School cellphone ban calling
The state Senate advanced a new version of a state Sen. Julian Cyr's bill that would require schools to ban the use of cellphones and other electronic devices from the first bell in the morning to the last bell letting students out in the afternoon.
'The cellphone is one of the most distracting devices ever created,' Senate President Karen Spilka and state Sen. Jason Lewis, the co-chair of the Education Committee, said in a statement Tuesday. 'Overwhelming evidence shows us that cellphones are major barriers to student growth and achievement in the classroom, and they make it harder for our talented educators to teach.'
According to the bill, schools would be required to have a mechanism in place to enforce the ban, but what that looks like would be up to each district. If it passes this session, it would take effect in the 2026-2027 school year.
A handful of school districts across the state already limit or ban cellphone use during school hours or on school property. Boston and Brockton began using Yondr pouches — small bags with magnetic locks — last year. Worcester also recently started implementing an updated policy on students' use of devices in schools.
There are some caveats: School districts can allow for several exceptions, and they have to offer a way for parents to reach students during the school day.
The bill moves Massachusetts closer toward the new norm in the more than two dozen states that have laws on the books restricting cellphone use during the school day. California, New York and Florida have all moved to limit the use of phones in class. And New Hampshire recently approved its own so-called bell-to-bell to ban after pressure from Republican Gov. Kelly Ayotte.
GOOD WEDNESDAY MORNING, MASSACHUSETTS. Tips, scoops, got a better metaphor than 'electronic cocaine'? Drop me a line: kgarrity@politico.com.
TODAY — Lt. Gov. Kim Driscoll chairs a Governor's Council meeting at noon at the State House. Sen. Ed Markey hosts a virtual event with Small Business for America's Future on the impact of tariffs on small businesses at 2 p.m. Attorney General Andrea Campbell is on GBH's 'Boston Public Radio' at 1 p.m.
EYES ON 2026
SURVEY SAYS ??? — State Senate Minority Leader Bruce Tarr won't quash (or confirm) speculation he's eyeing his own bid for governor.
But in a sign he could be serious about seeking higher office, he did recently commission a poll that looked at 'multiple important elections' and issues, according to a campaign spokesperson.
Tarr's campaign declined to share the results of the survey, which state campaign finance records show he paid $19,600 for in June. But the findings 'make me encouraged about Republican leadership in Massachusetts,' Tarr told Playbook last week.
— Republicans running for Massachusetts governor attack each other over fundraising by Chris Van Buskirk, Boston Herald: 'Mike Kennealy, a Republican running for governor of Massachusetts, accused Brian Shortsleeve, another conservative gubernatorial candidate, of inflating his fundraising numbers in a pair of public announcements over the past two months. Candidates regularly release public statements about their monthly fundraising that feature numbers different from what is found on the public campaign finance database maintained by the state. That is typically a result of delays by candidates' banks in reporting data to regulators.'
— Western Massachusetts' most powerful pol endorses Ed Markey's 2026 reelection bid by John L. Micek, MassLive: 'The dean of Massachusetts's Capitol Hill delegation, joined by two dozen state, regional, and local leaders from across Western Massachusetts, has endorsed U.S. Sen. Ed Markey's 2026 reelection bid. The endorsement from U.S. Rep. Richard Neal, D-1st District, comes as Markey continues to sew up support from key Democratic leaders as he looks to head off any additional primary challengers.'
DATELINE BEACON HILL
— Cost high to expand background checks for shelter applicants by Sarah Betancourt, GBH News: 'The cost of strengthening security in the state's family emergency shelter system could be significant, and cause delays for applicants seeking temporary housing. A recent report from the state's Executive Office of Housing and Livable Communities outlines two options for implementing the background checks through the National Crime Information Center (NCIC) operated by the FBI. The first is for the agency to directly manage the process, which would require purchasing fingerprint scanning equipment, develop protocols, hiring and training extra staff to submit fingerprints directly. The second is to use a third party vendor, like Idemia, the vendor currently under contract for similar work with other state agencies.'
— Massachusetts lawmaker's bill would ban ICE agents from wearing masks by Ryan Mancini, MassLive: 'A new bill filed in the Massachusetts Legislature would ban law enforcement, including agents with Immigration and Customs Enforcement (ICE), from wearing masks, but with some exceptions. State Rep. James Hawkins, D-2nd Bristol, introduced the bill in the wake of several ICE detainments in Massachusetts and across the country. In several instances, federal agents were masked or disguised before approaching an individual and placing them in ICE custody.'
