The Biden and Wyden Tax Plans

Tax Notes reporters examine President Biden’s Made in America Tax Plan and the international tax framework by Senate Finance Committee Chair Ron Wyden, D-Ore., and their international impact. 

For additional coverage, read these articles in Tax Notes:

• Wyden Cheers New Treasury Pitch in OECD Global Tax Reform Talks
• Brady Lambastes Potential Tax Hikes as Invitation for Inversions
• Treasury Ties Corporate Reforms to Improved U.S. Competitiveness
• Biden Administration’s ‘SHIELD’ Proposal Would Replace BEAT
• Senate Dems Pitch International Tax Changes With No Set Rates
• Yellen Stresses Global Cooperation on Minimum Corporate Taxation
• Tax Code Plays Big Role in Biden’s Infrastructure Plans
• Biden Proposes Eliminating FDII, Changing Earnings-Stripping Law

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This episode is sponsored by Avalara. For more information, visit avalara.com/taxnotes.

This episode is sponsored by University of California, Irvine Law School’s Graduate Tax Program. For more information, visit law.uci.edu/gradtax.

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Credits
Host: David D. Stewart
Executive Producers: Jasper B. Smith, Janelle Julien
Showrunner: Paige Jones
Audio Engineer: Jordan Parrish
Guest Relations: Christa Goad

Transcript

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David Stewart 0:02

Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: Biden or Wyden. On March 31 the Biden administration released the Made in America Tax Plan, which laid out several big ticket proposals, many of which President Biden advocated for in the 2020 campaign. Days later Senate Finance Committee Chair Ron Wyden, D-Ore., and two committee members unveiled their international tax framework, which they say is intended to stop corporations from moving operations and investments abroad. Although Senate Democrats said they've been working with the Biden administration, the two plans contain key differences. What would these plans mean for federal international tax policy? In a bit, we'll talk with Tax Notes reporters Andrew Velarde and Stephanie Soong Johnston on the international provisions and what they mean in the context of the OECD's work on the digital economy. But first let's talk with Tax Notes reporters Jad Chamseddine and Jonathan Curry about the basics and the political details of these plans. Jad, Jonathan , welcome back to the podcast.

Jonathan Curry 1:59

Hey, Dave.

Jad Chamseddine 2:00

Thanks for having us.

David Stewart 2:01

Let's start with the Biden tax plan. Jonathan , could you give us a high-level review of what's in that?

Jonathan Curry 2:06

Yeah, I'd be happy to. So the first thing to sort of understand is that the Biden administration is operating from a perspective that corporations have been way too successful at avoiding the corporate tax for years. Decades, really. They also believe that the current tax code actually incentivizes corporations to offshore their jobs and to shift their profits overseas thanks in part to the TCJA. And a common refrain that you'll hear from this administration that they're trying to end the "race to the bottom." This is the idea that countries around the world are causing self-inflicted wounds by regularly reducing their corporate tax rates to try to compete with each other. So what this plan is doing is it's aiming to not just stop that trend, but to reverse that a bit, too. And finally, this administration clearly believes that they need to raise a lot more revenue. And by golly, they say , they're going to get it from these big businesses. So with that in mind, here's how they plan to address those points. First, and their sort of headline move here, is they want to start by raising the corporate tax rate up to 28 percent from its current 21 percent. They also want to effectively double the minimum tax on global intangible low-taxed income, which is commonly called GILTI, along with a few other tweaks to how that would work. They're g oing t o pair that with changes to GILTI with multilateral agreements with other countries to get them to adopt matching minimum taxes of their own. If you're a tax nerd, you'll probably notice that this sounds suspiciously similar to the OECD's pillar 2 p roject, which I'm sure you're going to hear about in a few minutes. There's also, he's calling for a 15 percent minimum tax on book income. And this is intended to target the gap between the income that companies report to shareholders as well as the income reported for tax purposes after these companies claim credits and deductions and all that. Now interestingly, this would now only apply to companies reporting $2 billion of book income or more, way up from the $100 million threshold that he said in his campaign. So in theory, only the really, really big companies would have to deal with it. This new version of his book tax, or the one that he's given a little more details about, would also carve out exclusions for things that his administration likes, like research and development tax credits and tax breaks for clean energy as sort of part of his infrastructure plan calling for investments in clean energy. They also said they want to replace fossil fuel tax incentives with tax incentives for producing green energy. And if you were to look at his very lengthy infrastructure plan there's a long stack — it's about 29 pages long. Scattered throughout that is about a dozen little mentions of tax credits for this, tax credits for that, and sentence for here and for that. And so there's quite a few things there. Also he wants to prioritize corporate tax enforcement actions by the IRS. So he's called his most recent budget proposal, it was a skinny budget, so it wasn't the full thing. But his basic skinny budget called for directing an additional $400 million or so towards compliance efforts aimed at high-net-worth individuals and corporations .

