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What this means for your business.
State and local budget processes were significantly disrupted by the impact of COVID-19. States and localities now confront difficult tax and budget choices in the current and upcoming legislative sessions.
Tax professionals and leaders need to think about the downstream implications from a SALT perspective as teams prepare to do their analysis. Read through to learn about the importance of open lines of communication as teams handle these additional complexities and work to stay ahead of SALT trends.
The ongoing pandemic, economic challenges and political divisions exemplified by the tumultuous events of recent weeks will affect the prospects for significant tax legislation and other policy changes this year. President Biden has made it clear that his first priority is to address the pandemic and its economic fallout, even as the Senate considers an article of impeachment of former President Donald Trump. The potential effects of changing policies in the US and around the world—in addition to corporate and individual rate increases, potential increased taxation of foreign operations and a host of other proposed changes to US, state and foreign tax laws—may have a significant effect on your business.
Find out more about what our PwC Tax Policy team sees coming next for tax legislation and policy changes in 2021.
The difficulty of passing legislation through a closely divided Congress could mean that regulatory and administrative actions take on additional importance for at least the first two years of the Biden Administration. What does that mean for tax policy and legislative priorities?
With the global pandemic holding a firm grip over the US economy as 2021 gets underway, President Biden is moving ahead on a dual-track basis to address the pandemic and advance his broader policy agenda. The final results of the 2020 election cycle allow Democrats to use the ‘budget reconciliation’ process in order to enact some of Biden’s business and individual tax proposals in 2021. The Biden administration’s business tax proposals include several sector-specific proposals and the president’s ‘Made in America’ tax measures that seek to ‘end outsourcing’ and promote US domestic manufacturing and job creation. How might that impact your business?
Long-standing controversies over global tax policies have been complicated by the impact of the global COVID-19 pandemic. Severe economic stress related to the pandemic has led governments to make significant short-term changes to tax policies. The next six to 12 months will be crucial for the OECD/G20 Inclusive Framework’s effort to remake the international tax system and the broader debate over tax transparency.
Global trade will play a key role in economic recovery efforts in the United States and around the world. Business supply chains continue to be affected by the implementation of the updated free trade agreements in Canada and Mexico. The Biden administration is expected to continue separate free trade agreement talks with the European Union and the United Kingdom, as well as new trade agreements with other nations. Meanwhile, US-China trade policy is one area in which may be some continuity from the Trump to the Biden administration. With many of the world’s major economies forecast to still be smaller at the end of 2021 than they were in 2019, how might your business be affected?
State and local budget processes were significantly disrupted by the impact of COVID-19. States and localities will now confront difficult tax and budget choices ahead of their upcoming legislative sessions. While improving finances are generating calls for tax relief, most states will face some degree of budget shortfall as they write their FY 2022 budgets this year. The continuing effects of the pandemic may mitigate the desire of some states to provide tax relief and incentives, while also prompting other states to consider revenue-raising proposals. What does that mean for the state tax policy decision-making process?
It is not too early for businesses to examine how increases to the corporate tax rate, the proposed minimum tax or other proposed changes (for example, an increase in taxes on foreign income) could affect all aspects of their business, especially any impact on jobs, cash flows, investments and deals. How might your business be affected?
Kathryn Kaminsky and Wes Bricker lead PwC’s Tax and Assurance functions, respectively. Over the past several months, they have met with hundreds of CFOs and tax directors at companies across the United States and Mexico who are preparing for a new tax policy landscape. Together, they have seen the need for CFOs and tax directors to collaborate like never before. They put this report together with that in mind.