Latest news with #taxbreak
Washington Post
4 hours ago
- Business
- Washington Post
Trump's tax bill has become a battlefield for tobacco giants
Two of the largest tobacco firms in the United States are waging a lobbying battle over a key provision in the GOP's massive tax and spending bill. The version of the legislation that the House passed last month included language to claw back a $12 billion tax break that tobacco producers — most of them in North Carolina — use to make their products cheaper to export. The version of the legislation the Senate is considering would leave the tax break untouched. Now cigarette manufacturers and their allies in Congress are wrestling over the final fate of the provision — with Sen. Thom Tillis (North Carolina), a Republican whom Democrats hope to unseat in midterm elections, stuck in the middle. Industries from finance to health care to clean energy are pouring millions of dollars into Washington to influence the One Big Beautiful Bill Act, the legislative centerpiece of President Donald Trump's second-term agenda. Programs or tax laws worth hundreds of billions of dollars to various companies are at stake. The lobbying effort over the tobacco tax could be one of the most expensive ones this year. The 'duty drawback' tax policy at issue makes it easier for U.S. firms to export their leaf. Some companies buy tobacco from farmers, ship it overseas to be assembled into cigarettes, cigars and other products, then import the finished product. Because final assembly of the product did not take place domestically, the companies receive a rebate on federal taxes and certain import duties. Companies that manufacture tobacco products in the United States, such as Altria, which largely does not sell finished products outside the country, do not receive the same tax rebates. 'This has ended up being quite an arm-wrestling competition between one of our domestic companies and everybody else,' said Ray Starling, general counsel for the North Carolina Chamber of Commerce. Altria, the parent company of Philip Morris USA and the firm pushing to end the tobacco tax treatment, has spent nearly $5 million lobbying Congress on this legislation and other issues through the first two quarters of 2025, according to federal disclosures. The two firms that benefit the most from the tax break — British American Tobacco, which owns RJ Reynolds, and Japan Tobacco International — have each spent $170,000 on lobbying in the same period. During Trump's first term, his administration attempted through executive action to eliminate the drawback program tobacco companies and some other exporters use, but that policy was blocked in court. At Tillis's urging, the Senate Finance Committee eliminated the drawback provision from its version of the tax bill, which would preserve the tax rebate. Now each chamber of Congress is competing over the legislation's final form. Budget hawks in each chamber are wary of the price tag of the legislation — it could add $3.3 trillion to the national debt over 10 years when factoring in its effect on the wider economy, the Congressional Budget Office reported Tuesday. That makes any provision that could reduce the legislation's cost increasingly attractive. New polling from The Washington Post and Ipsos found Americans broadly oppose the measure, and especially dislike proposals to cut anti-poverty and anti-hunger programs to offset the bill's tax cuts. Tillis told The Post that 'we have to' find a new policy to replace the $12 billion in revenue that ending the rebates bring in. But eliminating the subsidy would harm farmers in his state, he said, which is why he wants to keep the rebates in place. The tobacco industry contributes $31 billion annually to North Carolina's economy, according to the John Locke Foundation, a conservative think tank. 'They have a disagreement on this policy, but they're partners. It's classic 'coopetition,'' said Tillis, using a term that describes when two competing companies rely on a shared infrastructure. For tobacco firms, many contract with the same growers for various types of leaf. 'At the end of the day, it's the impact on growers I have the concern with.' An Altria spokesperson said in a statement that the drawback amounts to 'the U.S. government providing a direct cash subsidy to tobacco companies,' and said firms could more aggressively take advantage of the rebate if Congress does not close the 'loophole.' An RJ Reynolds spokesperson said the provision 'poses a serious threat to North Carolina's economy, with potentially devastating consequences for farmers.' That's because tobacco growers rely on the plant to help financially support a host of other crops, said Kimberly Foley, executive director of Tobacco Associates, a grower-run trade group. Tobacco is aggressive to grow and can be disease-prone if not rotated with other crops, so growers frequently group tobacco with sweet potatoes, corn, fruits and vegetables, said Starling, who grew up on a tobacco farm. Without the tax rebate, which helps tobacco companies afford to buy the crop at higher prices, that multi-crop farming framework can make it so farms struggle to turn a profit. 'Tobacco is what's carrying everything else,' Foley said. 'Losing volume for tobacco either takes away their primary income opportunity on the farm and their most reliable income opportunity on the farm … or we lose the functionality and the logistical capabilities of the farm.' The issue could resonate in North Carolina's closely watched 2026 Senate race, which could help determine control of the upper chamber after the midterm elections. Democrats are recruiting former governor Roy Cooper to jump in the race to try to unseat Tillis. Democratic Rep. Wiley Nickel has already declared his candidacy. PACs and individuals associated with Altria and British American Tobacco are significant Tillis donors, according to OpenSecrets, which tracks corporate spending and political influence. Altria's political finance arm and people associated with the company gave more than $77,000 to Tillis and his PACs between 2019 and 2024; BAT contributed more than $44,000. But beyond the manufacturers, tobacco growers — and the regional cachet the plant holds — are a potent force and sympathetic symbol in Tar Heel State politics. 'Tobacco is still very culturally relevant in North Carolina,' said Starling, who was a senior adviser to Tillis in the state House of Representatives and later his Senate chief of staff. 'There's a big contingency of tobacco alumni, people who grew up around it, and it helped them buy their first pair of tennis shoes. I think there's a lot of respect for the industry and the hard work and work ethic that people engaged in the industry have shown.'