WHAT'S ON CAMPBELL'S DOCKET
— Massachusetts AG Campbell jumps into court fight over ICE tactics in L.A. by John L. Micek, MassLive: 'Arguing that its tactics have 'terrified immigrant and non-immigrant residents alike,' Massachusetts Attorney General Andrea J. Campbell on Tuesday joined a court fight over the Trump administration's immigration sweeps in Los Angeles. On Tuesday, Campbell's office announced that it had joined a coalition of 18 state attorneys general in a friend-of-the-court brief supporting the plaintiffs in a case that seeks to bar U.S. Immigration and Customs Enforcement agents from engaging in what they describe as 'unconstitutional and unlawful stops of Los Angeles residents during immigration sweeps.''
FROM THE HUB
— Wu says White Stadium costs for city will 'likely' exceed $91 million estimate by Emma Platoff, The Boston Globe: 'Boston Mayor Michelle Wu acknowledged Tuesday that the cost to taxpayers for renovating White Stadium will 'likely' exceed the latest official estimate of $91 million, as the cost of materials has risen. 'The last budget estimate at the point where design was finalized was $91 million,' Wu said Tuesday afternoon during an appearance on GBH's 'Boston Public Radio.' 'We will likely be above because different line items have gone up.' Wu did not offer a specific figure for the updated cost, but said 'we should know in a few weeks' as construction projects are put out for bid.'
— Boston Councilor pushes for neighboring towns to help pay Mass and Cass costs by Saraya Wintersmith, GBH News: 'Boston's neighboring cities and towns should pay into a regional fund to help with costs of the homelessness and addiction crisis around the intersection of Massachusetts Avenue and Melnea Cass Boulevard, also known as 'Mass and Cass,' says City Councilor John FitzGerald. … The first-term city councilor who represents most of Dorchester and a portion of the South End said he is filing a hearing order this week to prompt the city to consider the idea of a Regional Substance Use Disorder and Mental Health Fund that would require Boston and it's municipal neighbors 'to contribute to a shared fund supporting addiction recovery, housing and public health infrastructure,' according to the proposed hearing order made public Monday.'
— Southie pool reopens to public as Boston officials continue push to renovate facilities by Eve Zuckoff, WBUR: 'City officials celebrated the opening of the Condon pool in South Boston on Tuesday after it had been closed for several months for repairs. However, seven of the city's public pools — about one third — remain closed. The city has been in a years-long process to rehabilitate its public pools. Last summer, a third of Boston's city-run pools were closed for repair; the year prior, it was almost half.'
THE RACE FOR CITY HALL
— School Committee's Amico running for City Council by Caroline Enos, The Salem News: 'School Committee member Joseph Amico is running for an at-Large City Council seat this fall. Amico, 53, has served on the School Committee since 2015. During that time, he has been the committee's vice chair, sits on the finance and education subcommittees and is a member of the building committee for the city's new public safety building going up on Allens Lane.'
PLANES, TRAINS AND AUTOMOBILES
— Federal funding for I-90 Allston project in jeopardy by Bruce Mohl, CommonWealth Beacon: 'The massive package of tax and spending cuts President Trump signed into law on July 4 contains a provision that eliminates a federal transportation grant program that set aside $335 million last year for the nearly $2 billion I-90 Allston highway project in Boston. The provision rescinds 'the unobligated balances' of the roughly $3 billion Neighborhood Access and Equity Grant program, which included funding for a project that aims to straighten and lower to ground level the Massachusetts Turnpike as it passes between Boston University and the Charles River. The Massachusetts project, complete with a new MBTA station, would pave the way for Harvard University to construct a new neighborhood on its holdings in the area and help knit together a portion of Boston that had been severed by construction of the turnpike in the 1950s and 1960s.'
FROM THE DELEGATION
— Massachusetts Rep. Seth Moulton joins striking trash workers on picket line via Boston 25 News.
— Warren wants to give military a 'right to repair' by Christian M. Wade, Gloucester Daily Times: 'Massachusetts Sen. Elizabeth Warren is leading a rare bipartisan effort in Congress to authorize the military to repair its own weapons and machinery, arguing the 'common sense' move would save taxpayers' money and improve readiness. The Warrior Right to Repair Act of 2025, filed Tuesday by Warren and Sen. Tim Sheehy, a Montana Republican, would require contractors to provide the Department of Defense with access to technical data and materials the military needs to repair and maintain its own equipment.'
IT'S NOT EASY BEING GREEN
— How a 'cool block' in one Massachusetts city could provide a template for combatting extreme heat by Ben Tracy, CBS News: 'Chelsea is plagued by what is known as the Urban Heat Island effect, where dense development and a lack of green space can cause some neighborhoods to bake. … Research from the nonprofit Climate Central shows peak temperatures in such urban areas can be 15 to 20 degrees Fahrenheit hotter than greener ones. 'We're basically an island of hot stuff,' Bianca Bowman, a climate justice manager with GreenRoots, a local Boston environmental group, said of Chelsea. GreenRoots is experimenting with cooling solutions on a single block in Chelsea that GreenRoots calls the 'cool block.''