David Stewart 4:41

All right. Now Jad, what do we know about Senator Wyden's tax plan ?

Jad Chamseddine 4:43

Yeah. So Wyden's tax plan is — at the moment it's sort of just a framework of a plan. They've released a few pages sort of signaling where they want to go with the international tax plan. Just like the Biden tax plan, they would like to increase GILTI, but that sort of hinges as well as to where are they going to settle on the corporate tax. And that's obviously being discussed in the caucus. Biden suggested a 28 percent tax rate, but other members have spoken about perhaps a 25 percent tax rate. They think the 28 percent may be just a little too high considering the fact that you have to add into that state taxes as well. So this is still under negotiations. The framework, I think as mentioned by an aide, didn't include any numbers per se. They just sort of said they want some taxes to be higher. So you have some key differences between the Biden and Wyden plan. I think at the moment Wyden and his counterpart Sen. Mark Warner, D-Va., and Sen. Sherrod Brown, D-Ohio, are still sort of talking to their caucus to see what else they would like to include in an international tax plan, considering the fact that some of the members of Congress don't really know much about international taxation. So they're really leaving sort of the challenge to reform the framework in Wyden's hands and the staff of the the majority of the Senate Finance Committee.

6:07

And so it's going to take some time for them to shop around the ideas around their caucus and get input as well from House lawmakers, of which there is Rep. Lloyd Doggett, D-Texas, on the House Ways and Means Committee, who has been a big proponent of reforming international taxes and has been sort of on the case even before TCJA. And now obviously with TCJA, he's been slamming the 2017 tax law as one that helps companies offshore manufacturing. And he has a counterpart in the Senate, Sheldon Whitehouse, D-R.I., who has been sort of tag teaming on reforming international taxes. So there's no doubt that Senator Wyden will be talking to the White House and see where they can agree on some aspects of international taxation and how to go about reforming that.

David Stewart 6:56

So what have been the reactions to the plans that the lawmakers and the White House have proposed?

Jad Chamseddine 7:01

We're still early in the talks at the moment. The plan was released only a week ago, and so they're still talking about where to go with this. But Republicans were quick to slam the plans. We know that there's not going to be a lot of input from Republicans. If you want to increase the corporate tax rate, if you want to increase GILTI, you're basically telling Republicans that we know you're very proud of the 2017 tax law, but we hate it and we're getting rid of much of it. And especially the international tax framework, Republicans agree that there has to be some changes made to the 2017 tax law, especially on international part, but they don't necessarily want to raise GILTI. They don't want to obviously raise the corporate tax rate. They're afraid that this is going to invite more inversions, corporate inversions that we saw sort of from 2014 to 2017 or so. I guess maybe a little earlier than that. They're basically saying that, "Hey, if you're going to increase the corporate tax rate, if we're going to start taxing companies more, they're going to just start leaving the country again, and we don't want that." And they've sort of been hammering home the point that pre-TCJA you had more than two dozen inversions, especially of pharmaceutical companies, that sort of shipped their IPs out. They bought companies abroad and shifted their headquarters abroad to lower their tax burden. And if you increase the rate, if you mess around with the international tax framework, you are probably going to see that again.

