TAX TAKE: It's Not Easy Being Green: 2024 Greenbook Makes Old International Ideas New?
Last week, the Treasury Department released the highly anticipated General Explanations of the Administration's Fiscal Year 2024 Revenue Proposals, commonly referred to as the Greenbook. This year's edition (the 2024 Greenbook) will have decidedly less of an immediate impact on the tax policy landscape, as the proposals will certainly fall flat in a Republican-led House. Nevertheless, we here at Tax Take are here to remind you that tax proposals never die, so even if these ideas don't have much of a chance in the next couple of years, they may in the future, and so are worth monitoring over the long term.
This week's Tax Take will focus on the international provisions in this year's Greenbook. Many of the headline proposals are similar to those made last year and relate to conforming domestic law to more closely resemble a framework that is consistent with the Organisation for Economic Cooperation and Development (OECD) Pillar Two framework. Recall that last year's Greenbook took the House-passed version of the Build Back Better Act (BBBA) as a baseline, so many of the provisions that would have brought the global intangible low-taxed income (GILTI) framework more closely in line with the Pillar Two rules were not explicitly mentioned. The same is true for non-Pillar Two related proposals contained in the 2024 Greenbook – a careful examination of the international provisions in the House-passed legislation is worthwhile when reviewing the proposals.
In addition, the 2024 Greenbook repeats last year's proposal to create a carrot-and-stick framework for onshoring and offshoring a U.S. trade or business, in the form of a 10 percent credit for expenses paid or incurred in relation to onshoring and a corresponding denial of deductions for expenses paid or incurred in connection with offshoring. It also repeats last year's proposals to repeal the base erosion and anti-abuse tax (BEAT) and impose an undertaxed profits rule (UTPR) and a domestic minimum top-up tax. Other items of note include repealing the qualified business asset investment exemption (QBAI) altogether (the 2023 Greenbook suggesting limiting the exemption for routine returns to five percent, rather than the 10 percent under current law), repealing the high-tax exemption for both subpart F and GILTI, and repealing the foreign-derived intangible income (FDII) deduction.
As noted above, these provisions are unlikely to receive serious consideration in a divided Congress, but the results of the 2024 elections combined with the ever-changing global landscape could force them into future discussions. #TaxTake
Upcoming Speaking Engagements and Events
On March 20, Loren will speak at the TEI Midyear Conference on a panel titled, "Legislative & Regulatory Tax Policy Roundtable: Much of the Latter & None of the Former?"
In the News
Jorge commented on the TCJA provisions set to expire in 2025 in MarketWatch. "You are going to see a lot [of] back and forth beginning this year," he said. Jorge also noted areas with bipartisan support including keeping certain TCJA income tax rates and extending the child tax credit.
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