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Presented by Community Change Action: Delivered every Monday by 10 a.m., Weekly Tax examines the latest news in tax politics and policy. | | | | | |  | | By Bernie Becker | Presented by Community Change Action | With help from Aaron Lorenzo Editor’s Note: Weekly Tax is a weekly version of POLITICO Pro’s daily Tax policy newsletter, Morning Tax. POLITICO Pro is a policy intelligence platform that combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. YES, THE HURDLES REMAIN: The Biden administration’s most recent proposal of a global minimum tax of at least 15 percent has given just the latest shot of momentum to those long-standing international tax negotiations. But don’t take our word for it. Just listen to how the 15 percent proposal was received by other governments. “ We will really have the chance that in this summer this deal and agreement that we were working for so long can happen,” said Olaf Scholz, the German finance minister, via Bloomberg. It’s now “quite possible to reach an agreement in principle at the G-20 level working very hard in the next weeks,” added Paolo Gentiloni, the EU’s economy commissioner. And on top of that, you had positive comments from the finance ministers from Italy, Luxembourg and Spain, not to mention the opposition Labour Party in the U.K. So there can be little doubt that the talks being run through the Organization for Economic Cooperation and Development are in a better spot than they were at the start of the year, and that President Joe Biden and his team have had a lot to do with that. Even so, it’s way too early to start planning the victory celebrations. Here are some of the obstacles remaining to a deal — some more global issues, others distinctively American problems. First up: Is 15 percent actually a low enough minimum tax to get a deal? The Treasury Department said last week that was as low as it wanted to go. But that number still might be too high for other countries. For instance, the Irish finance minister, Paschal Donohoe, was among those speaking positively about the U.S. proposal last week. But Irish officials have also made it clear they don’t want to go higher than a 12.5 percent minimum tax, which also happens to be the current corporate rate in Dublin. So it’s quite possible some more give-and-take might be needed in negotiations. One more thing about a minimum tax: Even if all the necessary officials got on board with a 15 percent rate, they’d still have to figure out the actual base that would get taxed. The Biden administration has proposed scrapping an exemption for U.S. multinationals for income from certain offshore assets, but that kind of approach might not be attractive to other governments. | | | | A message from Community Change Action: We have a once in a generation opportunity to cut child poverty in half with the expanded Child Tax Credit & Earned Income Tax Credit. Let’s make it permanent. | | | MORE ON THAT IN A BIT, but thanks once more for coming back for Weekly Tax, where we’re happy to pass on the tax angle from the weekend’s big news in sports. Welcome to Medicare-eligible age: Today marks 65 years since Lugano, Switzerland, hosted the first Eurovision singing contest. (As luck would have it, the latest edition was won by an Italian metal band named Måneskin — though not without some controversy.) Our hearts will go on if you don’t send us tips and feedback, but you should do it anyway. Email: bbecker@politico.com, alorenzo@politico.com, bfaler@politico.com and teckert@politico.com. You can also reach us on Twitter at @berniebecker3, @aaronelorenzo, @tobyeckert, @Brian_Faler, @POLITICOPro and @Morning_Tax. MORE GLOBAL TAX TALKS: Here’s another big issues that negotiators have to work through — what to do about unilateral tax measures. The U.S. has stressed that countries that already have or are considering unilateral digital taxes should drop them if the global tax talks are successful, though some key players (like Brussels) aren’t rushing to embrace that idea. But this goes beyond digital services taxes: Negotiators essentially will also have to figure out a broader universe of unilateral measures that would be repealed under a deal through the OECD. “The definition will need to be preventative of future creative cross-border tax rules,” noted Daniel Bunn of the right-leaning Tax Foundation, adding: “The U.S. probably has a broader definition of unilateral measures than other countries, so there is likely some haggling left to do.” Another question hanging over this: Will other countries agree to back off from these unilateral measures if it’s unclear whether Congress will actually approve a global tax deal? “They’re concerned about giving away something for nothing,” as one expert summarized the concerns of other governments. | | | | JOIN TUESDAY FOR A CONVERSATION ON AMERICA'S MATERNAL HEALTH CRISIS: The maternal and infant mortality rates in the U.S. have been rising, especially for women and babies of color. One year into the pandemic, how have social determinants of health contributed to maternal and child health outcomes for Black women and other women of color? Join POLITICO for a deep-dive conversation for which we'll use Illinois as a case study to understand how social determinants of health and Covid-19 complicate efforts to eliminate maternal and infant mortality. We will also explore the various public health and policy solutions to reduce racial disparities during pregnancy and postpartum. REGISTER HERE. | | | | | Speaking of which: All the recent momentum behind the OECD process