Yahoo
11 hours ago
- Business
- Yahoo
New ‘bonus' tax deduction up to $6,000 could be on the way for those age 65 or older
If the massive tax package currently being debated in Congress becomes law, Americans who are 65 and older will enjoy a hefty new tax break: An additional $4,000 to $6,000 drop in taxable income, thanks to a new additional standard deduction. The House version of the tax bill calls for a $4,000 additional deduction, while the Senate version ramps that up to $6,000. The House approved its version in May, and the Senate is working now to bring its version to a vote. Then the two chambers will need to massage each bill into one cohesive whole, before sending it to President Donald Trump for signature. The potential bad news for taxpayers? There would be income limits, with the value of the tax break phasing out starting at a modified adjusted gross income of $75,000 for single filers and $150,000 for married-filing-jointly filers. This new tax break would be temporary, in effect only from 2025 through 2028. 'The bottom line is if you're in the modified adjusted gross income that gets this, it will save you on taxes,' says Mark Gallegos, a CPA and tax partner at Porte Brown LLC in Chicago. This would put 'more money back in people's pockets, and I think that's the whole point,' he says. House version Senate version Additional standard deduction $4,000 $6,000 Income limits Starts to phase out at income of $75,000 for single filers, $150,000 for couples Starts to phase out at income of $75,000 for single filers, $150,000 for couples Permanent or temporary? Temporary; in effect from 2025 through 2028 Temporary; in effect from 2025 through 2028 Available to taxpayers who itemize? Yes Yes It seems likely that this new tax break would be added on top of the existing additional standard deduction that Americans who are 65 and older already enjoy. In 2025, that additional standard deduction is worth $2,000 for a single filer aged 65 or older, or $3,200 for a married-filing-jointly couple if both spouses are age 65 or older (if just one spouse is 65+, the additional deduction is $1,600). Neither the House nor Senate proposals are clear about whether the new tax break would be added on to that existing tax perk, says Mark Luscombe, a CPA and principal analyst for Wolters Kluwer Tax & Accounting in Chicago. Nothing indicates that it would replace the existing additional deduction, 'so my interpretation is it's in addition,' Luscombe says. Keep in mind, too, that both bills propose an increase to the existing standard deduction that's available to all taxpayers. This gets a bit complicated, so let's back up a bit: The Tax Cuts and Jobs Act essentially doubled the value of the standard deduction, effective from 2018 through 2025. Now, both the House and Senate tax bills would make that tax change permanent. On top of that, each of the bills would give the standard deduction a slight bump: The House bill would temporarily increase the standard deduction by $2,000 for joint filers, $1,500 for head of household filers and $1,000 for single filers and those married filing separately, effective 2025 through 2028. The Senate bill would permanently increase the standard deduction by those same amounts, starting in 2026. So if one of these bills becomes law, then taxpayers aged 65 or older would enjoy the slightly higher standard deduction, plus their regular additional standard deduction, plus the new additional standard deduction. Here's an example of how these tax breaks would work, assuming the Senate's $6,000 version becomes law and assuming the new tax break is on top of the existing additional deduction. Example based on Senate's proposed bill A 70-year-old single taxpayer with taxable income of $50,000 in 2026 likely would qualify for these deductions: $16,000 standard deduction $2,000 existing additional standard deduction $6,000 new additional standard deduction That adds up to a $24,000 total deduction. Thus, $50,000 minus $24,000 = $26,000 taxable income. That reduction in taxable income would drop the taxpayer into the 12 percent tax bracket, from the 22 percent tax bracket. Learn more: Current tax brackets and federal income tax rates This new additional standard deduction would be in lieu of tax-free Social Security benefits for retirees, an idea touted by Trump on the campaign trail. That's because changing how Social Security benefits are taxed would be complex — and costly, reducing government revenues by as much as $1.5 trillion over 10 years, according to an estimate by the nonpartisan Tax Policy Center. Adding an extra standard deduction is simpler and cheaper. The $4,000 proposal in the House bill would reduce government revenue by an estimated $66 billion over 10 years, according to a report from the Bipartisan Policy Center. Also, the proposed tax break would help out lower-income taxpayers more than ending taxes on Social Security benefits would have, Luscombe says. For one, Social Security beneficiaries with lower incomes generally don't owe taxes on their benefits — that's a fate that hits higher-income beneficiaries. Plus, the proposed new tax break – both the Senate and House versions — has income limits that would skew the benefit toward lower-income taxpayers. 'This proposal has a phase-out, which is unusual for a standard deduction,' Luscombe says. 'That would tend to focus it on lower- to middle-income taxpayers.' Also unusual for a standard deduction? This one would be available to people who itemize their deductions. Still, 'very few people at these income levels are itemizing,' Luscombe says. 'Only about 10 percent of taxpayers currently itemize, even with the current standard deduction.' Learn more: How to choose between claiming the standard deduction and itemizing
