For more, please see my policy post originally posted at SalesTaxSupport.com.
Sales tax law changes and discussions in 2017 are likely to look
a lot like those of 2016, with one possible exception.
The repeating discussions and activities will include:
1) Expanding the sales tax base to include more services and
digital goods.
2) Congressional hearings on the Marketplace Fairness Act
without enactment of legislation.
3) Continued and expanded state efforts to get a case to the US
Supreme Court to challenge the 1992 Quill decision.
For more on this, see Sylvia
Dion's 12/16/16 post.
The possible new item is the federal
level tax reform discussions that include moving the business income tax to a
consumption tax. The House Republican blueprint released
in June 2016 calls for a cash-flow consumption tax where assets (other than
land and inventory) are expensed, interest expense in excess of interest income
is not deductible (it carries forward), imports are taxed and exports are
exempt, and the tax rate is lowered. They hope that this is considered a valid
border-adjustable tax by the World Trade Organization (WTO), because of the
desire to tax imports and exempt exports (this will help pay for lower rates).
If this cash-flow tax is not found to be border adjustable, and Congress wants
such a tax, perhaps we'll see the debate move to replacing the corporate income
tax (and perhaps other business income taxes) with a credit invoice VAT used by
over 130 countries, and known to be border-adjustable. If that happens, that
will lead to a new sales tax policy discussion - should the states convert
their sales taxes to a credit invoice VAT? One issue of course, is what to do
with the state level business income tax? Should it be kept if the federal
business income tax ends?
Congressman Jim Renacci (R-Ohio) has introduced a tax
reform plan to replace the corporate
income tax with a credit invoice VAT.
Let's see what happens.
What do you think?
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