FROM THE 413
— Berkshire schools scramble as federal freeze threatens student programs by Greg Sukiennik, The Berkshire Eagle: 'Summer learning programs in Pittsfield and North Adams are still running — for now — despite a sudden freeze of billions in federal education dollars that leaves the future of these after-school and summer services in limbo. The 21st Century Community Learning Center programs in Pittsfield and North Adams — which serve hundreds of at-risk students across both cities — are subject to a $6 billion freeze in federal education funding announced Monday, affecting $106 million allocated to Massachusetts schools.'
THE LOCAL ANGLE
— Methuen OKs $4.4M to cover insurance shortfall by Teddy Tauscher, The Eagle-Tribune: 'A $4.4 million shortfall in the city's health insurance trust fund is a result of rising medical costs, including from the classification of drugs that include weight loss medications Ozempic and Wegovy, according to Mayor D.J. Beauregard. To cover the gap, the council took the steps Monday needed to approve a $2.9 million transfer from the city's stabilization fund and another combined $1.5 million from last fiscal year.'
— Fall River moving some students to new schools as busing costs rise by Emily Scherny, The Herald News: 'Superintendent Tracy Curley has, for months, warned the district of a necessary policy change in line with state mandates that will change the way the district calculates distance between a student's home and school, impacting who is eligible to receive school transportation. At a May 27 City Council Committee on Finance meeting, Curley spoke of curtailing transportation costs despite increases in busing contracts, explaining that the objective of the school administration in re-drafting the policy is to comply with state guidelines for updated distance calculations, while continuing to transport eligible students.'
— MassDEP OKs New Bedford trash-transfer station site. Some neighbors 'deeply disappointed' by Frank Mulligan The Standard-Times: 'The state Department of Environmental Protection has given a green light to a proposed solid waste processing facility site opposed by North End neighbors that will now move to the city Board of Health for approval. The facility is proposed by South Coast Renewables, formerly Parallel Products, in an expansion of its operations at 100 Duchaine Boulevard in the New Bedford Business Park. MassDEP has been reviewing the application since early 2023.'
— Detained immigrants use 'habeas corpus' petitions to challenge ICE by Kevin G. Andrade, The New Bedford Light.
HEARD 'ROUND THE BUBBLAH
HAPPY BIRTHDAY — to Amy Sennett, Brittany Webb, Rachel Dec, Ryan Boehm, Boston Globe alum Wesley Lowery, George-Alexander Attia and MassGOP alum Madeleine Cammarano.
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In this episode of Tax Notes Talk, Alan Cole of the Tax Foundation discusses the international tax provisions in the One Big Beautiful Bill Act and what may be next for negotiations on a global tax framework. Tax Notes Talk is a podcast produced by Tax Notes. This transcript has been edited for clarity. David D. Stewart: Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: rethinking revenge. When the House released their initial version of the One Big Beautiful Bill Act, the international business community was concerned by the proposed section 899, which came to be known as the revenge tax. We covered this provision in a previous episode, which we'll link to in the show notes. Since then, the bill has been through a number of changes at the behest of senators and one significant change requested by the administration, concluding in the final version signed into law by President Trump. So where did Congress end up on international tax? And what does the bill mean for efforts to reach a consensus on international corporate tax? This episode is part of an ongoing series on the One Big Beautiful Bill Act. As we continue to dive deep into the most important tax changes and provisions in the coming weeks or even months, we'd like to hear from you. If there's an aspect of the bill you'd like to hear more about, please email us at podcast@ But for now, here to talk more about this is Tax Notes senior reporter Jonathan Curry. Jonathan, welcome back to the podcast. Jonathan Curry: Hello again, Dave. David D. Stewart: Now, I understand you recently talked to somebody about this. Who did you talk to? Jonathan Curry: Yeah. I talked to Alan Cole of the Tax Foundation. He's a senior economist there, and he's full of great insights. David D. Stewart: And what things did you talk about? Jonathan Curry: Well, we focused on the international tax provisions of the OBBBA, or the One Big Beautiful Bill Act. We covered quite a lot of ground, to be honest. Of course, this didn't happen in a vacuum. We went through the context, the history that led us to this point. We cover some of the major provisions in the bill, things that a lot of our listeners are, I'm sure, familiar with: the [global intangible low-taxed income, foreign-derived intangible income, and base erosion and antiabuse tax] and now the sad, new nicknames we all have to memorize in order to keep track with this evolving tax landscape that we're in. You'll hear things like the foreign tax credit haircut, the [controlled foreign corporation] look-through rule, things that might not necessarily jump off a page when you're scanning a bill. But it's stuff that's important for a lot of multinational corporations, international tax practitioners in particular, and it's going to have a lot of impact for certain industries. There are going to be some winners, some losers, and things like that. And of course, we talked about one of my favorite topics — which I'm sad it's not going to be in law anymore — the revenge tax, section 899. You'll hear Alan's views on what impact it had on the tax debate and international negotiations. And on the topic [of] international negotiations, all these international tax changes took place in the context of the pillar 2 global minimum tax framework. And you'll hear how he thinks that