US Puts Tax Reform Into Dialogue With China
The US Administration has put more of its hoped-for, but perhaps poltically difficult, tax reforms into the Fact Sheet that was issued after the 2015 United States-China Strategic and Economic Dialogue held in Washington on June 23-24.
In the 2014 Fact Sheet, the Administration had merely stated that it was committed to putting US public finances on a sustainable path over the medium term by, for example, eliminating tax loopholes.
In 2015, in repeating its commitment to fiscal sustainability over the medium term, the US said it expected to achieve this goal by “replacing sequestration with well-targeted spending cuts and loophole closers, and obtaining an additional USD1.8 trillion in deficit reduction.”
Deficit reduction is to be partly achieved through tax reforms, “including eliminating a provision known as stepped-up basis that allows wealthy households to avoid taxes on capital gains, raising the top capital gains and dividend rate for high-income households to 28 percent, and reforming financial sector taxation to make it more costly for highly leveraged financial firms to finance their activities with excessive borrowing.”
The US also promised to invest in education, such as by making permanent the American Opportunity Tax Credit; provide tax relief “to support middle class and working families;” and pursue policies to spur the development of new technology, such as enhancing and making permanent the research and experimentation tax credit.
In 2014, China committed to completing the replacement of business tax with value-added tax “in order to eliminate double taxation and promote economic transformation” In 2015. China made no further commitments on tax policies.