has raised more questions about how lawmakers here will approach a potential international agreement. The U.S. could easily need to sign a multilateral treaty to implement key parts of a global tax deal — most notably the first pillar of the talks, which centers on how and where the profits of multinationals are taxed. That would require the approval of two-thirds of senators, some of whom have a history of looking unfavorably upon such agreements. Itai Grinberg, Treasury’s deputy assistant secretary for multilateral tax matters, has been offering more briefings to lawmakers recently on the OECD talks, according to people with knowledge of those briefings. It’s not totally clear how well those briefings have been received, but lawmakers undoubtedly will have a lot of information to absorb if they do end up having to vote on a big international deal. So long story short on the OECD talks: A lot of progress has been made, as negotiators strive to strike at least a high-level deal by around the middle of 2021. But a lot still has to be worked through, and how many of these issues will be resolved remains an open question. “All in all, none of this seems insurmountable if everyone is willing to be flexible,” as one expert put it. | | | | HAPPENING TUESDAY - A PLAYBOOK INTERVIEW WITH ADAM KINZINGER: From the ousting of Liz Cheney from her leadership position to the looming death of a bipartisan commission to investigate the Jan. 6 insurrection at the Capitol, Donald Trump appears to be winning the internal GOP battle over the party's future. Join Playbook co-authors Rachael Bade and Eugene Daniels for an interview with a leading member of the Trump opposition, Rep. Adam Kinzinger (R-Ill.), to discuss his efforts to change the party's direction -- and whether that is even possible. Register here to watch live. | | | | | NOT WITHOUT A FIGHT: Congressional Republicans have said they’re willing to work with Democrats on reasonable ways to tamp down on tax avoidance and evasion, and thus allow the IRS to collect more revenues. But Biden’s proposal to give the tax collector an extra $80 billion over the next decade is already drawing fierce responses from the right. A group led by former top aides in the Trump White House is leading the way, as our Anita Kumar reported. Marc Short of the Coalition to Protect American Workers, who was chief of staff to former Vice President Mike Pence, said increased funding for the IRS was the least popular part of Biden’s plan, according to the group’s polling. So not surprisingly, the group has already released advertisements going after what Short calls “an Achilles heel for the overall plan.” Hanging over all of this is the IRS’s improper scrutiny of tea party groups during the Obama administration, as conservative groups with a longer track record — like Americans for Tax Reform and Heritage Action — are also sounding the alarm about the IRS funding. “We very much worry about a weaponized IRS in this world now,” said Adam Brandon, president of FreedomWorks More IRS: The American Council for Capital Formation Center for Policy Research is releasing a new study today on the agency’s funding. Among the key findings: The IRS is underfunded, which makes it difficult for the service to meet its core responsibilities. But ACCF’s Pinar Cebi Wilber also notes that the agency has faced new challenges beyond its control — like new sources of income, such as cryptocurrencies, and urgent new tasks from Congress, like the quick delivery of stimulus checks. “Congress should make sure the agency has enough funds to perform its core duties effectively first and think carefully before assigning additional tasks to an overworked agency without considering the ramifications for revenue collection and taxpayer service,” Cebi Wilber wrote. | | | |   | | | | | | GOING GREEN: Indonesia is considering a major revamp of its tax system, Reuters reports — including a potential carbon tax, as well as changes to the income tax and a hike in value-added tax rates. Indonesia is a top producer of coal, gas and oil, but a finance ministry document floats the idea of a tax targeting “carbon intensive sectors.” The country has also faced calls to make its income tax system, which currently has a top rate of 30 percent, more progressive. The finance ministry document would only say that it wants to “create a more healthy and just tax system,” as Indonesia considers whether to add more brackets. | | | CUT CUT CUT: Nebraska lawmakers overwhelmingly approved a corporate tax cut on Friday — with just one senator opposing the plan, The Associated Press reports. The measure, which also has the support of Gov. Pete Ricketts, would drop the top corporate rate in the state from 7.81 percent to 7.25 percent, at a cost of $26 million during fiscal 2025. The bill puts the corporate rate more in line with the top individual income tax rate, 6.84 percent, paid by many pass-through businesses. | | | Key White House adviser: Biden willing to let infrastructure negotiations linger a bit longer. Sens. Ben Cardin (D-Md.) and Rob Portman (R-Ohio) release bipartisan retirement bill. California’s gas tax is on the rise, again. | | | | A message from Community Change Action: Rent, food, child care, clothes--it’s never been more expensive to raise a family and just get by. The expanded Child Tax Credit & Earned Income Tax Credit puts cash directly into families pockets and we’re working to make it permanent. Learn more. | | | | | | Yes, Celine Dion won Eurovision — back in 1988, representing Switzerland. | | | | Follow us on Twitter | | | | Follow us | | | | |  |