this moves us in some ways closer to that and some other considerations there. David D. Stewart: All right. Let's go to that interview. Jonathan Curry: Well, Alan, it's great to have you here on the Tax Notes podcast. I know you're excited to talk about your favorite topic in the world: international tax. Welcome. Alan Cole: Thank you. Absolutely great to be here. Jonathan Curry: Yeah. So we're going to dive in and start off by talking from a 30,000-foot view, the big picture here. What was the international tax landscape prior to this new "big beautiful bill" coming into effect? I mean, why were lawmakers even wanting to make changes on the international tax end in the first place? Was this a major reform? Is this [Tax Cuts and Jobs Act] 2.0? What are we looking at here? Alan Cole: Mostly, we're looking at TCJA 2.0 on the international side. This is a very similar coalition to the one that wrote the international tax reform in 2017. Same party, same president. And that means that there's a limited desire to tinker with too much. And on top of that, the coalition had a pretty narrow majority in the House of Representatives, and that also lends itself to not making too many ultra controversial changes. That said, there were reasons to tweak TCJA even from the perspective of a party that had already passed it in recent memory. Jonathan Curry: Yeah. Now, the House version of the bill, when we got the first draft of it, I remember seeing the draft document come out and thinking, "Oh, boy, here's this whole new set of stuff to write about." And I looked at it, and there wasn't very much in there on the international tax space, except for section 899, which we'll get into later. But I mean, can you imagine the world in which international tax just got ignored altogether and the system we have currently in place was just left to continue running? Or was the Senate vision of making some changes here inevitable? Like this was going to have to happen one way or another? Alan Cole: One way you could look at it would be from the House's perspective, it's hard to get unanimous approval for something among the Republican members, and you effectively need unanimous approval in order to get a majority in the House if you're relying only on Republican votes. And that lends itself to just doing what you did before because that's the baseline that everyone can at least start from. But on the other hand, international corporate income tax is not usually an area that draws a lot of political controversy where you'll see a big dispersion in what different members believe. Especially if you're doing things carefully and relatively evenhandedly, and not trying to create big winners and losers. So there was room for a little more reform. I'm not surprised that ultimately the Senate did more to change international corporate income tax provisions than the House did, because the Senate definitely felt like they had room. They had effectively a larger majority than the House majority. But ultimately the House just agreed to the Senate's changes because international corporate income tax is not that politically controversial among members in the sense that there aren't different beliefs among members. So if you're going to present a package and say, "This is the best that our writers could do given the constraints," most of the members are probably going to go, "OK." And that's kind of what happened. The House roughly accepted the Senate's changes, and that's how we ended up with a somewhat more interesting international package than the initial House bill looked like. Jonathan Curry: Well, we've been talking about changes to the international tax portion of our laws here. Let's go over some of those changes. Let's start with the big three: GILTI, FDII, BEAT. Can you just run through us real briefly just a high-level view of what the changes that were made were? Alan Cole: GILTI and FDII both have new names now. Their acronyms are now NCTI [net CFC tested income] and FDDEI [foreign-derived deduction-eligible income]. Those names actually kind of existed before. They were intermediate steps in the calculations that got you to GILTI and FDII. But the reason for the name change is that one of the final steps is no longer there, and that is the subtraction of [qualified business asset investment] from the base of both of those tax bases. And the subtraction there is effectively a subtraction of the return on tangible investments. The idea is if you start with all income and then you subtract the return on tangible investments, what you have left is your intangible income. And that's indeed where the I's in GILTI and FDII come from. Both have an I that stands for intangible, and then the other I stands for income. Now they are each down to one I, just the one that stands for income, and they no longer target intangibles. That change is a "made in America" Trump agenda type change, I think. It's one of the places where you can see a bit of a Trump ideological stamp. And overall, I'm not a fan of this for reasons we can get into, but it's one of the few places where this is really something more than just an update to TCJA. It goes in a new direction, and it takes away the original purpose of GILTI and FDII, which was to target intangible income. Jonathan Curry: And about those acronyms, they used to have these memorable acronyms: GILTI, FDII. We still have BEAT, of course. Have you settled on a way to refer to these new acronyms, the two new acronyms we have here? It's NCFCTI and FDDEI. Any good quick shorthand in your mind that you've settled on? Alan Cole: We're talking about NCTI versus NCFCTI? The C standing for CFC, which stands for controlled foreign corporation. That's the international income component of the new bill. Usually I'm hearing NCTI that can maybe be turned into "necktie" or "nicktee," but I'm not sure which one of those two will win out. And some people have gone with "fidday" for the new FDII, F-D-D-E-I. But it's always been awkward to come up with good names for these things, and certainly the long acronyms are doing themselves no favors. Jonathan