly-skilled specialists to audit partnerships. It audited only about 0.03 percent of the partnership returns filed for tax year 2018.

Wyden’s bill would remove the complexity in current partnership rules by closing loopholes that essentially allow partners to pick and choose how, and whether, to pay tax. Simply closing these loopholes would raise at least $172 billion, without raising tax rates.

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Ranking Members Warn Against Bypassing Treaty Process

U.S. Senate Committee On Finance

The top Republicans on the U.S. Senate Finance Committee, the U.S. Senate Foreign Relations Committee, and the U.S. Senate Banking Committee expressed serious concerns with the Administration’s recent suggestions it is considering circumventing the Senate’s constitutional treaty authority in implementing a global tax agreement.  Finance Committee Ranking Member Mike Crapo (R-Idaho), Foreign Relations Committee Ranking Member Jim Risch (R-Idaho) and Banking Committee Ranking Member Pat Toomey (R-Pennsylvania) wrote Treasury Secretary Janet Yellen today asking for clarification of recent comments, reiterating the importance of constitutionally mandated congressional approval of tax treaties.  The letter comes as the Organisation for Economic Development and Co-operation (OECD) is negotiating an agreement on global tax rules.

From the letter:

As you know, under the U.S. Constitution, a bilateral or multilateral tax treaty would require the advice and consent of the Senate, with a two-thirds vote of approval.  Further, we are unaware of any existing congressional authorization that would permit the Administration to conclude a lesser international agreement, such as a congressional-executive agreement.  As described, the nature of changes required to implement Pillar One necessitates the conclusion of a treaty, not a congressional-executive agreement or other legislative override.

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Biden Global Tax Deal Puts Politics Over Progress, Surrenders Fate Of U.S. Economy To Foreign Competitors

Biden Global Tax Deal Puts Politics Over Progress

Brady, Crapo: Biden Global Tax Deal Puts Politics Over Progress, Surrenders Fate of U.S. Economy to Foreign Competitors

In a joint statement, Congress’s top Republican tax writers, Senate Finance Committee Republican Leader Mike Crapo (R-Idaho) and House Committee on Ways and Means Republican Leader Representative Kevin Brady (R-Texas), blasted the Biden Administration’s announcement that it had reached an agreement with the Organization for Economic Cooperation and Development:

“Rather than securing an agreement that would provide certainty and immediately eliminate digital services taxes, the Administration has instead used this global forum to advance its short-sighted domestic tax agenda. 

“By doing so, the Biden Administration is putting politics over progress and surrendering the fate of the U.S. economy to our foreign competitors. 

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Introduction Of Bill to Protect Taxpayer Rights and Privacy

Bill to Protect Taxpayer Rights and Privacy

Tax Gap Reform and IRS Enforcement Act provides guardrails around proposed IRS funding  

Washington, D.C.–Seeking to protect taxpayers against Democrats’ campaign to monitor Americans’ bank accounts, place taxpayer finances in a surveillance dragnet, and provide massive, additional mandatory funding to IRS for an army of IRS agents, U.S. Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and U.S. House Ways and Means Republican Leader Kevin Brady (R-Texas) introduced the Tax Gap Reform and Internal Revenue Service (IRS) Enforcement Act.   

“In light of recent proposals to massively expand the IRS, with unprecedented amounts of mandatory funding, and the IRS’s continued abuses of taxpayer rights and privacy, any additional IRS funding and monitoring of Americans’ private finances must come with guardrails to help protect against abuses,” said Crapo.  “This legislation places important guardrails around IRS funding to protect taxpayers’ rights and privacy.”   

“Before American taxpayers are subjected to 80,000 new IRS agents and surveillance of their private bank accounts, let’s begin with an accurate, independent estimate of Treasury’s so-called ‘tax gap,’” said Brady. “This bill also protects taxpayers from IRS targeting based on their political or religious beliefs and closes loopholes that risk leaking private taxpayer returns.” 

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Proposal To Close Loopholes Allowing Wealthy Investors, Mega-Corporations To Use Partnerships To Avoid Paying Tax

Proposal To Close Loopholes Allowing Wealthy Investors, Mega-Corporations To Use Partnerships To Avoid Paying Tax

Washington, D.C. –Senate Finance Committee Chair Ron Wyden, D-Ore., unveiled draft legislation to close loopholes that allow wealthy investors and mega-corporations to use pass-through entities, primarily partnerships, to avoid paying their fair share of taxes.

Seventy percent of partnership income accrues to the top 1 percent. Current partnership tax rules are too complicated for the IRS to enforce, turning partnerships into a preferred tax avoidance strategy for wealthy investors and mega-corporations. Although computers can check a wage earner’s return, the IRS needs highly-skilled specialists to audit partnerships. It audited only about 0.03 percent of the partnership returns filed for tax year 2018.

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United States Senate Committe On Finance: Republicans Demand Process To Vet Reckless Tax Spending Proposals

United States Senate Committe On Finance: Republicans Demand Process To Vet Reckless Spending

Finance Committee Republicans Demand Full, Open Process to Vet Reckless Tax-and-Spend Proposals

Proposals of this magnitude require the due diligence of hearings and markup

Washington, D.C. – U.S. Senate Finance Committee Republicans are demanding a full, open markup to thoroughly and rigorously examine and debate any forthcoming reckless tax-and-spend proposals in the Finance Committee’s jurisdiction.  While the legislation Democrats intend to introduce has been withheld from Republicans on the Committee and from the American people, press reports indicate a far-reaching and potentially highly disruptive agenda, with trillions of taxpayer dollars at stake.  Finance Committee Republicans and the American people deserve an open, thorough process to fully vet legislative proposals and maintain the integrity of standard Senate committee practice.

From the letter:

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Tax Cuts and Jobs Act (H.R.) Changes Made To The Committee-Reported Bill During Floor Consideration

US Senate Finance Committee _ TCJA

Changes Made by the Perfecting Amendment (Hatch #1618)

(Note: All JCT estimates are relative to the committee-reported version of H.R. 1)

Modifications
Increased Pass-Through Deduction (Sec. 11011)

  • This provision increased the deduction for qualified business income on individual returns from 17.4 percent to 23 percent of such income.
  • JCT Estimate: Change would reduce revenues by an additional $114 billion over ten years.

Extended Bonus Depreciation (Sec. 13204)

  • This provision extends the bill’s five-year 100 percent expensing period for an additional four years, decreasing gradually over that time.
  • JCT Estimate: This change would decrease revenues by $35 billion over ten years.

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