Jonathan Curry 8:29

Just to add kind of the public perspective, when President Biden first released his infrastructure proposal their reaction at first was that they like the idea of spending more infrastructure and more investment in a lot of different areas. But they were pretty uniformly opposed to the corporate tax changes he's proposing. There's been a little bit of nuance from people like Amazon's former CEO Jeff Bezos. He came out and essentially said that he'd be OK with some increase in the corporate tax rate, and a few other business leaders have been hinting that as well. From the perspective of the progressive tax activists , they're loving it right now. I mean, they're, they're really pumped up. I talked to a couple recently and last year when I had talked to them at the start of the pandemic they were just really expressing concern and woe that any sort of momentum for major corporate tax reform [and] international tax reform was just completely off the table. That there'd be no room for that in the wake of all the coronavirus response efforts and things like that. But they said that they're pleasantly surprised to think that they have momentum on their side and ready to see where the Biden administration goes with this.

Jad Chamseddine 9:25

May I also just add sort of to Jonathan's point as well that Republicans have also expressed interest in infrastructure and building better roads and better highways, bridges, etc. But how to pay for it has always been an issue and continues to be an issue. They just recently met with President Biden and Sen. Roger Wicker, R-Miss., basically said that, "We're supportive of expanding infrastructure, but at the same time there's no way we're going to increase the corporate tax rate or any other rates on businesses to pay for it." So they seem to be sort of stuck there.

David Stewart 9:56

All right . So with that in mind, where do things stand now? Does it look like either of these plans has a path forward?

Jonathan Curry 10:02

So a few days ago I was on a call with a couple Treasury officials with some other reporters and they really downplayed the differences between their plan and the Wyden plan. They essentially argue that the differences there are just a matter of degree and that they share a lot of the same objectives. I mean, of course, you would certainly expect them to downplay the differences and to emphasize the common ground. And that's what we have here. But I also don't think the differences between these frameworks are quite as big as the differences were among Republicans ahead of the 2017 tax law. Where if you recall, you had House Republicans were proposing a destination based cashflow tax, the Senate Finance Committee chair was floating a corporate integration tax plan, and President Trump's White House was doing its own thing. I think it's not quite as big a gulf as that, but also I pointed out that the plan that Biden released was really actually just the first part of his two-part plan here. This was his Made in America Plan, part of the American Jobs Plan, his overall infrastructure plan. And that was big, but part two is coming. That's going to be called the American Family Plan, and that's going to have a ton of new changes aimed at propping up families and workers. And those are going to be funded by raising taxes on the wealthy. So stay tuned because there's a lot more tax changes coming.

Jad Chamseddine 11:05

To Jonathan's point, Wyden also downplays differences between the two plans. He said that they're rowing in the same direction. So they have an open dialogue with the White House and with Treasury as to what changes need to be made or how they want to attack this area. They're still talking amongst each other so we can expect the plan to be reformed over the next couple of months. We know that Democrats are trying to get something done by the August recess. So there's going to be, I guess, a lot of meetings in the next couple of months to see where they can land on GILTI and FDII and the BEAT, and see if there's a lot of common ground there. And I guess get some input from the House as well where they want to land on these issues. And not expecting there to be really that big of a difference, as Jonathan said, between the two sides at the end of the day.

David Stewart 11:58

All right . Well, I guess this is an area that we'll be watching closely over the next weeks and months. Jonathan Jad, thank you for being here.

Jonathan Curry 12:05

Thanks, Dave.

Jad Chamseddine 12:05

Thanks for having us.

David Stewart 13:02

We turn now to a deeper look into the international provisions of the Biden and Wyden proposals, and what they mean for the OECD's ongoing work on the digital economy with senior legal reporter Andrew Velarde and chief correspondent Stephanie Soong Johnston. Andrew, Stephanie, welcome back.

Andrew Velarde 13:17

Good to be here, Dave. Thanks for having me.

Stephanie Soong Johnston 13:19

Yeah, same here. Thanks a lot.

David Stewart 13:19

All right . So Andrew, let's start with you. International tax is one of the major areas being targeted by both the administration and the Senate Finance Democrats. So what are the plans trying to accomplish with their changes?

