HAVE TO PLAN CAREFULLY: The Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, in which the justices ruled there is no constitutional right to an abortion, is going to spark a lot of change around the country.
So it’s probably no surprise that there will be new tax complications that people and businesses will have to navigate.
Some of those new challenges might not even have cropped up yet. But here’s one that businesses and their lawyers are well aware of — the new tax wrinkles that come with paying for employees to travel out-of-state to have an abortion.
Plenty of big-name companies, like Starbucks and Microsoft, announced weeks ago that they would help cover those travel expenses, when it just seemed all but a done deal that the Court would roll back Roe v. Wade after a half century.
Other businesses, like Dick’s Sporting Goods and Disney, entered the fray after Friday’s decision to offer similar benefits to their employees.
And one of the various questions those companies and their employees will have to answer is what impact those travel benefits might have on tax breaks and taxable income.
MORE ON THAT IN A BIT, but first welcome to the “June sure has gone by quickly” version of Weekly Tax. Also, put us on record favoring most references to “The Naked Gun.”
Hold your horses — literally. Today marks 370 years since the city of New Amsterdam — about a dozen years away from becoming New York City — got what’s thought to be the first speed limit law in what became the U.S. (or perhaps in North America).
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ABOUT THOSE EXPENSES: So here’s the situation — it looks like employees won’t have to pay taxes on reimbursements they get for abortion-related travel, at least up to a certain point, as Bloomberg Law and other outlets previously have noted.
Transportation expenses — like a bus, plane or train ticket — are among the items that can be reimbursed tax-free. But what about lodging and meal costs?
A company might be able to pay for up to $50 a day in those expenses without the employee owing any taxes — but no more than that, according to Daniel Hemel, a tax law professor at the University of Chicago and a former clerk for Justice Elena Kagan.
“So you might have some situations in which employees who travel across state lines for abortions have to report a portion of their reimbursed expenses as income,” Hemel said.
Luckily for businesses, it might not be quite as complicated for them. Experts say that companies should be able to deduct whatever reimbursements they offer to employees for traveling for abortions, even if the worker owes taxes on at least some portion of those expenses.
SEMI-WEEKLY BBB UPDATE: Congress will be out of Washington for the next two weeks, and it’s not clear how much progress Sen. Joe Manchin (D-W.Va.) and Senate Majority Leader Chuck Schumer can make on a potential tax hike-and-climate deal between now and when lawmakers return.
After Congress returns in mid-July, lawmakers will only be in town a handful of weeks before the August recess — seemingly the latest in de facto deadlines for a Democratic budget reconciliation measure.
So what is there to watch out for over these next couple weeks? Some groups of Democrats do seem to be getting a bit antsy.
For instance, Democrats are looking at a “last-ditch plan” to at least temporarily preserve the expanded Obamacare subsidies they put into place last year, as our Adam Cancryn reported — one of those areas in which Manchin has been sending mixed signals.
And remember the SALT caucus? That smaller group of blue state Democrats are starting to make more noise about not backing any reconciliation package that doesn’t offer relief to the $10,000 cap on state and local deductions that Republicans enacted in their 2017 tax law, as Bloomberg’s Laura Davision noted.
How much of an impact might that kind of talk have on Manchin and Schumer’s negotiations? Perhaps not much, though there definitely are lots of Democrats who want to extend those bigger Obamacare subsidies.
But it could add to the list of complications that Democrats are facing, with the House having only three legislative weeks left before their scheduled to break for August.
RELATED NOTE: One of the questions still hanging over Democrats is whether they can implement one half of the global tax deal negotiated through the Organization for Economic Cooperation and Development as part of a budget reconciliation deal.
Treasury Secretary Janet Yellen and other top Biden administration officials are certainly hoping that Democrats will ratchet up the U.S.’s existing minimum tax on the foreign income of domestic multinationals.
But Republicans and some in the business community are sounding the alarm about the U.S. pressing ahead on the OECD deal while the EU remains stuck on implementation — and with Hungary, the sole objector within the 27 nation bloc, showing no inkling to back down.
So what’s next? Top European officials say they’ll continue to press their case to Prime Minister Viktor Orban and the Hungarian government, as The Wall Street Journal noted.
Talks about the minimum tax are set to happen in Spain later this week, at a NATO meeting, though President Emmanuel Macron of France also acknowledged there’s only so much that the rest of Brussels can do to pressure Hungary.
Keep an eye out for it: Itai Grinberg, a Treasury tax official who played a key role in the talks over the OECD agreement, and Pascal Saint-Amans, the head of the OECD’s tax center, will discuss the current state of play on the global tax agreement at a D.C. conference this morning.
OFFERING A LITTLE HELP: The Spanish government is preparing to offer a range of relief for lower-income people battling inflation — including tax cuts on energy bills, Reuters reports. The 9 billion euro package (around $9.5 billion) is split around 60-40 between new spending measures and tax cuts, and will cut the value-added tax on energy bills in half — from 10 percent to 5 percent. That tax relief will also be retroactive back to January, according to Prime Minister Pedro Sanchez, with the whole package operational until the end of year. Spain also enacted relief measures, including tax cuts, back in March and has already put into place a windfall tax on energy companies. Sanchez is looking to extend the windfall to power companies, Bloomberg reported.
Related to windfall taxes: “BP pays Britain $127 million in 2021 tax for North Sea production,” also from Reuters.
ALMOST THERE: Democrats in California are closing in on a deal to send direct payments to certain residents, The Associated Press reports. The emerging deal would use about $9.5 billion of the state’s record $97 billion surplus, and comes after Gov. Gavin Newsom and Democratic legislative leaders have had different priorities for offering relief from inflation and rising gas prices. It would offer $350 per taxpayer to single filers making up to $75,000 a year and couples making as much as $150,000, with another $350 per dependent. Single filers with up to $125,000 in income and couples earning as much as $250,000 would get $250, and residents making double those figures would receive $200, with both groups getting extra money for dependents, too. California’s gas tax is also scheduled to increase this week, from 51.1 cents per gallon to 53.9 cents per gallon, as part of an automatic inflation adjustment. Newsom and Democratic lawmakers have brushed aside suggestions to suspend the gas tax or scrap the upcoming increase.
Pro Budget: “Financial Services funding bill clears House committee.”
FT: “RWE warns UK tax on electricity generators would risk £15bn investment in renewables.”
AP: “Pakistan stock market plunges on new govt tax on industries.”
For you reality television fans: “Mike ‘The Situation’ Sorrentino owes $2.3M in taxes after prison stint.”
The Seattle Mariners have the longest current playoff drought in Major League Baseball (20 years). The Los Angeles Angels are tied for third, at 7 years.