Daily Tax Update - May 23, 2017: White House Releases FY 2018 Budget Proposal

White House Releases FY 2018 Budget Proposal:  Today, the Trump Administration released its fiscal year 2018 budget proposal. The proposal did not expand on the president’s tax plan, released April 26, but assumes that any adopted tax reforms will be revenue neutral. The budget also proposes cutting $239 million in IRS funding, $800 million from Medicaid, and $72 billion in disability benefits, while increasing military expenditures by 10% and spending $2.6 billion on border security.

Ways and Means Hearing Highlights Divisions on Border Tax Proposal:  Testimony at today’s Ways and Means Committee hearing on the border tax proposal highlighted a lack of consensus on the effects of the plan. Archer Daniels Midland Co. CEO Juan Luciano testified that the tax would make American companies more competitive, a position echoed by The Lindsey Group CEO Lawrence Lindsey, while Target Corp. CEO Brian Cornell asserted that the proposal would undermine growth. Former Walmart CEO William Simon urged the committee to focus on rebuilding US manufacturing in order to protect and grow middle class jobs. Finally, Reed College Economics Professor Kimberly Clausing expressed concerns that the border tax proposal is incompatible with US obligations under the World Trade Organization.

OECD Issues Discussion Draft of Guidance on Hard-to-Value Intangibles:  Today, the Organization for Economic Cooperation and Development (OECD) released its discussion draft regarding the implementation of the approach to pricing transfers of hard-to-value intangibles described in Chapter VI of its Transfer Pricing Guidelines. Comments on the draft are requested by June 30.