The rettig rounds – politico electricity generation by country


The word on and off Capitol Hill is that those meetings are going well, and at least some of the GOP tax writers who have sat down with Rettig have been effusive with their praise, as your Morning Tax author and Pro Tax’s Aaron Lorenzo reported. For instance: Sen. Bill Cassidy (R-La.), asked if he was worried that Rettig didn’t have much managerial experience — at a time when that was an issue for Trump’s choice at the Veterans Affairs Department — responded: “Abraham Lincoln did not have managerial experience before becoming president, and he did a pretty good job.”

For his part, Senate Finance Chairman Orrin Hatch (R-Utah) said in a statement that Rettig “fits the bill” after his meeting with the nominee. (Hatch’s office included a photo in that release, so we also found out that Chuck Rettig is very, very tall.)

So what’s it all mean: At this point, no senator — Republican or Democrat — has voiced any real objections to Rettig. And at least in some pockets, there is a desire to move Rettig’s nomination as quickly as possible — not to mention Mike Desmond, Trump’s choice for IRS chief counsel. (Those are the only two political slots in the whole agency.)

There are a couple reasons for that — having a permanent IRS commissioner in place would conceivably make the implementation process for the tax law run more smoothly, and there are also concerns about last week’s information technology meltdown on the day of the filing deadline.

Still, several members of the D.C. tax community said it was far too soon to get worried about how quickly the nomination is moving — in part because Finance members also want to move as swiftly as they can to get the nomination to the Senate floor. Plus, the committee can only move so fast on the pick.

Ever heard of Operation Moolah? We hadn’t either. But apparently it was 65 years ago, near the end of the Korean War, that the U.S. Air Force began offering $100,000 to the first pilot that handed them a working Soviet MiG-15 fighter jet. ( Here’s more on the winner of that prize, a North Korean pilot named No Kum Sok, and his ensuing issues with the American government.)

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THE LONG REACH OF TAXES: Who knew the GOP tax cut might have played a role in … forcing out the House chaplain? Father Pat Conroy stepped down from that role 10 days ago — but, as Heather Caygle and Jake Sherman report, it wasn’t willingly. And there’s some conjecture from Democrats that an opening prayer that Conroy delivered during last year’s tax debate might have prompted Speaker Paul Ryan (R-Wis.) to seek his departure. “As legislation on taxes continues to be debated this week and next, may all Members be mindful that the institutions and structures of our great nation guarantee the opportunities that have allowed some to achieve great success, while others continue to struggle,” Conroy said in the prayer.

PERFECTLY AVERAGE! The Organization for Economic Cooperation and Development is out with new data examining just how much in taxes workers are paying on their wages — and the United States (26 percent) is right in line with the average for the 35 OECD members as a whole (25.5 percent).

The OECD figure is based on how much a worker pays in income taxes and social security contributions, while subtracting any family incentives received. Workers paid the most in Belgium, 40.5 percent, while Denmark and Germany both topped 35 percent. Meanwhile, Chilean workers paid just 7 percent. The big takeaway from the OECD: Countries are taxing households with children less than childless households, and that’s not a bad thing. “This easing of the income tax burden on families with children, especially on single parents, is encouraging,” said Pascal Saint-Amans, the director of the OECD’s tax policy center. “Setting tax policy in a way that maintains work incentives, particularly for low and middle-income earners, is vital to spur inclusive growth.”

MARK YOUR CALENDARS: The IRS is expected to give the Senate Finance Committee more information on so-called syndicated conservation easement deals in June, Bloomberg Tax’s Kaustuv Basu reports. Those deals — which have allowed investors to profit more quickly than in traditional conservation easement transactions — have come under criticism from lawmakers on both sides of the aisle, and tax writers will decide how to deal with the issue after that next update.

The IRS had previously said that syndicated deals could have cost the Treasury as much as $230 billion over a several-year span, though there were immediate questions about whether that figure included some double-counting. The agency has now put that figure at around $20 billion, and lawmakers are considering bipartisan legislation that would block partnerships from gaining off an easement deal in which the charitable deduction was more than two-and-a-half times the initial investment — though getting a broader bill to attach that measure to could be a steep challenge this election year.

THE DAY IN STOCK BUYBACKS: Democrats have been hammering the GOP tax cut because of the recent rise in stock buybacks — around a quarter-trillion dollars just this year. But while stock buybacks are normally embraced on Wall Street, Goldman Sachs isn’t so sure this time around, CNN reports. “Surprisingly, Goldman Sachs found that since Trump’s election companies that emphasize stock buybacks and dividends have trailed the S&P 500 by two percentage points. Heavy buyback stocks have essentially matched the broader market. On the other hand, companies that are investing in the future are winning.”

Speaking of which: While stock buybacks are getting a lot of attention, Bloomberg reports that companies have been more likely to pour money back into the business in the wake of the new tax law. “Among the 130 companies in the S&P 500 that have reported results in this earnings season, capital spending increased by 39 percent, the fastest rate in seven years, data compiled by UBS AG show. Meanwhile, returns to shareholders are growing at a much slower pace, with net buybacks rising 16 percent. Dividends saw an 11 percent boost.”

WHERE’D ALL THE MONEY GO? When it comes to liquefied natural gas, Australia is quickly catching up to Qatar, currently the world’s leading exporter. One area where Australia is not catching up with Qatar: raising revenue from exporting liquefied natural gas. As Bloomberg notes, Qatar is on track bring in around $20 billion in taxes on LNG in 2020, while Australia is projected to bring around 3 percent of that total — about $600 million. That’s largely because the Australian tax system isn’t set up to maximize revenues from LNG, where projects can take quite awhile to turn a profit. Either way, more revenue from natural gas could certainly help Australia, which is about to run its 10th consecutive budget deficit — though a surplus is projected for 2021, and the government recently ditched a planned round of tax hikes.

TAXES AND EDUCATION, CONT’D: Tens of thousands of teachers in Arizona walked off the job on Thursday, in a protest that affected more than 850,000 students, the Arizona Republic reports. The teachers are seeking pay hikes, increased education funding and a hold on future tax cuts.

So how much of an issue are taxes here? Vox makes the case that Arizona policymakers’ penchant for tax cuts — or an “ ideological aversion” to taxes, as one expert put it — over the last quarter-century led to the current predicament. Gov. Doug Ducey, a Republican, has pushed for a 20 percent increase in teacher pay by 2020, and at least one state GOP lawmaker has floated a tax increase to help relieve the education funding issue — a three-year, 1 percent increase in the sales tax.