Curry: Yeah. It will take a while for the dust to settle and for the tax community to settle on an agreed-upon way to refer to these, I think. Personally, I vote for "necktie." So GILTI and FDII had some pretty substantial changes. BEAT, as I understand, is fairly not that different, correct? Alan Cole: BEAT we can actually go through pretty simply. There was an idea for a whole bunch of changes to BEAT in the Senate draft, but they got rid of that set of changes and went with a much more simple rate hike to BEAT, not as big as the rate hike that it was scheduled for. It was scheduled to go from 10 [percent] to 12.5 [percent], and instead they made it go from 10 [percent] to 10.5 [percent]. So they kind of curved much of the rate increase in BEAT, and they preserved the current-policy treatment of credits and set it in law permanently. So mostly, they punted on BEAT. But there was an effort to do something more interesting, which was a high-tax exemption. And that would have actually done a lot to put BEAT a little bit more towards its intended purpose, or at least its stated purpose. It says it's a base erosion tax. That's what the B-E stands for. And base erosion would be when you're trying to get to a lower-tax jurisdiction, you're taking deductions in the U.S. by making payments out to some lower-tax jurisdiction so that your income shows up there instead. And the U.S. doesn't like that; the U.S. calls that base erosion because they would rather the income be in the U.S. and taxed as U.S. income. And that would make sense if all instances of stuff taxed under BEAT were base erosion. But in many cases, it's effectively just going after normal large countries with high corporate income tax rates because it doesn't actually make any determinations based on what kind of country a company is making payments to, or what kind of presence they have there. It just looks at categories of accounting that are deemed suspicious. So the Senate had an idea: "Well, let's actually look what kind of country it is. And if it's a high-tax country, defined as having at least 90 percent of the U.S. tax rate, then we can exempt you from BEAT, because there, you're not base eroding, you're just paying tax to another country that has a similar tax rate to ours. Presumably because you honestly believe that the royalty payments actually do belong to your enterprises in that other country." And that makes sense if you're a Japanese company and you say that a lot of your work comes from engineers based in Japan. That's a very believable claim, and that's not really a tax evasion-like claim. Same with France, for example. That's not a country that you would try to increase your income tax liability in because it's a high-income tax country. So that idea had a lot of promise, but I think the Joint Committee on Taxation scored it more expensively than perhaps writers thought it would be. I was surprised to see the number that high. I had been conditioned to think that the Joint Committee on Taxation thought that BEAT was a relatively smaller provision. And then we got this larger number, and then sure enough, it was gone in the next draft, and they did something simpler on BEAT. So I think it was just a matter of they didn't get the score they wanted and they pulled back from it. Jonathan Curry: I see. So you don't think it's a policy decision that lawmakers are like, "We don't think we should do this." It's more like, "Well, maybe on the margin, it's just not really worth making the change because it will add to our numbers, our bad math here, the deficit numbers." OK, well, that's interesting. Alan Cole: Yes. I think they were working within a current-policy revenue-neutral framework on the international side. So they were looking at 2025. What are we collecting in 2025? Let's try to design a system that collects about the same amount but is a little bit better. And if the BEAT score stopped them from reaching that goal, then that would be a reason to reverse it. Jonathan Curry: Yeah, yeah, interesting. Now there were a couple other changes in here too — CFC look-through rule, FTC haircut. Anything that surprised you? Or are these all pretty expected provisions to include in this package of proposals? Alan Cole: I think there are two categories here, and actually each of your examples comes from one of the categories. CFC look-through rule, and we could also go with the downward attribution glitch fix. There are some things that are so into the weeds that you can only really get coverage of them in a place like Tax Notes. These are really complex glitches in TCJA, or they are things that have been extended a long time, and it would be complicated if they ever went away. CFC look-through is like that. It would make the handling of U.S. multinationals much more complex without necessarily raising that much revenue. And so they made the CFC look-through rule permanent. That's a patch to the whole CFC look-through issue. And then they also included the patch to fix the problem in constructive ownership rules that was accidentally made in TCJA. It's pretty clear that there was a section of U.S. tax law that was supposed to be amended and instead it got removed, and it creates exceptions to constructive ownership rules. And that exception disappeared entirely rather than being rewritten. And as a result, people were kind of credited with having much greater CFC reach than they actually should have, and it was a whole big mess. So those are the bug fix types. And those, I think, were not big surprises. A lot of them you could see that members like Rob Portman (R-Ohio) and Thom Tillis (R-N.C.) were talking about these things for a while, and they didn't cost much. So those were definitely going to make it in there. And then the other category has to do with kind of the way that the international situation has evolved since TCJA. It's not so much that TCJA was written in a flawed way in 2017 in these cases. It's more that the way the rest of the world does things has changed, although Republicans are not always singing the same tune as the rest of the world on international