Daily Tax Update - May 24, 2016: Senate Finance Committee Holds Second Hearing on Corporate Integration Hearing

Senate Finance Committee Holds Second Hearing on Corporate Integration Hearing:  Today, the Senate Finance Committee held a hearing titled “Debt versus Equity: Corporate Integration Considerations.”  In his opening statement, Senate Finance Committee Chairman Orrin Hatch (R-UT) noted that the tax code subsidizes debt financing for corporations, causing “significant distortions in the economy.”  He said that this causes businesses to base financing decisions on tax consequences rather than market conditions, puts consumers at risk for higher interest rates due to overleveraged businesses that are more vulnerable in economic downturns, and favors the use of “complicated tax-planning strategies that redirect resources away from projects and ventures that lead to growth.”  Ranking Member Ron Wyden (D-OR) agreed, stating that “business decisions should be made for business reasons, not tax reasons.”    

Several witnesses also made statements, which can be found below:

  • Mr. John Buckley 
    Former Chief Tax Counsel, Committee on Ways and Means United States House of Representatives 
    Testimony
  • Ms. Jody K. Lurie
    CFA Vice President, Corporate Credit Analyst, Fixed Income Strategy and Research, Janney Montgomery Scott LLC
    Testimony
  • Mr. John McDonald
    Partner, Baker & McKenzie LLP, 
    Testimony
  • Mr. Alvin C. Warren, Jr.
    Ropes & Gray Professor of Law, Harvard Law School
    Testimony

The House Small Business Committee Holds Hearing on Taxation and Its Effect on Entrepreneurs:  Today, the House Small Business Committee held a hearing titled “The Sharing Economy: A Taxing Experience for New Entrepreneurs, Part I.”  In his opening statement, Chairman Steve Chabot (R-OH) discussed “the sharing economy” and the ways that entrepreneurs are “running smack-dab into the buzz-saw of an outmoded tax code that is not designed to accommodate them.”  He stated that the panel would explore potential solutions to change the tax system so that it works better for new small businesses.  A second hearing on the same topic is scheduled for May 26.   

Several witnesses also made statements, which can be found below:

  • Ms. Caroline Bruckner
    Executive-in-Residence, Accounting and Taxation and Managing Director, Kogod Tax Policy Center, American University
    Testimony
  • Mr. Rob Willey
    VP Marketing, TaskRabbit
    Testimony
  • Mr. Morgan Reed
    Executive Director, ACT The App Association
    Testimony
  • Mr. Joe Kennedy
    Senior Fellow, Information Technology and Innovation Foundation
    Testimony

House Appropriations Committee Bill Would Cut $236 Million From the IRS:  Today, the House Appropriations Committee released a draft of the annual Financial Services appropriations bill, which funds the IRS, SEC, and other federal government agencies.  The bill provides for funding in the amount of $10.9 billion for the IRS, which is a reduction of $236 million from current funding.  The bill also proposes to change the structure of the Consumer Financial Protection Bureau into a five-member commission.