Asking for a word on foreign tax credits

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May 02, 2022 View in browser   By Bernie Becker FIRST LOOK: A bipartisan group of nine House tax writers is urging the Treasury Department to be more open to business concerns about final foreign tax credit regulations released late last year. The nine lawmakers told Treasury Secretary Janet Yellen that they appreciated that foreign tax credits, in which companies can get a tax break for income taxes paid to other countries, are a particularly dense subject. But they added that they were concerned that the final FTC rules could lead to American businesses being double-taxed and discourage "investment by U.S. companies in emerging markets where we need to stay competitive with China." With that in mind, the tax writers asked Yellen to keep discussing the matter with the business community and "to be particularly mindful of how these changes could negatively impact U.S. companies' competitiveness abroad" in a letter sent Friday and obtained by Pro Tax. Businesses have already pointed out a range of potential problems with the final FTC regulations, saying they could make life particularly difficult for companies operating in countries with which the U.S. doesn't have a tax treaty. In Friday's letter, the bipartisan group of tax writers also asked for more comprehensive IRS guidance for applying the FTC rules and for Treasury to consider offering companies safe harbors in certain situations. Reps. Brad Schneider (D-Ill.) and Kevin Hern (R-Okla.) led the letter to Yellen. Reps. Jodey Arrington (R-Texas), Ron Estes (R-Kan.), Drew Ferguson (R-Ga.), Ron Kind (D-Wis.), Stephanie Murphy (D-Fla.), Jimmy Panetta(D-Calif.) and Jackie Walorski (R-Ind.) also signed on, as did Del. Stacey Plaskett (D-U.S. Virgin Islands). MORE ON THAT IN A BIT, but first thanks for coming to the "do tax people get invited to the cool after parties?" version of Weekly Tax. (Or are tax people too busy with other fun endeavors?) Well, that's a prediction that came true: Today marks 22 years since then-President Bill Clinton announced that civilians would have access to a more accurate global positioning system (GPS), something CNN wrote would have a lasting impact on the "nascent car navigation market." (Previously, the Pentagon had been scrambling the GPS signals used by civilians, and allowing only the most accurate signals for military users.) Help us pin down what's happening. Send your best tips and feedback. Email: bbecker@politico.com, bfaler@politico.com and teckert@politico.com. You can also reach us on Twitter at @berniebecker3, @tobyeckert, @brian_faler, @POLITICOPro and @Morning_Tax.   HAPPENING NOW - MILKEN INSTITUTE GLOBAL CONFERENCE: Go inside the 25th annual Milken Institute Global Conference with our special edition Global Insider newsletter, featuring exclusive coverage and insights from one of the world's most influential gatherings. Stay up to speed with the latest from #MIGlobal, which brings together 3,000 of the world's most powerful leaders and features 700+ speakers representing more than 80 countries. Don't miss out, subscribe today.     Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. NOW WHAT? The lawmakers' letter stopped short of calling for what the business lobby has been seeking on the foreign tax credit regulations — a one year delay of the rules, which went into effect this year. Businesses say that would give them more time to comply with the complicated regulations that are only made trickier by all the moving pieces happening on the international tax scene these days — most notably, the global tax deal that the Biden administration helped across the finish line last year, which could face implementation issues here in the U.S. and in a variety of other places. But it's also true that the extra time would allow for more lobbying to make the rules more business-friendly. The National Foreign Trade Council, one of the first groups to call for that one-year delay, said as much in a letter about two months ago. That kind of pause, the group wrote to Yellen, would allow for "any reasoned reconsideration" of the rules, particularly in how they interact with potential changes caused by the global agreement. Key Democrats previously have said that business groups should have raised more of a stink about the draft regulations, though lobbyists say that the final rules contained significant updates and that the corporate community did lodge some complaints about the draft rules. In any event, there had been some signals in previous months that Treasury would engage with the business community on the rules, as outlets like Tax Notes reported. But it might be getting close to do-or-die time for businesses seeking a delay to