corporate income tax. Here, there were a few lateral changes that can just harmonize the U.S. with foreign tax cuts a little bit more. And basically, the situation was that the U.S. had what appeared to be lower rates, but actually its rules were less generous in unique ways that were anomalous to the United States. Those are things like expense allocation, the FTC haircut, as you mentioned. Those things make it a little bit worse to be a U.S. company. But in TCJA, you had lower nominal rates than the 15 percent target that the Europeans and OECD want a lot of people to settle on. The Senate took a look at that and said, "Well, we can just remove some of these U.S. idiosyncrasies, and that gives us effectively tax cuts for corporations. And then we can raise the nominal rate, take some of that money back. That's a neutral trade, but it makes our tax code look a little bit more in line with the 15 percent target." But notably, they went only to 14 [percent], not to 15 [percent], as if almost to say, "You're not the boss of us, we will do something slightly different than your target." But effectively, the U.S. at 14 [percent] with its rules is still maybe a little bit worse, a little bit less taxpayer friendly, at least revenue-wise, than a 15 percent rate. So I don't think U.S. companies are getting away with a lot with the 14 [percent] instead of the 15 [percent]. Jonathan Curry: With this new suite of changes that we have, are there any obvious winners and losers here? I mean, you alluded to the Trump administration having a vision and putting its stamp on things. They've talked a lot about increasing domestic investment. Did these changes move the U.S. more towards that? Alan Cole: I think there are some changes that are intended to have a real impact that aren't just a little bit of lateral shuffling and creating a 14 percent rate rather than a lower 13 percent rate. There are some things that are a little bit more intended to be substantive. But even there, from an individual company's perspective, I think a lot of these things come out to be roughly a wash relative to the 2025 tax code. For example, the elimination of QBAI — the attempt to maneuver the system previously directed at intangibles towards a little bit more of a tangible and America First and export-focused tax system — that may not have that much of an impact on an overall taxpayer bottom line because, actually, the sort of company that has a lot of QBAI domestically also has a lot of it internationally. And one of those is a tax cut, and one of those is a tax hike, so they balance out for an individual taxpayer. But overall, you want to be the sort of company that has a lot of capital expenses in the U.S. or research and development in the U.S. and then maybe exports a lot. Whether using your tangibles or intangibles, that probably comes out pretty well. The big thing that I see flagged as a likely downside from large corporate practitioners is a change to [section] 163(j) interest limitations. Effectively, international income doesn't count for that, and that means that those become much tougher on some firms. Jonathan Curry: Yeah. I've certainly heard the same listening to a lot of webinars and hearing from different tax practitioners and what they're saying their eye is on and what's the big thing for their clients to look out for. [Section] 163(j), the foreign element of it definitely comes up quite a lot. So you alluded to this earlier, the current-policy baseline. Republicans did get a little mischievous with their math this time around. They used the current policy as opposed to current law, which broke with a lot of precedent. Can you tell me: How did the math add up here on the international tax provisions? Did we come out roughly revenue neutral in terms of the changes that are the higher rates, but a broader base and so forth? Where did we land in terms of the numbers? Alan Cole: Well, the tax code that was enacted in 2017 under current-law baseline rules, there, in order to make the corporate income tax side of the TCJA permanent, they had to do a fair amount of surprise tax hikes at the very, very end of the budget window. And you can count from 2017 out to 2026. That's when those tax hikes showed up. In a few cases, they had them show up a little bit earlier so as to reduce the score of the TCJA within the budget window, but there was a suite of tax hikes. In the international sphere, a lot of those tax hikes come directly in 2026, but they kind of went for current policy 2025. So what they managed to do as a result of the switch to current policy was effectively cancel out those last minute hikes on the international side and then make permanent the slightly lower, not quite revenue neutral, TCJA international side that wouldn't have passed Byrd rule muster in 2017 without those hikes. They canceled those hikes and made that permanent. So they did get some benefit if you're looking at it from the taxpayers' perspective, or they did create some revenue loss that probably would not have been possible under the current-law baseline. Jonathan Curry: To talk about one of my favorite provisions that's actually no longer in law, section 899, the retaliatory tax, the revenge tax. I certainly had a lot of fun writing about this. It makes for a great headline, and it was such an interesting piece of policy that has kept evolving throughout the process. Section 899 had two elements, correct? There is one that was going to impose these higher, progressively higher withholding rates on corporations, individuals, countries that had what we deem the discriminatory or unfair tax, undertaxed profit rules, UTPRs, and income inclusion rules. And there was also an element that was going to target digital services taxes, which later in the Senate was only going to be happening through the so-called super BEAT that was going to supercharge the base erosion and antiabuse tax. We did get a G7 deal at the end of this where they agreed that they were going to scrap their UTPRs and IRRs. They left aside, shelved for now, the question of DSTs. But in your view, how big of an