By Taxpayers Association of Oregon
Forget what politicians, columnists and lobbyist say about Biden’s upcoming tax reform. Instead focus on your attention on what a conference of hundreds of tax professionals are saying amongst themselves about it which is pure dread, confusion and panic.
Biden hopes to close what they see as a specific $700 billion tax gap of what he perceives as the amount of added money taxpayers should be paying but aren’t. In order to close this gap, Biden has introduced an entire planet of new rules, regulations and taxes that has tax professionals held hostage to fully understanding what it does and how it would work.
Biden is taking his tax scheme abroad with a huge money grab and tax trap for multi-national companies. By making changes to GILTI (Global Intangible Low-Taxed Income), the President hopes to convince the international community to begin taxing international software and technology companies more. Biden plan details reveals a disturbing plan where America would tax our multinational tech companies greater than other nations.
When changes to GILTI are made, it will impact revenue for dozens of states including Oregon which have a taxable connection to GILTI. For Oregon politicians this means more money. For international companies based in Oregon this makes Oregon a more tax hostile place to operate in. This provides these companies another reason to leave Oregon, either by outsourcing/shipping off portions of their company or moving entirely.
Biden wants to raise taxes through reducing deductible business interest deductions (known as the 163j section). Through numerous tweaks to corporate deductions a business can see their taxes explode even though the politicians are not selling it as a tax increase. The devil is hidden in the details and the hell it brings to your bottom line will be severe.
Biden’s tax plan calls for a new “minimum book income” tax for larger businesses. It is like a new Alternative Minimum Tax aimed at guaranteeing more tax revenue from businesses. The new minimum book income standard helps to redefine what is actual income and therefore increases actual taxes. The newly invented minimum book income baffles accountants as it is hard to define and remains uncertain on how much of an impact it will have. Even worse, some of the finer details will come out later, possibly after the tax has passed. That gives power to unelected agency heads to decide how much the new tax will bite.
These tax professionals are alarmed that many of these fine details are not being debated and that they may pass Congress with little public discussion.
Biden’s SHIELD rule would go after foreign companies in low-tax nations that access US markets and create a countering tax penalty for them. This would effectively punish a low tax success story like Ireland (12.5% tax). There are also plans to change Mark to Market rules which would have a significant impact.
By changing tax rates, halving deductions, increasing taxable events and increasing who is covered is how Biden hopes to bring in trillions in new taxes.
Many of Biden’s plans in Congress are changing by teh week, not giving even Members of Congress a chance to read the bill.