Latest news with #MikeCrapo
The Hindu
14 hours ago
- Business
- The Hindu
Wall Street, Main Street push for foreign tax rethink in U.S. Budget bill
Industry groups representing sectors including real estate, finance and multinational companies are pushing for the reduction or exclusion of a retaliatory tax targeting foreign investors in the U.S. in the Republican tax bill, as they see it as a threat to their businesses and to the broader markets and economy. The proposed tax, known as Section 899, applies a progressive tax burden of up to 20% on foreign investors' U.S. income as pushback against countries that impose taxes the U.S. considers unfair, such as digital service taxes. It could raise $116 billion in taxes over 10 years. Some individual companies are also pushing for action, according to two lawyers familiar with their clients' plans, who did not name specific companies due to client confidentiality. 'Lobbying surrounding Section 899 is at peak levels,' said Jeff Paravano, a former Treasury Department official who is now chair of law firm BakerHostetler's tax group. The move comes as Senate Finance Committee Chairman Mike Crapo, the Republican in charge of the chamber's tax writing provisions, and other Republicans are in close coordination with President Donald Trump on the tax bill, having met on Wednesday. The White House declined to comment. Mr. Crapo said he would not comment on ongoing discussions about the bill. Global investors hold almost $40 trillion in U.S. assets, such as securities, loans and deposits, according to the U.S. Treasury International Capital Reporting System. This raises concerns about the ripple impact of the bill. "It has the potential to be a very negative impact on the free flow of capital from the U.S. and through businesses that are multinational," said Gabriel Grossman, a U.S. tax partner at Linklaters, adding he has seen some clients put planned investments in the U.S. on pause until they have more clarity on the new levies. The broader bill itself is also creating much debate as it is forecast to add about $2.4 trillion to the U.S. debt and has sparked an explosive feud between Trump and his erstwhile key ally Elon Musk, the billionaire CEO of Tesla. Collateral damage Industries across different sectors are on high alert. The new levy could increase taxes from rents and real estate investment trusts, gains from property sales and securitized products. "There is a legitimate fear among investors that, if this goes through, it could impact investments, and that it would create higher costs for real estate in terms of getting financing," said David McCarthy, managing director at the CRE Finance Council, a nonpartisan trade group. "It could depress the value of real estate if you don't have as much money to finance property purchases." The asset management industry is concerned about outflows. "We encourage the Senate to make this provision more targeted to respond to unfair foreign taxes and other concerning measures rather than disincentivizing beneficial foreign investment in the U.S.," a spokesperson for the Investment Company Institute said. The investment community is also working to clarify whether Treasuries and corporate bonds will remain exempt as they are currently subject to a portfolio interest exception that applies no taxation, lawyers and industry sources said. "There's reason to believe that fixed-income assets wouldn't be in scope, but there's still considerable uncertainty about this point," Morgan Stanley strategist Michael Zezas said in a note to clients. A footnote part of the Budget Committee report, which provides direction to taxpayers, courts and the Treasury in interpreting the statute, says that Section 899 "does not apply to portfolio interest." Foreigners' equity investments, however, do not count with the portfolio interest protection and could be taxed, lawyers and banks said. Multinational companies could face a new tax burden on dividends and inter-company loans, potentially reducing profit, according to Section 899. Jonathan Samford, president of the Global Business Alliance, a lobbying group for international companies in the U.S., said many multinationals could decide to shut down operations in the U.S., risking 8.4 million jobs in the country. "Those companies will not be paying U.S. tax whatsoever because they will not be able to operate in that punitive, high-tax environment," he said. Morgan Stanley said in a note to clients a repatriation of profits out of the U.S. and pressure on the U.S. dollar. Corporate loans could also become more expensive, as loans extended by foreign banks might be subject to the new tax burden if section 899 overrides current treaties, lawyers said, adding that companies could end up paying more for the debt to make up for the tax increase. Senate passage Investors are hoping for some changes in the Senate. Senator Steve Daines, a Montana Republican on the Finance Committee, said it may be necessary to clarify the language in Section 899. 'We want to make sure we don't have tax policies that in some way would diminish the fact that we are the gold standard in the world,' Daines said. Morgan Stanley said in a note that it expects "sufficient Senate Republicans to take notice and clarify the policy to mitigate this risk" of increasing the cost of capital for the U.S. "It actually is pretty much of a nuclear bomb," said Pascal Saint-Amans, partner at Brunswick Group, who is also the former tax chief of the Organization for Economic Cooperation and Development, who led the 2021 global tax treaty. "The coverage (of Section 899) seems extremely broad and the terms are not extremely well-defined."