impact does section 899 have on the international discussion? Do you think that was key to the U.S. getting this agreement with the G7? Or was that just a little sideline, sideshow? Alan Cole: I think [section] 899 was a very dangerous gamble, and I think it paid off. I had concerns about it while it was still in the bill. It didn't make it into the final law, and that was actually the outcome that [section] 899's architects kind of were hoping for, I think. It would have been pretty ugly if it had happened, but it was a threat they didn't want to have to go through on. So yeah, one of the biggest aspects of the OBBB international is effectively the thing that wasn't in the bill. We talked about, I'd say three categories of things that are in the bill. There's the Trump priority type stuff with the QBAI; there's the bug fixes; and there's the moving towards the 15 percent target by doing some lateral trades. But the OBBB also had [section] 899, the retaliatory provision, kind of our doomsday device, our mutually assured destruction thing. And it was supposed to target two foreign taxes, and the G7 agreed to get rid of one. And we said, "OK, good enough." And we put it down. And I think one reason that it worked well was there's broad support for combating UTPR and DST much beyond the Trump administration. One characterization you could make of the Trump administration is it starts a lot of arguments with foreign countries. And in some cases, those arguments are idiosyncratic to the Trump administration specifically. For example, arguing that Canada is not doing enough to combat fentanyl crossing the northern border of the U.S., that was not on most people's radar. That seems like a fight idiosyncratic to the Trump administration. And maybe even fighting over bilateral trade deficits, that's pretty idiosyncratic to the Trump administration. But within the U.S. business community, within the U.S. Congress, there's actually quite a lot of opposition to UTPR and to DST. The former because it usurps Congress's authority. It's a little bit like, "Oh, the Treasury went out and talked to a bunch of people over the Atlantic. Now Congress has to rewrite the U.S. tax code in a bunch of ways. Some of them kind of arbitrary, but don't seem to have much rationale." That wasn't going to fly, if only because it was a usurpation of Congress's authority. And practitioners also didn't like it because it would be a lot more work and it would turn out to not actually have much of an impact on U.S. companies' taxes. DSTs, meanwhile, are basically just tariffs in disguise. They're a way for foreign countries to effectively tariff the large number of U.S. tech companies that have done really well globally. Foreign governments have seen those as big bags of money, like pinatas that they can whack at and the money will fall out and they get a treat. And there's no support in the U.S. for letting these things stand. And so in some cases, when the Trump administration is saying something, there's a little bit of a feeling, "Well, can we wait this out? Might they get distracted?" For example, they don't seem to be talking much about buying Greenland anymore. That was a big thing for a few months, and then they just moved on. And also, there's the reality that there will be a new president and maybe that president is not going to have the same idiosyncratic Trump priorities. But I think [section] 899 being there in legislative text made a lot of people realize that not only is Congress behind the president on DSTs and UTPR, but maybe even most of the rest of the United States is as well. And so there's no way of waiting out the president and maybe making inroads with opposition or with people within his party who don't agree with all of his stuff. No, this was unanimous among Republicans, and I think probably even some Democrats really would actively want these things to go away, and few would make a big priority of arguing for them. So I think [section] 899 showed Congress's stacking order of priorities, and showed the American business community's stacking order of priorities. It even went so far as to say, "These are the specific offenses that we want [section] 899 to apply to. We're going to call out them by name, and we're also going to come up with a list of things that aren't offenses and [section] 899 can't be used for." They narrowly cabin the retaliation to be just these two things. So I think if you're a foreign government and you're not sure what to do with the more hostile or bellicose U.S. trade posture — well, the things that have broad opposition in the U.S., you probably are more likely to make a concession on those than on things that are less workable. And especially with respect to the UTPR, that's something that isn't even in effect yet. So it's easier to not do something that you haven't even started doing yet. It's easier to flake out on a plan that you haven't yet brought to completion than to stop doing things the way you were already doing them for a long time. So all of those reasons, I think, meant that the UTPR was the easiest domino to fall. I don't think that the Trump administration is going to get all of its priorities. For example, the stuff about value added taxes being an unfair barrier to trade. Well, I don't think that Europe is going to reorder its entire tax system. Value added taxes in Europe probably raise something on the order of €4 [trillion] or 5 trillion per year, if you add all of the countries together. Jonathan Curry: Sounds significant. Alan Cole: Yeah, something like that. Jonathan Curry: That's not a small chip in a poker game here. No. Alan Cole: Yeah, yeah. They're not going to just come up with something new within the next three years in order to appease one U.S. president who has idiosyncratically said that VATs are an unfair barrier to trade. Jonathan Curry: Well, Alan, so looking ahead, is there any unfinished business on the international tax front? Or do you think that this round of changes will satisfy lawmakers, policymakers for the next, I don't know, couple of years, three, five years, 10 years before