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Friendly Skies, Friendlier Tax Jurisdictions?

Friendly Skies, Friendlier Tax Jurisdictions?

Still on deck in the Senate: It is expected this week to renew dozens of expired tax breaks, including tax cuts for business research, wind power, and foreign profits.

It's worth remembering that if a $42 billion package like this gets passed every year, the federal deficit could grow by $800 billion over ten years.

Some tax specifics on that spending bill that the President will soon sign: The Consolidated and Further Continuing Appropriations Act of 2015 would give the IRS a budget of $10.95 billion—that's $346 million less than last year. It would extend the Internet Tax Freedom Act, or ban state taxation of Internet access, through October 1, 2015.

It would prevent companies that have reincorporated in the Cayman Islands or Bermuda from winning government contracts. Expatriates would no longer need to maintain healthcare coverage under the Affordable Care Act.

Friendly skies, friendlier tax jurisdictions? For years, airlines operated at a loss and paid no taxes. Now that they are profitable again, airlines may shift assets either to Amsterdam or London to take advantage of their lower tax rates.

Delta Air Lines, Inc. (NYSE: DAL) would likely consult with the IRS about the structure of any asset shift to Europe. “It's an airline,” says Jennifer Blouin of the Penn-Wharton Public Policy Initiative. “These hard assets are more mobile than most.”

Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty.” Theodore Roosevelt might not have been discussing corporate tax reform when he said those words, but he might as well have been.

CNNMoney's Jeanne Sahadi moderated last week's TPC/Penn Wharton Public Policy Initiative's event on US corporate taxes and shares her take on the effort, pain, and difficulty of corporate tax reform. Odds are not in reform's favor: It's happened only a few times in the 100-year history of the income tax.

Even corporate reform will be a tough slog: The American public has not been given a good reason why corporate tax reform should come before individual tax reform; international cooperation is critical, and not easy to achieve; and  few lawmakers may be prepared to accept to pushback they'll get from firms that lose favored tax breaks.

And nothing lasts forever, including, maybe, Kansas' tax cuts. In response to the state's expected $280 million shortfall in the current fiscal year, Republican Governor Sam Brownback  suggested in his reelection campaign that he'd cut more than  $70 million in agency spending and transfer more than $200 million into the state general fund from various reserves.

Now, Kansas' legislative research office concludes that Brownback's plan would balloon the deficit to $650 million for the next fiscal year. To deal with the shortfall, The New York Times reports his own budget director as saying, “Everything is on the table, including the tax policy.” This may put in jeopardy the deep income tax cuts Brownback successfully pushed in his first term.

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The post The Senate Keeps Working… appeared first on TaxVox.

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The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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