Reuters
15 hours ago
- Business
- Reuters
Wall Street, Main Street push for foreign tax rethink in US budget bill
NEW YORK/WASHINGTON, June 9 (Reuters) - Industry groups representing sectors including real estate, finance and multinational companies are pushing for the reduction or exclusion of a retaliatory tax targeting foreign investors in the U.S. in the Republican tax bill, as they see it as a threat to their businesses and to the broader markets and economy. The proposed tax, known as Section 899, applies a progressive tax burden of up to 20% on foreign investors' U.S. income as pushback against countries that impose taxes the U.S. considers unfair, such as digital service taxes. It could raise $116 billion in taxes over 10 years. Some individual companies are also pushing for action, according to two lawyers familiar with their clients' plans, who did not name specific companies due to client confidentiality. 'Lobbying surrounding Section 899 is at peak levels,' said Jeff Paravano, a former Treasury Department official who is now chair of law firm BakerHostetler's tax group. The move comes as Senate Finance Committee Chairman Mike Crapo, the Republican in charge of the chamber's tax writing provisions, and other Republicans are in close coordination with President Donald Trump on the tax bill, having met on Wednesday. The White House declined to comment. Crapo said he would not comment on ongoing discussions about the bill. Global investors hold almost $40 trillion in U.S. assets, such as securities, loans and deposits, according to the U.S. Treasury International Capital Reporting System. This raises concerns about the ripple impact of the bill. "It has the potential to be a very negative impact on the free flow of capital from the U.S. and through businesses that are multinational," said Gabriel Grossman, a U.S. tax partner at Linklaters, adding he has seen some clients put planned investments in the U.S. on pause until they have more clarity on the new levies. The broader bill itself is also creating much debate as it is forecast to add about $2.4 trillion to the U.S. debt and has sparked an explosive feud between Trump and his erstwhile key ally Elon Musk, the billionaire CEO of Tesla (TSLA.O), opens new tab. Industries across different sectors are on high alert. The new levy could increase taxes from rents and real estate investment trusts, gains from property sales and securitized products. "There is a legitimate fear among investors that, if this goes through, it could impact investments, and that it would create higher costs for real estate in terms of getting financing," said David McCarthy, managing director at the CRE Finance Council, a nonpartisan trade group. "It could depress the value of real estate if you don't have as much money to finance property purchases." The asset management industry is concerned about outflows. "We encourage the Senate to make this provision more targeted to respond to unfair foreign taxes and other concerning measures rather than disincentivizing beneficial foreign investment in the U.S.," a spokesperson for the Investment Company Institute said. The investment community is also working to clarify whether Treasuries and corporate bonds will remain exempt as they are currently subject to a portfolio interest exception that applies no taxation, lawyers and industry sources said. "There's reason to believe that fixed-income assets wouldn't be in scope, but there's still considerable uncertainty about this point," Morgan Stanley strategist Michael Zezas said in a note to clients. A footnote part of the Budget Committee report, which provides direction to taxpayers, courts and the Treasury in interpreting the statute, says that Section 899 "does not apply to portfolio interest." Foreigners' equity investments, however, do not count with the portfolio interest protection and could be taxed, lawyers and banks said. Multinational companies could face a new tax burden on dividends and inter-company loans, potentially reducing profit, according to Section 899. Jonathan Samford, president of the Global Business Alliance, a lobbying group for international companies in the U.S., said many multinationals could decide to shut down operations in the U.S., risking 8.4 million jobs in the country. "Those companies will not be paying U.S. tax whatsoever because they will not be able to operate in that punitive, high-tax environment," he said. Morgan Stanley said in a note to clients a repatriation of profits out of the U.S. and pressure on the U.S. dollar. Corporate loans could also become more expensive, as loans extended by foreign banks might be subject to the new tax burden if section 899 overrides current treaties, lawyers said, adding that companies could end up paying more for the debt to make up for the tax increase. Investors are hoping for some changes in the Senate. Senator Steve Daines, a Montana Republican on the Finance Committee, said it may be necessary to clarify the language in Section 899. 'We want to make sure we don't have tax policies that in some way would diminish the fact that we are the gold standard in the world,' Daines said. Morgan Stanley said in a note that it expects "sufficient Senate Republicans to take notice and clarify the policy to mitigate this risk" of increasing the cost of capital for the U.S. "It actually is pretty much of a nuclear bomb," said Pascal Saint-Amans, partner at Brunswick Group, who is also the former tax chief of the Organization for Economic Cooperation and Development, who led the 2021 global tax treaty. "The coverage (of Section 899) seems extremely broad and the terms are not extremely well-defined."
