Daily Tax Update - September 9, 2008

REID SUPPORTS SECOND STIMULUS PACKAGE:  Senate Majority Leader Harry Reid voiced support for another economic stimulus bill yesterday.  Reid said, “The state of the economy is very desperate. . .Since we left here for a recess. . .we have only more bad news, which means we should look forward. . .during this work period to see if we can do an economic stimulus bill.” Reid continued, “And the news of the day—the federal intervention on Fannie and Freddie—is but the latest evidence that our economy is in serious trouble.” Reid added, “With families struggling from coast to coast, Democrats are ready to pass another economic recovery package, and we hope this is something both parties can agree upon.”

• Regarding Congressional action on a continuing resolution, Reid said, “We must also work to pass a continuing resolution this work period that will prevent a government shutdown and keep the government running into next year. There has been some talk of the politics of a government shutdown. Let's be clear: Shutting down the government means that senior citizens stop receiving checks and veterans stop receiving health care. We must not let that happen, and I hope Republicans will work with us on a reasonable process to avoid it."
• Today, House Majority Leader Steny Hoyer said, “I don't think tax rebates will be a part of the stimulus package.” Hoyer said the stimulus package would focus on infrastructure, unemployment, and the low-income home energy assistance program.

GAO REPORT—MORE US COMPANIES SHIFTING INCOME TO LOWER TAX RATE COUNTRIES:  Senate Finance Committee Chairman Max Baucus and Ranking Member Chuck Grassley commented on a recent GAO report that found that the number of foreign operations of US companies is increasing, with the largest companies paying the lowest effective tax rates, and more income is being reported in lower tax rate jurisdictions outside the US. The report concluded that businesses may be manipulating existing tax laws by shifting corporate income and tax planning to foreign tax rate jurisdictions in which they operate. 

• Baucus said, “I’ve said before that we will tackle tax reform in 2009 and this report underscores the need to review business taxes as part of our tax reform efforts in the next Congress. Simply put, I do not intend to allow US multinationals to sidestep their fair share of taxes by moving income offshore. Rather, they should do their patriotic duty and start to bring their income onshore, along with as many jobs as possible for American workers. This GAO report will help the Finance Committee develop a better understanding of how the tax code works today for US multinational businesses, as we determine how changes could affect our country’s global competitiveness and economic security.” 
• Grassley said, “The Finance Committee has always been vigilant on transfer pricing issues. It’s a complicated area of tax policy theory and practice, especially if intangible assets are involved. We’ll continue to work toward a system that’s less burdensome on taxpayers and tax administrators but assures that shared business activities are properly accounted for in how US-based taxable income is determined.” 

TAX BILL INTRODUCED SEPTEMBER 8^TH:
H.R.6835: To amend the Internal Revenue Code to provide for an increased mileage rate for charitable deductions.
Sponsor: Rep Hall, John J. [NY-19] (introduced 9/8/2008)      Cosponsors (None)

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