Legislative Activity

Comprehensive Tax Reform to be Delayed

House Ways and Means Chairman Dave Camp (R-MI) acknowledged last week that plans to overhaul the nation’s tax code may not make it out of committee this year.

Although Chairman Camp remained hopeful, he pointed to the government shutdown as slowing momentum and demurred when asked whether he would limit amendments to potential reform legislation.

Chairman Camp met with Republican leaders, including House Speaker John Boehner (R-OH), on Thursday to discuss reform plans. No decisions were made regarding the potential timeline for tax reform and Chairman Camp said that he would continue to hone reform legislation

In addition, Senate Finance Committee Chairman Max Baucus (D-MT) delayed a Finance Committee members’ meeting that had been scheduled for Thursday last week to discuss the possible release of several tax reform draft proposals dealing with tax administration, cost recovery, and international tax.

This followed a Finance Committee Republican member meeting on Wednesday during which time members agreed to delay a decision on whether to support draft options until pending budget discussions are resolved. Following this development, Chairman Baucus has indicated that he is considering how to proceed.

It remains possible that Chairman Baucus may soon release these draft proposals without the support of Committee Republicans.

Renewed Push for European Financial Transaction Tax

German political parties who are considering a coalition government have released a document renewing talks of implementing a financial transaction tax (FTT) among European Union (EU) countries. The FTT would place a levy on stocks, bonds, currencies, and derivatives contracts. Many had considered the idea as “dead,” but with Germany, the EU’s strongest economic member discussing the measure, the FTT is once again being considered.

If their coalition is formed, the parties “want to swiftly introduce a financial transactions tax that has a broad basis at a low tax rate as part of a strengthened cooperation with the EU.”

Although German President Angela Merkel recently won reelection in September, her coalition party lost many of their seats, meaning new coalition partners, most likely the Social Democrats, will need to enter the coalition to form a government. The Social Democrats strongly support an FTT.

Regulatory Activity

France Inks FATCA Deal

On Thursday, November 14, France became the eighth nation to sign a Model 1 Intergovernmental Agreement (IGA) with the United States. The agreement was expected as France was one of five nations (along with Germany, Spain, Italy, and United Kingdom) to issue a joint statement with the United States last year regarding the intent to begin a government-to-government process to implement the Foreign Account Tax Compliance Act (FATCA). Germany, Spain, and the United Kingdom have already inked a Model 1 IGA with the United States.

The signing of the IGA means that financial institutions located in France will now not be subject to the FATCA regulations, but will instead be subject to the slimmed down reporting required by the Model 1 IGA.

With only eight nations to have signed a Model 1 IGA and two nations so far signing a Model 2 IGA, the United States is negotiating with many nations in an effort to boost those numbers. Withholding has already been pushed back from its January 1, 2014, start date to July 1, 2014.