Yahoo
17 hours ago
- Business
- Yahoo
The stealth Senate dealmaker who could deliver Trump's tax cuts
Some of the most critical components of President Donald Trump's agenda are in the hands of a soft-spoken senator from Idaho who behind closed doors is one of Capitol Hill's most calculating dealmakers. Senate Finance Chair Mike Crapo is rushing to finalize his panel's portion of his party's massive legislative centerpiece. He could begin briefing colleagues on bill text as soon as Monday, according to a person granted anonymity to share an evolving schedule —while three people aware of the state of negotiations say a full tax package may not be ready for release until early next week. That package needs to unite 51 Republicans in the Senate without alienating more than three GOP members of the House. The fate of vast Republican tax cuts enacted in 2017, and set to expire at the end of this year, hangs in the balance. In interviews throughout the past several weeks in the halls of the Senate, as he shuffled between meetings and votes flanked by trusted advisers, Crapo played his cards close to his vest. Asked about how he planned to make sure a trio of expiring business tax cuts are made permanent, he replied, 'I'm just not going to comment.' On whether the Senate would make tweaks to controversial House Medicaid language: 'We're working that right now. I'm not going to get into the details.' On how negotiations were going over whether to lower the House agreement to increase the cap on the state-and-local-tax deduction to $40,000: 'We're looking at the entire bill.' Crapo is known for his spare words, but also for his history of landing deals — and squashing ones he doesn't like, such as last year when he tanked a bipartisan tax bill negotiated by then-Finance Chair Ron Wyden and the chair of the House Ways and Means Committee, Jason Smith. At the same time, longtime colleagues and aides say Crapo can sometimes play the role of committee consensus-builder to his detriment — and he may have to put that tendency aside as the clock ticks down to the GOP's self-imposed July 4 deadline to send Trump his 'big, beautiful bill.' The question is now whether Crapo can help broker an agreement at this political moment when he has never presided over a policy battle with such high stakes. 'Mike Crapo is probably one of the three most well-respected members of the Republican caucus. People trust him. He listens. He tells you the truth. He tries to be inclusive, sometimes to a fault,' said Sen. John Kennedy (R-La.) in an interview. 'He's quiet. He's really, really smart.' People who have worked closely with Crapo say he likes to slowly build agreement among his committee members, has seemingly infinite patience to work out issues and most likely won't take a position with Senate leadership until he feels like all of his fellow panel Republicans are on board. 'Crapo is a very thoughtful and deliberate lawmaker who has strong views on tax policy himself, but also who cares about what his committee members want,' said Joe Boddicker, a former tax counsel for Senate Finance Republicans under Crapo, now of the law firm Alston & Bird. 'He will try to incorporate the feedback from them, and he puts a high premium on that feedback … so it'll be a group product, one that reflects the viewpoints of the committee membership.' He has previously walked political tightropes to pull off difficult legislative wins. Among the most notable was in 2018, when, as chair of the Senate Banking Committee, Crapo crafted a rare bipartisan deal with red-state Democrats to loosen Dodd-Frank regulations on banks — the most significant overhaul of the rules since they were first created after the 2008 financial crisis. '[He] puts the time in on it. He's low-key, but he is a connector, a facilitator,' said Sen. Mike Rounds (R-S.D.), who worked closely with Crapo on the banking overhaul. 