Coca Cola owes more than $3 billion in taxes(Read article summary)
Coca Cola, the soda giant, owes more than $3 billion in taxes, according to the IRS. This brief will keep readers updated on this and other tax news.
On the Hill: A Freeze, a Pontiff, and a Looming Deadline. The House voted to freeze funding for Planned Parenthood, hoping it could help avert a shutdown by appeasing 31 seemingly-unappeasable Republicans who want to defund the organization completely. Meanwhile, the Iran deal remains a sore point. Congress has until September 30—or five business days from now—to reach agreement and keep the government open for business. Odds of a shutdown? Climbing by the minute. Pope Francis addresses Congress on Thursday. Maybe that will help.
Have a Coke and a bill? The IRS says its Coca Cola audit reveals the soda giant owes $3.3 billion in taxes and interest for 2007 to 2009. Not surprisingly, Coke will challenge the assessment. The dispute is over how the multinational reports taxable income in the US and licensing practices for subsidiaries selling products overseas.
State budgets are improving, but not necessarily over the long term. TPC’s HowardGleckman recaps a TPC State and Local Finance Initiative forum on the state of the states. “Today’s decent economy gives states a chance to build up reserves for the inevitable next downturn, reform their tax systems, and rethink how they spend taxpayer money. Unfortunately, many states are mired in ideological battles or unwilling to confront entrenched interests. In a few years, we may look back at 2015 as (yet another) missed opportunity for state government.”
For example: Is an Iowa property tax cut achieving its goal? Iowa enacted a big cut two years ago that is expected to provide $4.4 billion in property tax relief over ten years and $90 million annually in income tax cuts. The package includes a 10 percent roll-back on commercial property tax rates over the next two years and a tax credit for commercial property owners. It also returned some of the state surplus through a $60 income tax credit, and increased the state’s Earned Income Tax Credit. But this fiscal year, it’s costing the state $260 million and Democratic Senator Joe Bolkcom says it’s hitting Democratic spending priorities.
Meanwhile, North Carolina’s new budget includes a big income tax cut. The new budget passed Friday cuts income taxes by $400 million, and levies new sales taxes on repair, installation and maintenance services if the item involving service would be subject to a sales tax. The theory, according to Republican lawmakers: Sales tax revenue is more reliable than income tax revenue. Said tax cut backer and GOP state Senator Bob Rucho, “Tax reform is an ongoing process. Ultimately we’re trying to get rid of income tax and move to a consumption-based tax.”
But in West Virginia, the time is not right for tax reform. The state has a revenue shortfallfor the third consecutive fiscal year. State Senate President Bill Cole said the tax reform committee is “getting close” to being able to craft legislation, but it wants “to make sure we don’t put our treasury in harm’s way.”