All Change Please... or Plus Ca Change?
Kitty Miv, Editor
12 November, 2020
Well, the obvious big development in the news this week is the (eventual) calling of the US presidential election in favour of Democratic challenger, Joe Biden and his Vice President, Kamala Harris. And unless you've been hiding under a rock for the past week or so, you'll no doubt be aware that it's not necessarily over until it's over, with various legal wheels having been set in motion by the incumbent.
However, what is clear is that – if Congress will let him – the President Elect has some big plans in tax terms. According to announcements made during the election campaign, Biden's tax proposals include a potential increase in the federal headline rate of corporate tax from 21 to 28 percent, reforming the GILTI rules, and introducing a 15 percent minimum tax, or "book tax," on companies with reported income in excess of USD100m. He also discussed imposing sanctions on jurisdictions deemed to facilitate corporate tax avoidance and voiced support in July 2020 for tax relief for manufacturing companies.
In terms of personal taxes, Biden has said he would restore the top rate of personal income tax to 39.6 percent from 37 percent; restrict tax breaks for wealthy taxpayers; and tax capital gains as ordinary income and prevent wealthy taxpayers from deferring tax through investments. He also proposed that estate taxes, also reduced by the TCJA, should be raised back to "the historical norm." Finally, he has said that payroll taxes should be expanded for those on high incomes to fund more generous social security benefits.
The Democratic plan pledges "marked tax relief" for working families, including through more generous, refundable tax credits to benefit for those on low and middle incomes, equal tax treatment for retirement contributions, and more accessible tax breaks for homeownership.
However, whether these goals are accomplished remains to be seen.
Elsewhere, Oman's Ministry of Finance announced plans to introduce a new personal income tax on high earners.
The announcement comes less than a month after the country announced that it would introduce the Gulf Cooperation Council value-added tax framework, from April 2021.
The income tax plans are included in the country's Medium-Term Fiscal Plan for the period 2021 to 2024.
Finally, returning to where we began this week's column, by way of the European Union, it emerged that the EU has increased tariffs on USD4bn worth of US imports, effective November 10, 2020.
The tariffs have been introduced as a countermeasure in a long-running dispute between the EU and US over subsidies allegedly granted to aircraft manufacturers Airbus and Boeing, respectively.
In October 2020, the World Trade Organization (WTO) ruled that the EU could impose tariffs against US exports worth up to USD4bn, as a countermeasure against US subsidies provided to Boeing. In October 2019, following a similar WTO decision in a parallel case on Airbus subsidies, the US imposed retaliatory duties worth USD7.5bn on EU exports.
The European Commission said that the EU's countermeasures have been introduced as the US has not yet provided the basis for a negotiated settlement, which would include the removal of the US tariffs on EU exports in the Airbus case.
The Commission said that the countermeasures bring the EU onto an equal footing with the US, with sizeable tariffs on each side based on the WTO decisions. The EU measures include additional tariffs of 15 percent on aircraft, as well as additional tariffs of 25 percent on a range of agricultural and industrial products imported from the US.
Until next week!
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