'He doesn't need the spotlight, but he is very, very effective.' But Crapo is getting an earful from his members right now about what the tax portion of the GOP megabill should look like. Sen. Thom Tillis (R-N.C.) wants to make the 'no tax on tips' proposal — a Trump campaign promise — more fair for blue-collar workers in certain industries. Meanwhile, Sen. James Lankford (R-Okla.) wants to scale back a tier of new endowment taxes on private universities, a favorite proposal from House Ways and Means Republicans. Crapo is fielding a host of concerns from an ideologically diverse group of Senate Republicans, from moderate Susan Collins of Maine to conservative Josh Hawley of Missouri, who say they won't vote for a bill that could result in people losing Medicaid coverage. And then there's Sen. Ron Johnson, a Finance member who has warned he could vote against the megabill if Republicans don't commit to massive reductions in spending. At the same time, Crapo has shown in the past he's not afraid to stand up for his own interests. He surprised his House counterparts last year when he quietly killed the bipartisan tax deal crafted by Smith and Wyden. He opposed many of the policies, including an expansion of the Child Tax Credit. But while he didn't know then how the 2024 elections would shake out, stymying that deal also left the door open for the scenario in which Crapo now finds himself: able to run point on a more sweeping, and wholly partisan, tax overhaul exercise under a GOP governing trifecta. The fallout, however, also soured the relationship between Crapo and Smith. Yet the two men have found a new way to work closely together over the last few months to deliver Trump's biggest legislative priorities through the filibuster-skirting budget reconciliation process. 'I think part of the problem is that Wyden and Smith got together and Crapo didn't feel like he was a full partner,' said Finance Republican Sen. John Cornyn of Texas regarding the prior episode. Cornyn added that the current political conditions have necessitated an accord between the two lawmakers. They'll have to work together. Their two committees differ on the questions of business tax permanence — which would cost around half a trillion dollars to implement — and how high to cap the SALT deduction — which all Finance Republics want lowered. And there's continued disagreement over using an accounting tactic to essentially paper over around $3.8 trillion of extensions of Trump's tax cuts. Smith says he's in favor of the maneuver, but House hard-liners are extremely skeptical of the idea. Senate Republicans, including Crapo, want to keep it in place. 'We've been communicating very closely so we each know what the other is thinking,' 74-year-old Crapo, who has served in the Senate for more than three decades, said in an interview of his working relationship now with 44-year-old Smith, who was elected to the House in 2013 and has a reputation for being more outwardly pugnacious. 'We each know what the other's politics are in their caucus,' Crapo continued, 'and we're trying to keep ourselves in a situation where there are as few differences as possible.' A spokesperson for Smith did not respond to a request for comment about the House member's rapport with the senator. The partnership will come in handy as Crapo faces enormous pressure from other members of House GOP leadership, who are urging the Senate not to make so many changes to the House-passed bill that it will slow down the bill's final passage — if not derail the effort altogether. 'Mike Crapo is a brilliant senator and he's instrumental on the tax stuff and everything else. You got to respect his opinion. But at the end of the day, I hope they leave it right where it's at,' said House Majority Whip Tom Emmer (R-Minn.) in an interview last week. Crapo, meanwhile, has expressed quiet confidence he will deliver a viable product — even as he deals with the competing demands of House leaders like Emmer, his fellow Finance Republicans and even the Senate parliamentarian, whose rulings could complicate his efforts. Asked recently about an anticipated parliamentary ruling on the accounting tactic, he managed to sum up his whole approach: 'I never declare victory until the game is over.' Jordain Carney and Mia McCarthy contributed to this report.
