OVERNIGHT MONEY: Tax havens get a look

THURSDAY’S BIG STORY:

Kicking the wheels of tax reform: Tax writers in the House will turn their attention on Thursday back to overhauling the code and will start with how tax havens have eroded the U.S. tax base. 

The hearing will examine different tax strategies used by multinational corporations to shift income out of the United States and into low-tax and no-tax jurisdictions.  

{mosads}The hearing also will consider when profit shifting is actually eroding the tax base and when the strategies merely move income from a high-tax foreign jurisdiction to a lower tax one with little effect on U.S. tax revenues.

“The use of tax havens as part of corporate tax avoidance strategies narrows the U.S. tax base and requires other taxpayers to pay higher rates on both domestic and overseas income,” said House Ways and Means Committee Dave Camp (R-Mich.).  

“There is widespread agreement among academics, economists and lawmakers that these practices are both unfair to taxpayers who aren’t able to engage in these strategies and harmful to the U.S. economy.”  

The panel’s discussion draft on international tax reform included options to combat the erosion as part of a larger effort to broaden the tax base, lower tax rates and move toward a more modernized and competitive system of international taxation.  

On Wednesday, Camp said that he has started meeting one on one with every member of his panel to push the ball forward on tax reform.

Camp and Senate Finance Committee Chairman Max Baucus (D-Mont.) have made tax reform a central priority.

“There’s obviously going to be more work with members on this really important issue,” Camp said.

The current investigation into the IRS’s targeting of Tea Party groups has dominated the tax discussion in Washington in recent weeks. But Camp and Baucus are hoping that the investigation can spur momentum for tax reform.

Camp has vowed to pass a tax overhaul out of his panel this year.

WHAT ELSE WE’RE WATCHING 

Looking back: The Senate Banking Committee plans to talk to top regulators on Thursday about the lessons learned about community banks during the financial crisis. Witnesses will include representatives from the Federal Deposit Insurance Corporation and the Government Accountability Office.

Next in line: The House Appropriations Committee will mark up the fiscal 2014 agriculture spending bill, which totals $19.5 billion in discretionary funding, $1.3 billion below the fiscal 2013 enacted level and approximately equal to the current level caused by automatic sequestration spending cuts. This total is $516 million below President Obama’s request.

Export-Import: A House Financial Services subcommittee hearing will examine ways to reform the Export-Import Bank. Fred Hochberg, chairman of the board and president of the Export-Import Bank, who is also awaiting final confirmation from the Senate to start a second four-year term, will testify. Several House Republican lawmakers have introduced a bill that would eliminate the bank, and eventually hand the entity over to the Treasury Department to wind down.

Hochberg saw the bank through a tough reauthorization fight last year that allowed the Ex-Im to increase the bank’s total financing ability to $140 billion from $100 billion and renew its charter for three years, through 2014. 

The House and the Senate provided broad support for the reauthorization bill. 

LOOSE CHANGE

Taxes and immigration: Sens. Orrin Hatch (R-Utah) and Marco Rubio (R-Fla.) introduced several amendments to the immigration reform bill that will ensure that newly legalized immigrants pay their back taxes and another that would implement a five-year waiting period for healthcare reform tax credits and subsidies after becoming permanent residents.

ECONOMIC INDICATORS

Initial Claims: The Labor Department releases its weekly filings for jobless benefits. 

Mortgage Rates: Freddie Mac is releasing weekly data on fixed-rate mortgages, which remain around historic lows. 

Retail Sales: The Commerce Department will release its May report measuring the total receipts of retail stores. Sales figures are widely followed as the most timely indicator of broad consumer spending patterns, which represent 70 of economic activity. 

Export Prices-Import Prices: The Commerce Department releases its May report tracking trends in exports and imports, with the export data worth watching for indications of how the global economy is faring. Imports provide an indication of domestic demand, but given the severe lag of this report relative to other consumption indicators, it is not particularly valuable. 

Business Inventories: The Commerce Department will release its April report on sales and inventory from all three stages of the manufacturing process, manufacturing, wholesale and retail.

WHAT YOU MIGHT HAVE MISSED

— Senators urge Obama to stay on sidelines of immigration debate

— House Appropriations panel approves $512 billion Pentagon spending bill

— Regional jobs data show broad-based growth

— CEO departures picked up pace in May

— FDIC, consumer watchdog launch tool for elderly to sniff out scams

— Second IRS furlough day scheduled for Friday

— Levin calls on Treasury to apply tougher rules to foreign exchange derivatives

— Cincinnati Dems defend city from IRS scandal

— Ways and Means Chairman: IRS targeting of Tea Party groups didn’t start in Ohio

— Dem bill would withhold lawmakers’ pay until debt limit raised

— Boehner says he will vote for House farm bill

— Sales, hiring raising CEO expectations for growth

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