It is hard to overstate the magnitude of the shock wave emanating from the United Kingdom in the wake of voters' decision to exit the EU. The surprising victory of the Leave campaign will almost certainly prompt introspection on the part of EU leaders and force the next U.K. prime minister to confront the serious possibility of a major recession and tangled trade policy. Where the Brexit vote might have a more subtle impact is on the U.K. tax regime.
Tax Analysts Blog
In many small shops customers see a sign advising, “If you break it, you’ve bought it.” This warns shoppers to take extra care when handling the merchandise. Unfortunately, voters in the U.K. received no such simple warning before they voted to leave the European Union, effectively dropping their country on the concrete like a cheap ceramic souvenir – likely breaking it into three pieces.
Evolutionary changes typically occur at a glacial place. In the tax world, however, we are witnessing a paradigm shift that’s occurring far more rapidly. I’m referring to the rise of automatic information exchange between national revenue bodies. This was unthinkable just a few short years ago.
This will be music to the ears of some incentive-philes. Royal Dutch Shell, the ginormous energy company, has announced plans to build a petrochemical plant in Beaver County, Pennsylvania. Shell will invest billions of dollars in a state badly in need of investment and create thousands of jobs in a state badly in need of jobs. So let's stipulate that Shell building a giant plant that will employ thousands of people is a good thing for my home state of Pennsylvania.
Donald Trump's tax plan isn't particularly well developed, but he does make his position clear on one major international tax issue. Trump would retain the United States' worldwide tax system while eliminating the deferral of taxes on foreign profits. This position is at odds with many reform plans featuring a switch to territoriality, and it is very close to the preferences of Democratic Sens. Ron Wyden and Bernie Sanders. All three politicians are right -- it is time for the United States to end deferral and finally level the playing field between domestic and foreign profits.
Establishment Republican leaders, having consulted their textbooks for the definition of racism and concluded that it encompasses their improbable standard-bearer Donald Trump’s cringe-worthy attacks on the Mexican-American federal judge presiding over the Trump University trial, have moved on to try to further mainstream their presumptive nominee’s candidacy by pressuring him to release his tax returns. Senate Majority Leader Mitch McConnell, who a month ago said Trump would “have to make that decision himself,” now feels emboldened enough to declare, “For the last 30 or 40 years, every candidate for president has released their tax returns, and I think Donald Trump should as well.”
On the streets of many major cities, you can often find small groups of people huddled around a card table while a charming young man quickly explains the game he is about to play to separate some unsuspecting suckers from their money. Called the shell game, the venture involves a wager in which the sucker must pick under which of three walnut shells a small pea is sitting. A variant, three-card monte, involves the same con, but with playing cards instead of shells.
The Oklahoma Supreme Court recently approved a ballot measure (779) that will, if approved by voters, increase the state sales tax by 1 percent. The new revenue would be earmarked to fund $5,000 pay raises for Oklahoma teachers and provide support for the state's colleges and universities. The question before the court was whether the proponents had gathered the requisite number of signatures; the court said yes. But the tax issue is much more interesting.
George Voinovich, both a two-term senator and governor of Ohio, died June 12. Voinovich was an extremely popular governor known primarily for his fiscal discipline. Many of the remembrances of the Ohio politician have praised him for standing against his Republican allies and opposing the 2003 tax cuts proposed by George W. Bush. Lost in some of the discussion is that Voinovich was a supporter of the far larger 2001 tax cut legislation and that other Republicans did much more to try to derail Bush's plans.
Donald Trump is a big fan of tariffs. He’s made them a cornerstone of his get-tough trade policy, suggesting (among other things) a 45 percent import duty on Chinese goods and a 35 percent tariff on cars manufactured in Mexico. And as Time magazine recently observed, he’s not the least bit concerned about the potential fallout. “Who the hell cares about a trade war?” he said last month.