Politico
17 hours ago
- Business
- Politico
The stealth Senate dealmaker who could deliver Trump's tax cuts
Some of the most critical components of President Donald Trump's agenda are in the hands of a soft-spoken senator from Idaho who behind closed doors is one of Capitol Hill's most calculating dealmakers. Senate Finance Chair Mike Crapo is rushing to finalize his panel's portion of his party's massive legislative centerpiece. He could begin briefing colleagues on bill text as soon as Monday, according to a person granted anonymity to share an evolving schedule —while three people aware of the state of negotiations say a full tax package may not be ready for release until early next week. That package needs to unite 51 Republicans in the Senate without alienating more than three GOP members of the House. The fate of vast Republican tax cuts enacted in 2017, and set to expire at the end of this year, hangs in the balance. In interviews throughout the past several weeks in the halls of the Senate, as he shuffled between meetings and votes flanked by trusted advisers, Crapo played his cards close to his vest. Asked about how he planned to make sure a trio of expiring business tax cuts are made permanent, he replied, 'I'm just not going to comment.' On whether the Senate would make tweaks to controversial House Medicaid language: 'We're working that right now. I'm not going to get into the details.' On how negotiations were going over whether to lower the House agreement to increase the cap on the state-and-local-tax deduction to $40,000: 'We're looking at the entire bill.' Crapo is known for his spare words, but also for his history of landing deals — and squashing ones he doesn't like, such as last year when he tanked a bipartisan tax bill negotiated by then-Finance Chair Ron Wyden and the chair of the House Ways and Means Committee, Jason Smith. At the same time, longtime colleagues and aides say Crapo can sometimes play the role of committee consensus-builder to his detriment — and he may have to put that tendency aside as the clock ticks down to the GOP's self-imposed July 4 deadline to send Trump his 'big, beautiful bill.' The question is now whether Crapo can help broker an agreement at this political moment when he has never presided over a policy battle with such high stakes. 'Mike Crapo is probably one of the three most well-respected members of the Republican caucus. People trust him. He listens. He tells you the truth. He tries to be inclusive, sometimes to a fault,' said Sen. John Kennedy (R-La.) in an interview. 'He's quiet. He's really, really smart.' People who have worked closely with Crapo say he likes to slowly build agreement among his committee members, has seemingly infinite patience to work out issues and most likely won't take a position with Senate leadership until he feels like all of his fellow panel Republicans are on board. 'Crapo is a very thoughtful and deliberate lawmaker who has strong views on tax policy himself, but also who cares about what his committee members want,' said Joe Boddicker, a former tax counsel for Senate Finance Republicans under Crapo, now of the law firm Alston & Bird. 'He will try to incorporate the feedback from them, and he puts a high premium on that feedback … so it'll be a group product, one that reflects the viewpoints of the committee membership.' He has previously walked political tightropes to pull off difficult legislative wins. Among the most notable was in 2018, when, as chair of the Senate Banking Committee, Crapo crafted a rare bipartisan deal with red-state Democrats to loosen Dodd-Frank regulations on banks — the most significant overhaul of the rules since they were first created after the 2008 financial crisis. '[He] puts the time in on it. He's low-key, but he is a connector, a facilitator,' said Sen. Mike Rounds (R-S.D.), who worked closely with Crapo on the banking overhaul. 'He doesn't need the spotlight, but he is very, very effective.' But Crapo is getting an earful from his members right now about what the tax portion of the GOP megabill should look like. Sen. Thom Tillis (R-N.C.) wants to make the 'no tax on tips' proposal — a Trump campaign promise — more fair for blue-collar workers in certain industries. Meanwhile, Sen. James Lankford (R-Okla.) wants to scale back a tier of new endowment taxes on private universities, a favorite proposal from House Ways and Means Republicans. Crapo is fielding a host of concerns from an ideologically diverse group of Senate Republicans, from moderate Susan Collins of Maine to conservative Josh Hawley of Missouri, who say they won't vote for a bill that could result in people losing Medicaid coverage. And then there's Sen. Ron Johnson, a Finance member who has warned he could vote against the megabill if Republicans don't commit to massive reductions in spending. At the same time, Crapo has shown in the past he's not afraid to stand up for his own interests. He surprised his House counterparts last year when he quietly killed the bipartisan tax deal crafted by Smith and Wyden. He opposed many of the policies, including an expansion of the Child Tax Credit. But while he didn't know then how the 2024 elections would shake out, stymying that deal also left the door open for the scenario in which Crapo now finds himself: able to run point on a more sweeping, and wholly partisan, tax overhaul exercise under a GOP governing trifecta. The fallout, however, also soured the relationship between Crapo and Smith. Yet the two men have found a new way to work closely together over the last few months to deliver Trump's biggest legislative priorities through the filibuster-skirting budget reconciliation process. 