Andrew Velarde 13:31

Well, Dave, some of the major TCJA international provisions are being singled out in both plans. Now sometimes the plans embrace a similar approach for reform on these provisions. Other times they take different tacts. Thematically though what they tout is remarkably similar. Reform is seen as a way to end incentives for offshoring investment, encourage onshoring, and better reduce the ability of companies to strip away profits.

David Stewart 14:00

So which international provisions are being targeted by the two plans?

Andrew Velarde 14:04

Both Biden and Wyden set their sights on GILTI, FDII, foreign-derived intangible income, and BEAT, base erosion anti-abuse tax, provisions. GILTI is where you have the most agreement between the two, so let's start there. Let me just level set very quickly on GILTI. It provides that each U.S. shareholder of a controlled foreign corporation is subject to tax on GILTI, which is defined as the excess of its pro rata share of tested CFC income over a 10 percent return on his pro rata share of depreciable, tangible property of each CFC. That last point, that's the called the QBAI, qualified business asset investment. Under section 250, a 50 percent deduction on GILTI is allowed . So let's get to the plans now. Both plans call for an increase in the GILTI rate. Biden targets 21 percent, which would be three quarters of the increased 28 percent corporate rate. Wyden and the Senate Finance Committee Democrats, they don't get specific on the exact rate, just that it should be higher. Both also want to end the QBAI exemption for deemed returns under 10 percent. Both plans also take issue with the way GILTI is currently determined on a global basis, which they think encourages blending of high-tax income with low-tax income to lower the GILTI rate. They have somewhat different proposals on how to address this issue, however. The administration wants to move towards a per country calculation of GILTI. Wyden and the Senate Finance Democrats on the other hand, tout a much simpler method involving some aggregation. This divides global income into a high-tax category and a low-tax category for the jurisdictions and applies GILTI only on the latter. Foreign corporate tax above GILTI is excluded from the regime altogether. Interestingly they also call for using Treasury rules under the Trump administration that expanded the high-tax exception to GILTI, which historically had only been used for subpart F. Wyden had previously been up in arms about this rulemaking as an overreach of authority, so it's ironic that now they're calling to use these rules as part of their changes to GILTI to expedite the rollout. But that irony is acknowledged by the framework itself. Now it's not all bad news for taxpayers when it comes to Wyden's plan. As an "incentive to onshore research and management jobs," the framework also calls for an allowance of expenses for research and management that occur in the U.S. to be treated as domestic expenses. Expense allocation rules related to foreign tax credits have long been a complaint of taxpayers on the application of GILTI, arguing that it drives up the rates far higher than it was originally intended.

David Stewart 16:53

Now you also mentioned FDII. As I understand it, FDII and GILTI were related. Is that correct?

Andrew Velarde 16:59

Yes . In a sense they are. FDII is designed as the TCJA's carrot to attract intangible assets into the United States to counterbalance the GILTI rules stick. FDII, just speaking generally, FDII provides a 37.5 percent deduction for U.S. corporations' deemed intangible income earned from the sale of property or services for foreign use. Both look at QBAI as part of their calculation, and both hinge on the section 250 deduction.

17:26

There is less agreement between the two camps —between the Biden administration and the other Senate Democrats — about how to approach the FDII provision though, when you compare it with GILTI. Biden wants to eliminate it altogether. This probably should come as little surprise. It has been criticized as ineffectual by Biden's Treasury leading up to the release of his plan and also criticized as encouraging the movement of assets offshore by companies in order to increase the FDII deduction.

Andrew Velarde 17:51

Wyden on the other hand leaves the door open for retaining FDII, but with some changes. There's not a ton of details here, but we see the plan calling for replacing the deemed intangible income provision with deemed innovation income. That amount would be based on the share of R&D and worker training expenses occurring in the U.S.

David Stewart 18:11

Now you also mentioned a third TCJA provision, the base erosion anti-abuse tax, the BEAT. So what's happening to that?

