The Dobbs Fallout, Tax Edition – POLITICO
MUST PLAN CAREFULLY: The Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organizationin which the judges ruled that there is no constitutional right to abortion, will spark a lot of change across the country.
So it’s probably no surprise that there are new tax complications that individuals and businesses will have to deal with.
Some of these new challenges may not even have arisen yet. But here’s one that corporations and their attorneys are well aware of — the new tax ripples that come with paying employees to travel out of state to get abortions.
Many big companies, like Starbucks and Microsoft, announced weeks ago that they would help defray those travel costs, when it seemed anything but a done deal that the Court would overturn. Roe vs. Wade after half a century.
Other companies, such as Dick’s Sporting Goods and Disney, entered the fray after Friday’s decision to offer similar benefits to their employees.
And one of the various questions these companies and their employees will need to answer is what impact these travel benefits might have on tax relief and taxable income.
MORE ON THIS IN A BIT, but first welcome to the “June went by quickly” version of Weekly Tax. Also, put us on the record in favor most references to “The Naked Gun”.
Hold your horses – literally. Today, it is 370 years since the city of New Amsterdam – about a dozen years from becoming New York – got what is believed to be the first speed limit law in what became the United States (or possibly North America).
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ABOUT THESE EXPENSES: So here’s the deal – it looks like employees won’t have to pay taxes on reimbursements they get for abortion-related travel, at least up to a point, like Bloomberg Law and other outlets have already noted it.
Transportation costs — such as a bus, plane or train ticket — are among the items that can be reimbursed tax-free. But what about accommodation and meal costs?
A company might be able to pay up to $50 a day for these expenses without the employee owing taxes — but no more than that, according to Daniel Hemel, a University of Chicago tax law professor and former clerk of Judge Elena. Kagan.
“So you might have situations where employees who cross state lines for abortions have to report a portion of their reimbursed expenses as income,” Hemel said.
Luckily for businesses, it may not be as complicated for them. Experts say companies should be able to deduct any reimbursements they offer employees to travel for abortions, even if the worker owes taxes on at least some of those expenses.
SEMI-WEEKLY BBB UPDATE: Congress will be absent from Washington for the next two weeks, and the extent of the senator’s progress is unclear. Joe Manchin (DW.Va.) and Senate Majority Leader chuck schumer can do about a possible tax hike and a climate deal by the time lawmakers return.
After Congress returns in mid-July, lawmakers will only be in town a few weeks before the August recess — seemingly the last de facto deadlines for a Democratic fiscal reconciliation measure.
So what should you watch out for in the next two weeks? Some groups of Democrats seem to be getting a little anxious.
For example, Democrats are considering a “last chance plan” to at least temporarily preserve the expanded Obamacare grants they put in place last year, as reported by our Adam Cancryn – one of those areas where Manchin has sent mixed signals.
And remember the SALT caucus? This small group of blue state Democrats are starting to make more noise for not supporting a reconciliation package that doesn’t offer relief from the $10,000 cap on state and local deductions that Republicans have enacted into their 2017 tax law, as noted by Bloomberg’s Laura Davision.
What impact could this kind of discussion have on Manchin and Schumer’s negotiations? Maybe not much, although there are certainly plenty of Democrats who want to expand those larger Obamacare grants.
But that could add to the list of complications Democrats face, with the House having just three legislative weeks left before their scheduled August recess.
RELATED NOTE: One of the questions still hanging over Democrats is whether they can implement half of the global tax deal negotiated through the Organization for Economic Co-operation and Development as part of a budget reconciliation agreement.
Treasury Secretary Janet Yellen and other top Biden administration officials certainly hope Democrats will increase the existing U.S. minimum tax on foreign earnings of domestic multinationals.
But Republicans and some in the business community are sounding the alarm that the US is pursuing the deal with the OECD while the EU remains stuck on implementation – and with Hungary, the only opponent within the 27-nation bloc, showing no intention of backing down.
So what’s the next step? Senior European officials have said they will continue to press their case with Prime Minister Viktor Orban and the Hungarian government, as noted by The Wall Street Journal.
Minimum tax talks are due to take place in Spain later this week at a NATO meeting, although French President Emmanuel Macron has also acknowledged that there is little the rest of Brussels can do about it. put pressure on Hungary.
Keep an eye on it: Itai Grinberg, a Treasury tax official who played a key role in the OECD deal talks, and Pascal Saint-Amans, the head of the OECD tax centre, will discuss the current state of the global tax deal at a DC conference this morning.
OFFER A LITTLE HELP: The Spanish government is preparing to offer a range of relief to low-income people battling inflation, including tax cuts on energy bills, Reuters reports. The 9 billion euro (about $9.5 billion) package is split 60-40 between new spending measures and tax cuts, and will cut value added tax on utility bills in half. energy, from 10% to 5%. This tax relief will also be retroactive to January, according to Prime Minister Pedro Sanchez, with the whole package operational until the end of the year. Spain also passed relief measures, including tax cuts, in March and has already introduced a one-off tax on energy companies. Sanchez is looking to extend the windfall to power companies, Bloomberg reported.
On windfall taxes: “BP pays Britain $127m tax in 2021 for North Sea production”, also from Reuters.
ALMOST THERE: California Democrats reach agreement to send direct payments to some residents, reports the Associated Press. The emerging deal would use about $9.5 billion of the state’s record $97 billion surplus, and comes after Governor Gavin Newsom and Democratic legislative leaders had different priorities for delivering relief from inflation and rising gasoline prices. It would offer $350 per taxpayer to single filers earning up to $75,000 a year and couples earning up to $150,000, with an additional $350 per dependent. Single filers with income up to $125,000 and couples earning up to $250,000 would receive $250, and residents earning double those figures would receive $200, with both groups also receiving additional money for dependents. California’s gasoline tax is also expected to increase this week, from 51.1 cents per gallon to 53.9 cents per gallon, as part of an automatic adjustment for inflation. Newsom and Democratic lawmakers have brushed aside suggestions to suspend the gas tax or scrap the upcoming increase.
Pro Budget: “Financial Services Funding Bill Passes House Committee.”
FT: “RWE warns UK electricity generator tax could risk £15bn investment in renewables.”
AP: “Pakistani Stock Exchange Plunges in New Government Tax on Industries.”
For you reality TV fans: “Mike ‘The Situation’ Sorrentino owes $2.3 million in taxes after his time in prison.”
The Seattle Mariners have the longest current Major League Baseball playoff drought (20 years). The Los Angeles Angels are tied for third at 7.