'I think part of the problem is that Wyden and Smith got together and Crapo didn't feel like he was a full partner,' said Finance Republican Sen. John Cornyn of Texas regarding the prior episode. Cornyn added that the current political conditions have necessitated an accord between the two lawmakers. They'll have to work together. Their two committees differ on the questions of business tax permanence — which would cost around half a trillion dollars to implement — and how high to cap the SALT deduction — which all Finance Republics want lowered. And there's continued disagreement over using an accounting tactic to essentially paper over around $3.8 trillion of extensions of Trump's tax cuts. Smith says he's in favor of the maneuver, but House hard-liners are extremely skeptical of the idea. Senate Republicans, including Crapo, want to keep it in place. 'We've been communicating very closely so we each know what the other is thinking,' 74-year-old Crapo, who has served in the Senate for more than three decades, said in an interview of his working relationship now with 44-year-old Smith, who was elected to the House in 2013 and has a reputation for being more outwardly pugnacious. 'We each know what the other's politics are in their caucus,' Crapo continued, 'and we're trying to keep ourselves in a situation where there are as few differences as possible.' A spokesperson for Smith did not respond to a request for comment about the House member's rapport with the senator. The partnership will come in handy as Crapo faces enormous pressure from other members of House GOP leadership, who are urging the Senate not to make so many changes to the House-passed bill that it will slow down the bill's final passage — if not derail the effort altogether. 'Mike Crapo is a brilliant senator and he's instrumental on the tax stuff and everything else. You got to respect his opinion. But at the end of the day, I hope they leave it right where it's at,' said House Majority Whip Tom Emmer (R-Minn.) in an interview last week. Crapo, meanwhile, has expressed quiet confidence he will deliver a viable product — even as he deals with the competing demands of House leaders like Emmer, his fellow Finance Republicans and even the Senate parliamentarian, whose rulings could complicate his efforts. Asked recently about an anticipated parliamentary ruling on the accounting tactic, he managed to sum up his whole approach: 'I never declare victory until the game is over.' Jordain Carney and Mia McCarthy contributed to this report.
Yahoo
5 days ago
- Business
- Yahoo
Humana to back curbs to Medicare Advantage billing practices, WSJ reports
(Reuters) -Humana has told congressional staffers that it will support moves that would curtail billing practices worth billions in extra payments to the industry, the Wall Street Journal reported, citing staffers and a document viewed by it. The company is willing to back new limits on lucrative payments insurers can gain from diagnoses recorded by nurse practitioners who visit millions of enrollees in their homes, according to a one-page policy overview shared with the staffers, the WSJ reported on Thursday. Humana did not immediately respond to a Reuters request for comment. Nearly half of the 65 million people covered by Medicare, the U.S. program for people aged 65 and older or with disabilities, are enrolled in Medicare Advantage plans run by private insurers. Insurers are paid a set rate for each patient, but can be paid more for patients with multiple health conditions. Last fall, staff working for Senators Mike Crapo and Ron Wyden, the leaders of the Senate Finance Committee, contacted Medicare Advantage insurers for suggestions on legislative steps that would address the potential misuse of home visits described in Journal articles, the newspaper reported citing people familiar with the matter. The Journal reported in February that the U.S. Department of Justice was examining UnitedHealth's practices for recording diagnoses that trigger extra payments to its Medicare Advantage plans. The healthcare conglomerate had then said it was unaware of any new probe. The WSJ has run a series of stories over the last several months detailing how UnitedHealth profited from using Medicare billing rules to its favor. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