Andrew Velarde 18:17

So here you have a fairly wide divergence between the two plans when it comes to the BEAT. The BEAT is a minimum tax on related party payments that is one of the few provisions in the TCJA that also targets foreign multinationals. It's triggered when crossborder-related party payments exceed 3 percent of total deductions. It is calculated on the excess of modified taxable income over a taxpayer regular tax liability reduced by some types of credits. The Biden administration has called it ineffective and wants to replace it completely with a new proposal, the Stopping Harmful Inversions and Ending Low Tax Developments proposal, or SHEILD. This would be a more multilateral approach. SHIELD's trigger would be an effective tax rate established through a multilateral agreement, or if SHIELD is implemented before we have that multilateral agreement, it would be set at the amended GILTI rate of 21 percent. SHIELD also envisions tightening of anti-inversion rules. We've seen this being floated around for a while going back to Biden's campaigning days. We have a little more details on this now. Foreign companies will be considered U.S. residents if post-acquisition management control remains in the U.S., or if the former shareholders of the expatriated U . S. entity have at least 50 percent ownership interest. That's a substantially lower threshold than it is currently. Now Senate Democrats, they don't call for the complete replacement of BEAT. Rather they envision a second increased BEAT rate on base erosion payments that are above the current 10 percent rate. But there is also another potential taxpayer benefit here, which would be the allowance of more credits under BEAT. Not only the full value of domestic credits, which is mentioned the framework, but potentially foreign tax credits as well. This allowance of FTCs for the BEAT has long been a major source of complaint from taxpayers, but Treasury has always thought that this was kind of hardwired into the statute. They couldn't do anything to offer relief. As with GILTI though, practitioners I've spoken with have cautioned against being too optimistic or to begin planning around any potentially taxpayer beneficial portion of these provisions. Not enough is known about the details here on any of these changes to know how they will affect taxpayers going forward . FTC allowance may not mean much if what constitutes a base erosion payment also expands substantially, for example. We will just have to wait and see as more details start to emerge in the coming weeks and months.

David Stewart 20:50

All right now let's turn to the even larger context of all this: the negotiations that are ongoing at the OECD for a two-pillar solution to the taxation of the digital economy. So Stephanie, first off, where do things stand at the OECD?

Stephanie Soong Johnston 21:03

Regular listeners of the podcast might recall that the 139-member jurisdictions of the OECD's inclusive framework on base erosion and profit-shifting have been working on a plan for quite some time now. Just to quickly recap what those two pillars are: pillar 1 would revise profit allocation nexus rules so that market countries, the countries in which consumers are located, are able to better tax companies on their profits arising from cross border activities that aren't tied to physical presence under existing rules. This is referred to as Amount A, which basically would affect the residual profits of multinational corporations. But a big point of contention in pillar 1 was the scope of Amount A. Who's in and who's out? The blueprints suggested that Amount A would hit automated digital services and consumer-facing businesses. But that raises all kinds of questions about how do you determine what these companies are? What business lines within those companies would fall into scope? So on and so forth. So scope has been described as the mother of all issues holding up countries agreeing on pillar 1. Pillar 2 would effectively ensure global minimum taxation primarily through the global anti-base erosion or GLOBE proposal, which comprises the income inclusion rule, which has been described as being similar to the GILTI regime and the undertax payment rule, which is similar to the BEAT. Two big questions here were the minimum rate. What is the rate going to be? And how will the GILTI regime and BEAT coexist with the GLOBE regime? So before last week the 139 jurisdictions were working on getting to an agreement on the two pillars, but they effectively put the negotiations on hold just to wait for the U.S. Treasury team to get in place, resume their place at the table, and really tell the other countries what the U.S.'s new position is, if it was new at all. So the inclusive framework was aiming to get an agreement on the two pillars by the end of June or early July. And the G-20 finance ministers were going to try to approve that agreement at their next meeting in early July. And so now these countries have some preliminary answers from the Biden administration about where they stand.

David Stewart 23:12

How do the Biden tax plans fit in with these negotiations at the OECD?