Yahoo
2 days ago
- Business
- Yahoo
Oil Industry Gets $1 Billion Tax Tweak in GOP's Senate Bill
(Bloomberg) -- Senate Republicans included a tax break estimated to be worth more than $1 billion for oil and gas producers in their version of President Donald Trump's sprawling fiscal package. Security Concerns Hit Some of the World's 'Most Livable Cities' How E-Scooters Conquered (Most of) Europe JFK AirTrain Cuts Fares 50% This Summer to Lure Riders Off Roads Taser-Maker Axon Triggers a NIMBY Backlash in its Hometown The provision would allow energy companies subject to a 15% corporate alternative minimum tax to deduct certain drilling costs when calculating their taxable income. Companies including ConocoPhillips, Ovintiv Inc. and Civitas Resources, Inc. lobbied in favor of it. The change was included in the legislation released Monday by Republicans on the Senate tax writing committee, which would slash tax credits for wind, solar, electric vehicles and hydrogen. The tax break for drilling costs is nearly identical to a bill by Republican Senator James Lankford. His home state of Oklahoma is among the top oil and gas producing states. Lankford's bill, called the Promoting Domestic Energy Production Act, would cost the US government $1.1 billion over 10 years, according to the non-profit Tax Foundation, which cited an estimate from the non-partisan Joint Committee on Taxation. A representative for Lankford declined to comment. Earlier this year, Lankford told told CNBC that his bill was necessary to prevent independent oil and gas producers from being squeezed by the Corporate Alternative Minimum Tax, enacted under former President Joe Biden to prevent corporations from using deductions and credits to pay little or no taxes. 'If we can't get rid of that entirely we at least need to give some relief to those folks who are independent producers,' Lankford said. 'We need to be able to get some relief to them so they're not constantly worried about it.' Also See: Republican Who Flip-Flopped on Energy Credits Risks Voters' Ire Some Democratic lawmakers, along with environmental and watch dog groups including Friends of the Earth and Public Citizen, criticized the Senate bill as a giveaway to fossil fuel companies. 'There is a giant give away to the oil industry tucked right into this bill,' said Senator Elizabeth Warren, a Massachusetts Democrat. 'They are going to get a special get out of paying your taxes free.' Other supporters of the measure, which wasn't included in the House version of the bill, include the Domestic Energy Producers Alliance, founded by oil billionaire and Trump donor Harold Hamm. It was also backed by the American Exploration & Production Council, which represents independent oil and gas producers including Oklahoma City-based Devon Energy Corp. 'America and the world need affordable, reliable energy – and this common-sense legislation will enable domestic producers to more quickly invest in production and meet this critical need,' said Anne Bradbury, the group's chief executive officer. --With assistance from Cam Kettles. (Updates with comment from senator and more details starting in the 10th paragraph.) Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? How a Tiny Middleman Could Access Two-Factor Login Codes From Tech Giants American Mid: Hampton Inn's Good-Enough Formula for World Domination The Spying Scandal Rocking the World of HR Software ©2025 Bloomberg L.P.
Bloomberg
2 days ago
- Business
- Bloomberg
A UK Wealth Exodus? Why ‘Non-Dom' Crackdown Risks Backfiring for Reeves
The debate over the UK's 'non-dom' status has taken center stage yet again. The decision by Chancellor of the Exchequer Rachel Reeves to end a two-century old tax break for wealthy foreigners has triggered the exit of many well-heeled residents from the country. What started as a trickle of departures risks turning into an exodus as rich individuals grapple with a raft of other changes hitting their finances — from higher taxes on private equity investments to levies on private school fees. Technology entrepreneurs and heirs to storied European fortunes have already left, and a mass withdrawal could see the government's efforts to boost tax revenue backfire.
Bloomberg
3 days ago
- Business
- Bloomberg
Oil Industry Gets $1 Billion Tax Tweak in GOP's Senate Bill
Senate Republicans included a tax break estimated to be worth more than $1 billion for oil and gas producers in their version of President Donald Trump's sprawling fiscal package. The provision would allow energy companies subject to a 15% corporate alternative minimum tax to deduct certain drilling costs when calculating their taxable income. Companies including ConocoPhillips, Ovintiv Inc. and Civitas Resources, Inc. lobbied in favor of it.