they decide to give things another look? Alan Cole: The biggest unfinished business is in the area of how the U.S. international income tax system will coexist with pillar 2. The G7 deal didn't say that pillar 2 is fully going away, although that's still an outside possibility. More likely, Europe continues to implement its version of CFC rules, its effective equivalent of GILTI or now NCTI. That's all likely to still happen. The U.S. wants to be independent of pillar 2, not have pillar 2 go over and touch things that have previously been touched by the U.S. tax code. In many cases, that's relatively simple. You can think of companies that are American and companies that are German, and obviously at the very top level, you'll have one or the other of the two systems. But it starts to get more complicated when you have nested acquisitions. That's something you see in, for example, the pharmaceutical industry a lot because there are both tax and operations reasons that pharmaceutical companies have long chains of acquisitions. Often there's one type of company that does research, and then another one says, "This is good research. We're going to buy your company and figure out how to distribute the drug everywhere." Once you get those nested things, it's much, much harder to figure out exactly how the income inclusion rule, like the European international rules, would coexist or sit side by side with NCTI without colliding with it. So that's an area of unfinished business. Digital service taxes, also unfinished business. That's effectively kind of the European hidden tariff inside of corporate income tax policy. On our side, BEAT I think is actually unfair in some of the same ways that digital services taxes are. And then the big elephant in the room is all of the other trade policy stuff often done under the economic emergency rationale, which is actually being challenged in U.S. courts, and potentially just normal section 301 retaliatory tariffs too. All of those things create a chaotic international negotiation environment. But overall, the U.S. international tax system would hold up pretty well. My one question is, in the change to make it less targeted at intangible investment, does that end up having an effect on how, say, intangible-heavy firms look at the U.S. tax system? Jonathan Curry: Yeah, that'll be something to watch. All right. Well, Alan, thank you so much for taking time to chat with us today. I appreciate it. Alan Cole: Absolutely. Thank you for having me.
Time Magazine
25 minutes ago
- Time Magazine
GOP-Led House Panel Subpoenas Epstein Files and Testimony From Clintons
The Republican-led House Oversight Committee subpoenaed the Justice Department on Tuesday for files related to the late convicted sex offender Jeffrey Epstein, despite resistance from House GOP leadership and growing unease within the Trump Administration over the political and legal implications of such disclosures. The subpoena calls for the Justice Department to turn over all investigative materials related to Epstein's decades-long sex trafficking operation, with victims' identities redacted. The Committee also issued a broad array of subpoenas for deposition testimony from high-profile figures across both Democratic and Republican administrations—among them former President Bill Clinton, former Secretary of State Hillary Clinton, former FBI Directors James Comey and Robert Mueller, and six former U.S. attorneys general, including Merrick Garland and William Barr. The latest activity from the Committee follows Justice Department officials interviewing Epstein's former associate Ghislaine Maxwell, and then Maxwell being moved to a minimum-security facility in Texas. "While the Department undertakes efforts to uncover and publicly disclose additional information related to Mr. Epstein and Ms. Maxwell's cases, it is imperative that Congress conduct oversight of the federal government's enforcement of sex trafficking laws generally and specifically its handling of the investigation and prosecution of Mr. Epstein and Ms. Maxwell," Rep. James Comer, the Oversight Chair, wrote in a subpoena to Attorney General Pam Bondi. The subpoenas come nearly two weeks after one of the panel's subcommittees voted to compel the Justice Department to release the files, just before the House left for its summer recess. House Speaker Mike Johnson publicly resisted the effort, arguing the Administration needs 'room to act' before Congress intervenes. But the committee's decision to subpoena the Justice Department shows that interest in the Epstein files remains high among Republicans, even as President Donald Trump has repeatedly tried to move past the Justice Department's decision not to release a full accounting of the investigation. A July memo from the Justice Department stated that Epstein died by suicide and that no 'client list' of abusers had been recovered—a conclusion that has only deepened suspicion among conspiracy-minded conservatives and Democrats alike. Democrats first pushed to subpoena the Justice Department for its files on Epstein, and were joined by three Republicans to initiate the subpoena in July. The Justice Department will have until Aug. 19 to hand over the requested records. The committee is also requesting that the former government officials appear for depositions between August and October, concluding with Hillary Clinton on Oct. 9 and Bill Clinton on Oct. 14. While former Presidents have often been subpoenaed, none have ever appeared before lawmakers under compulsion. Clinton's association with Epstein has been publicly known for years and included travel on his plane after he left office, according to court records. The Wall Street Journal reported last month that a book assembled for Epstein's 50th birthday in 2003 included a message from Clinton, as well as Trump and others. Both Clinton and Trump were listed as 'friends' in the book. Trump has denied writing the letter and sued the Wall Street Journal. A spokesperson for Clinton said in 2019 that he cut off ties with Epstein prior to his 2019 arrest and was unaware of Epstein's alleged crimes.