Stephanie Soong Johnston 23:16

So, first off let me just say it has been sort of weird for us trade reporters in the tax space to see the mainstream press cover the Biden administration's plans as regards to these pillars. Because these talks have been going on for quite some time now. It's not really new that the U.S. administration has always been supportive of pillar 2. But the Biden tax plan really makes it clear that the U.S. is kind of directly tying their plans to what's going on in the OECD, which is new. It was sort of implied under the Trump administration kind of quietly. But this is the first time I've noticed that the U.S. has really come out in favor, strongly in favor of at least one part of the two-pillar plan. So, Biden's tax plan really speaks to pillar 2. The GILTI regime reforms and the SHIELD idea would effectively bring the U.S. system in line with the proposed structure of the GLOBE in two important ways. First, by moving the minimum tax to a country-by-country determination, as Andrew described, and by scaling back the BEAT and replacing it with something that is more in line with what other countries were looking for. So I just want to pull out one aspect of the part on Biden's tax plan that really makes it clear that they are tying these plans to the OECD. It says, "Other countries working in the OECD G-20 project favor rule where the United States would turn off the BEAT regime when entities are resident in countries that have adopted the globally agreed upon minimum tax. If adopted the president's proposal would do just that." So here we have a clear indication that Biden is onboard with pillar 2. But his plans do deviate from the pillar 2 blueprint in that the U.S. would repeal the QBAI exemption while pillar 2 would call for a substance based carveout. Now doubling the rate to 21 percent may also be a bit high for some countries within the inclusive framework , such as Ireland, which has a 12.5 percent corporate tax rate. So I think there's going to have to be some negotiation in that space for some time now. One thing I noticed in the plan that Andrew did notice as well was that the SHIELD would deny MNEs U.S. tax deductions linked to payments made to related parties that are subject to a low effective tax rate. And the plan indicates that a low effective tax rate would be tied to the rate that the inclusive framework would agree on in pillar 2. So that to me was very interesting because that provides an incentive for countries to agree on pillar 2, kind of giving them this option. If our plans go through before the pillar 2 agreement is in place, then companies will be taxed at a higher tax rate. So that is something that was interesting to me.

David Stewart 25:41

We now have some clarity on the U.S. position on pillar 2. Have we learned more about the U.S. position on pillar 1?

Stephanie Soong Johnston 25:48

So The Financial Times broke the story on the eve of the inclusive framework steering group meeting on April 8. I had heard ahead of time that this was going to be the meeting in which the new Treasury team would present their official opening offer to the rest of the inclusive framework steering group on where they stand on pillar 1 because that was a really big question. Would the new team offer any leeway on pillar 1 once they were in place? So I managed to get the slides for that presentation and they said that Treasury is now proposing what they call a comprehensive scoping idea. And this calls for designing quantitative criteria to narrow the scope of pillar 1, presumably Amount A to target only the largest and most profitable MNE groups, regardless of industry classification or business model. And so that would require designing criteria on revenue, which would exclude many MNE groups and target only the biggest companies and profit margins, which would ensure that only the most intangible driven, profitable and profit-shifting prone companies are affected, according to the slides. And I understand that the revenue threshold being floated is about $20 billion, but no profit margin threshold has been proposed yet. So this idea would narrow the scope of MNEs subject to Amount A to no more than 100 companies. And like I said before, it would get rid of the need to decide on qualitative characteristics to decide whether a company is in scope or out of scope. So this is something that is very interesting and it's kind of in line with what other commentators have called for. Having the Amount A determination tied to more quantitative factors rather than qualitative to prevent future disputes about who's in and who's out.

David Stewart 27:30

So one of the other issues that's going on in the background of all these negotiations are unilateral measures being adopted by some countries, digital services taxes specifically. And the previous administration was looking into imposing tariffs on those countries. What can you tell us about what's going on with that process now under the Biden administration?

Stephanie Soong Johnston 27:47

So under the Biden administration there was a question of whether they would be more tariff happy or less tariff happy than the Trump administration. And the answer seems to be that they are willing to at least threaten tariffs over digital services taxes , and have basically continued this line of inquiry.

28:06

So on March 26 the Office of the U.S. Trade Representative announced that it was considering imposing 25 percent extra tariffs on the goods from Austria, India, Italy, Spain, Turkey, and the United Kingdom over their digital taxes. All these countries have digital services tax or a digital advertising tax. India has an equalization levy . They all basically try to do the same thing — tax digital companies.