the regulations, which have already been in effect for four full months. WELL, THAT'S SOMETHING: Practically every Democrat in Congress right now wanted to preserve the expansion of the Child Tax Credit that the party enacted in its 2021 pandemic relief bill, which authorized monthly payments of up to $300 per child for qualifying families. But they didn't, because of the opposition of Sen. Joe Manchin (D-W.Va.). And according to a new book, Senate Minority Leader Mitch McConnellwould have been nothing but thrilled about that outcome, as Insider's Joseph Zeballos-Roig reports. McConnell had been afraid that if Americans got used to benefits like the monthly child allowances, it would be very difficult for Republicans to strip them away when they took back power, as The New York Times' Jonathan Martin and Alexander Burns write in their new book "This Will Not Pass." Democrats are still trying to salvage a slimmed-down version of President Joe Biden's Build Back Better agenda, which would have extended the expanded CTC for another year under the version that passed the House last year. Manchin, who forced Democrats to abandon that measure, was particularly skeptical of the expanded CTC, calling for work requirements and even suggesting that parents would use their payments to buy drugs. But it's worth noting that McConnell's view of the situation — that voters would both get used to and want to keep social benefit programs if Democrats could only keep them in law for awhile — was shared by many Democrats, which is why they tried to pack lots of initiatives into the BBB on a short-term basis.   INTRODUCING DIGITAL FUTURE DAILY - OUR TECHNOLOGY NEWSLETTER, RE-IMAGINED:  Technology is always evolving, and our new tech-obsessed newsletter is too! Digital Future Daily unlocks the most important stories determining the future of technology, from Washington to Silicon Valley and innovation power centers around the world. Readers get an in-depth look at how the next wave of tech will reshape civic and political life, including activism, fundraising, lobbying and legislating. Go inside the minds of the biggest tech players, policymakers and regulators to learn how their decisions affect our lives. Don't miss out, subscribe today.     Around the World LET'S SEE WHERE THIS GOES: Ghana implemented a 1.5 percent tax on lots of electronic transactions on Sunday — and as the BBC reports, there is a lot of interest in how that will work out . Merchants are concerned the new e-levy will force consumers to pay more through what is frequently a more reliable payment method, and skeptics of the tax — which will hit any transaction of at least 100 cedi, or around $13 — say it will make life especially difficult for lower-income people. For its part, the government acknowledges that the e-levy will likely lead to a drop in mobile transactions, with Ghana's central bank suggesting that might have already started. The bank found that customers already started using cash more late last year in preparation for the tax. But government officials also say they're confident that the mobile money industry will survive and thrive in Ghana. Around the Nation AROUND THAT TIME AGAIN: Lawmakers in Hawaii are on the cusp of approving tax rebates for every household in the state, the Honolulu Civil Beat reported. The payments, which would go to taxpayers who filed state taxes in Hawaii for 2021, will cost the state around $250 million. Lawmakers structured the rebates to be most helpful to lower-income people — filers making at least six figures will get a $100 payments, while those making under that threshold will receive $300. Larger families would also get bigger payments. The state House and Senate, both run by Democrats, are expected to back the rebates in final votes this week, which would authorize the first payments of their kind in 15 years. Lawmakers had been skeptical of the rebates, which had been proposed by the Democratic governor, David Ige, before coming onboard as the state's surplus grew. Quick Links WSJ: "Conservation Tax-Break Deals Keep Flowing Despite IRS Crackdown." Bloomberg: "Big-Shot Lawyers Lured by Beaches and 4% Tax Rate to Puerto Rico." Also Bloomberg: "Musk's Move to Texas May Yield Big Tax Savings on Tesla Sale." USA Today: "We fought the IRS, sort of, and finally got someone to answer the phone." The Guardian: U.K. chancellor and business secretary "at odds over windfall tax on oil and gas profits." Did you know? Geocaching is a "global treasure hunt," as National Geographic put it, of people using GPS to look for hidden objects.   Follow us on Twitter Toby Eckert @tobyeckert Bernie Becker @berniebecker3 Brian Faler @brian_faler Aaron Lorenzo @aaronelorenzo   Follow us

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