This month State Tax Notes turns 25 years old. It’s quite the accomplishment. There were some rocky times, but the magazine has emerged as a place where state and local tax ideas are floated, the debates are spirited, and discussion is informed. The magazine is better than ever, and we’re excited for what the future may hold.
Tax Analysts Blog
This Thursday the federal estate tax will turn 100. And that brings to mind one of the most familiar set pieces of modern American politics: Republicans call for repealing the estate tax, and Democrats denounce the idea. This year Donald Trump and Hillary Clinton have dutifully assumed their respective roles. And voters have the pleasure of watching this argument unfold. Again.
The European Union has ordered the government of Ireland to collect €13 billion in corporate taxes from Apple Inc. That’s roughly $14.5 billion given current exchange rates; one of the largest tax bills in human history. The determination comes as part of Brussels’ ongoing investigation of state subsidies that take the form of advance tax rulings.There are several aspects to this story that leave Americans scratching their head. Let’s review them.
Not content with routing all of its sales from Europe, Africa, the Middle East, and India through subsidiaries in Ireland – and paying a 12.5 percent corporation tax on the profits – in 1991 Apple negotiated an even better deal with Ireland. That deal, and its 2007 version 2.0, reduced Apple’s tax rate on those profits to just five one-thousandths of 1 percent (.005!) in 2014.
In the wake of the United Kingdom's vote to exit the European Union, another core member of Europe is facing an uncertain future because of proposed major constitutional reform. Italian voters will go to the polls in late October or early November to decide the fate of Prime Minister Matteo Renzi's leftist government. If Renzi's reform passes, it will make governing Italy much easier, but its main aim is to essentially disenfranchise a euroskeptic, populist movement similar to the U.K. Independence Party.
You can feel it in the air. The college football season is just around the corner and we are plenty excited. But there’s another high-stakes drama that is almost as captivating to aficionados of tax policy. In case you missed it, the U.S. Chamber of Commerce has filed suit in federal court challenging the Treasury Department and the IRS over their latest anti-inversion regulations.
There is something very wrong with our priorities as a nation when our elected officials fast- track tax relief for Olympic athletes – many of whom are well-paid professional athletes – and place funding for a serious threat to public health on the back burner. Congress should be ashamed of itself.
Apple is a major part of why the United States is the world's leading innovator on new technologies, particularly those involving telecommunications and computers. The company has over 66,000 domestic employees, and a large percentage of its customers are here -- at least 40 percent, according to its latest annual report. But Apple also aggressively avoids paying taxes in high-tax jurisdictions, particularly the United States. And Apple CEO Tim Cook's recent statements are misleading about why.
That Donald Trump revised his tax reform plan came as no surprise. His campaign had been hinting for several weeks that a partial rewrite was in the works. The presumed objectives of the revision were threefold, and it’s useful to keep these goals in mind when evaluating the details of his plan.
Most Americans are still waiting for Donald Trump to release his tax returns. But he’s not the only one dragging his feet. Hillary Clinton, who has generally been very forthcoming with her tax disclosures, hasn’t divulged her 2015 return, either.