Stephanie Soong Johnston 28:30

And the United States does not like this. They raked France over the coals for their digital services tax back in 2019 and had actually proposed the same type of tariffs, 25 percent tariffs, on French goods starting on January 7, but had decided to pull back on those plans until the USTR could decide what kind of tariffs would apply to other countries that have discriminatory taxes. So these new tariffs are now up for discussion for public commentary, and we can probably expect further movement on this front in the coming months. Essentially, the U.S. has not given up on using tariffs as a threat to induce countries to agree to pillar 1 or get to some kind of agreement. Because as we all know, as a condition of agreement for pillar 1, countries are expected to withdraw their unilateral measures. Now the question of what a unilateral measure is still remains to be seen. Does this cover digital services taxes only? Does it cover equalization levies ? How about withholding taxes? How about significant economic presence rules? So there's a lot to be decided about what unilateral measures would have to be withdrawn as the condition of pillar 1.

David Stewart 29:37

All right . Now you also mentioned that we're expecting to see some movement on this around the time of the G-20 meeting in July. So what are we expecting to see around then?

Stephanie Soong Johnston 29:46

That is a very good question because initially we were thinking, "Oh well, we'll see an agreement on a full solution, maybe with some details that are yet to be determined." Now I'm hearing that we'll see just a political agreement, kind of high-level political agreement, in July. So what will be on the table in the summer? We can probably not expect a fully fleshed technical agreement to be agreed by that time. I get a sense that it's going to be more of a high-level political agreement and then more technical details to follow. So what was interesting though was that in a recent interview with Pascal Saint-Amans, the OECD's tax chief, he welcomed the new Biden administration's positions and the progress that seems to be made. But he also indicated that in terms of chances to get an agreement by the timeline in mid-year , but he also said but for sure before the G-20 summit in October. So I wonder if there is going to be a little bit of wiggle room for getting to an agreement this year. All I know for sure is that this has been going on for quite some time and they've already missed the deadline in October of last year. So I would expect for sure something happening, an agreement to happen sometime this year before the end of the year.

David Stewart 31:03

All right . Well, we'll definitely have to have you back when we have more information about what that agreement is. Stephanie, Andrew, thank you for being here.

Andrew Velarde 31:09

Thank you for having me, Dave.

Stephanie Soong Johnston 31:10

Thanks!

David Stewart 31:12

Now coming attractions. Each week, we highlight new and interesting commentary in our magazines. Joining me now from her home is Acquisitions and Engagement Editor in Chief Janelle Julien. Janelle, what will you have for us?

Janelle Julien 31:23

Thanks, Dave. In Tax Notes Federal, Shannon Jemiolo, Ian Redpath, and Thomas Vogel examine the ways in which the TCJA changed the income recognition rules. Robert Kantowitz argues that the Sixth Circuit’s conclusion in Patrick’s Payroll Services Inc. v. Commissioner was wrong. In Tax Notes State, Michael Giovannini explores several of the more eyebrow-raising state deviations of RUUPA. Three Eversheds Sutherland practitioners evaluate recent attempts by states to artificially inflate the sales price in sales tax disputes. In Tax Notes International, Kartikeya Singh analyzes the effect of amount A, a key part of the OECD’s pillar 1 proposal, using firm-level and aggregated data. Reuven Avi-Yonah considers the Biden administration’s Made in America Tax Plan.

32:13

And finally, on the Opinions page, Marie Sapirie writes that the deficiencies in the data the IRS has about platform workers will be dramatically shored up once expanded information reporting begins under the American Rescue Plan Act. Doug Sheppard traces the legacy of Carol Calkins, who began in state and local tax in its infancy in the early 1970s.

David Stewart 32:32

You can read all that and a lot more in the pages of Tax Notes Federal, State, and International. That's it for this week. You can follow me online @TaxStew, that's S-T-E-W. And be sure to follow @TaxNotes for all things tax. If you have any comments, questions, or suggestions for a future episode, you can email us at podcast@taxanalysts.org. And as always, if you like what we're doing here, please leave a rating or review wherever you download this podcast. We'll be back next week with another episode of Tax Notes Talk.