US displeasure notwithstanding, French lawmakers approved a digital services tax. Should President Emmanuel Macron sign the law, as he is expected to within the next two weeks, France will levy the 3 percent tax on sales generated in France by tech companies with revenues exceeding €750 million ($850 million), with at least €25 million earned in France. It would apply to about 30 companies including Google, Amazon, and Facebook and include all 2019 sales. It could raise €400 million this year.
And the UK moves forward on its own digital tax. The UK proposed a 2 percent digital services tax that also is likely to apply to firms such as Google, Facebook, and Amazon. The levy would remain in effect until a multinational tax is in place. Top Senate Finance Committee Democrat Ron Wyden has warned that the tax could jeopardize US-UK trade.
Fed Chairman: “Unthinkable harm” if Congress does not raise debt ceiling. In testimony before the Senate Banking Committee, Federal Reserve Chairman Jerome Powell warned that “no one should assume that the Fed or any other agency can be relied upon to shield our economy from the short, medium and long-term negative consequences of such an act.” Meanwhile, Treasury Secretary Steven Mnuchin and Speaker Nancy Pelosi continue to negotiate spending bills; Mnuchin hopes Congress will vote to increase the debt ceiling before its August recess.
The new IRS Form W-4: A solution in search of a problem. Any day now, the IRS will release its near-final version of the form, which is supposed to reflect the individual income tax changes in the Tax Cuts and Jobs Act. But TPC’s Howard Gleckman says the new form won’t simplify things for many taxpayers. Besides, for all the hand-wringing last spring, most filers got the refunds they expected.
Senate Finance Committee Democrats question IRS guidance on donor disclosure requirements. In a letter to IRS Commissioner Charles Rettig, Finance Committee Democrats warn that new guidance that allows certain tax-exempt groups to avoid disclosing names of major donors could hinder criminal investigations. “The change… seems to limit the tools available to investigators attempting to uncover illegal activity which can span from tax fraud, to illegal political contributions from foreign entities, to terrorist financing.”
Two counties want sales taxes for transportation dollars. Larimer County, Colorado may ask voters to approve a sales tax increase of 0.5 percent to fund transportation. The levy would be on top of a .25 percent sales tax hike voters approved last November to fund a behavioral health facility. The county’s current sales tax is 0.8 percent. Its largest city, Fort Collins, has not yet agreed. Meanwhile in Hamilton County, (Cincinnati) Ohio, the board of commissioners has proposed a sales tax increase of 0.7 percent to boost metro bus service, bringing its total sales tax rate to 7.7 percent. Currently, Cincinnati’s earnings tax funds about half the county’s $100 million bus service. Without new funding, officials predict a $60 million deficit over the next decade.
New York State will trim its film production tax break to fund diversity programs. Democratic Governor Andrew Cuomo announced yesterday that New York will reduce its Film Production and Post-Production Tax Credit Programs. The state will use the money—about $1 million a year—to fund job training and workforce development in the entertainment industry.
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