On April 29, 2021, WITA discussed the efforts to create a global minimum tax, and related international tax and trade issues.

PROGRAM AGENDA 

Welcome: 10:00 AM (US/Eastern)

• Kenneth Levinson, Executive Director, WITA

• Lilian V. Faulhaber, Professor of Law, Georgetown University Law Center
• Loren C. Ponds, Member, Miller & Chevalier Chartered – former Chief Tax Counsel, Ways & Means Republican
• Bob Stack, Managing Director, Washington National Tax | International Tax Group, Deloitte Tax LLP
• Moderator: Antonia Ferrier, Chief Strategic Communications Officer, CGCN Group

• Q & A with Audience – Webinar attendees are encouraged to use the Q&A function on the Zoom app to submit their questions in real time.

SPEAKER BIOGRAPHIES

The post WITA Webinar on Proposals for a Global Minimum Tax appeared first on WITA.

Trade and the 2020 Elections: The Swing Voter Project

By: Madelyn Cunningham

On February 4th, 2020, WITA hosted Rich Thau as a keynote speaker, as he gave his presentation, “Trade and the 2020 Elections: The Swing Voter Project.” Kimberly Ellis, WITA Board member and Principal of the Monument Policy Group, introduced Thau with his business title, President and Co-Founder of Engagious, and his other project, the Swing Voter Project. By grouping swing voters into two categories: Obama-Trump voters and Romney-Clinton voters, Thau has set out to predict the outcome of swing voting counties in the Upper Midwest.

Thau began by discussing his methodology of picking locations to study, through a color-coded map released by CNBC. The map depicted in dark red the highest rates of swing voting in the 2016 elections from Obama to Trump. Each dark red county was cross-examined by population, and selected if not too sparsely populated.

But why take on this project? According to Thau, there were three reasons. Firstly, in 2016, inconsistent and purely quantitative pollsters did not account for the entire opinion of those they were polling. Thau highlighted the need to not only ask what their opinion was, but also why, prompting his qualitative research design.

Secondly, Thau argued that no one should be shocked by the 2020 election outcome as they were in 2016, especially with the amount of contention in the recent political climate. Lastly, the project should be able to uncover key insights into swing voting habits.

Thau then moved on into his key findings thus far. He found that from the areas he polled, the swing voters were low information voters, receiving most of their news and political information from local broadcastings limited to sports, weather, crime, and traffic, local websites, facebook, national morning TV shows, and “news aggregators” accessible from their device. 

To build on the fact that these are low information voters, Thau asked participants to identify the Democratic candidates for the upcoming 2020 election. He first asked them how confident they were in identifying the Democratic candidates from official photos on a 1 to 10 scale.

In August, Bernie Sanders was the first most identified, at 8.3, followed by Joe Biden, Elizabeth Warren, Kamala Harris, and Beto O’Rourke. Pete Buttigieg was less than 2 and has not shifted since the scale was generated in August. For comparison, Alexandra Ocasio-Cortez, though not a presidential candidate for 2020, was ranked by identification rate in 4th place after Elizabeth Warren. 

In October, Thau was interviewed by Michael Smerconish about the likelihood that Obama-Trump voters would vote for Trump again in the fall. He discussed a hypothetical match-up between Obama and Trump. In each focus group, roughly 2/3rds would choose President Trump. Even though Trump’s campaign promise to bring back manufacturing jobs in the area had not been followed through, these voters were still with the president because of his “America First” agenda.

Compared to the Obama-Trump voters, swing voters that voted Romney then Clinton responded they would vote for Obama in an Obama-Trump match-up.

Thau also found that there was not much “nostalgia” for the Obama-Biden administration among the swing voters. Even participants from Joe Biden’s hometown, Scranton, Pennsylvania, felt no connection to him as a candidate, saying that he was not truly from there to begin with. 

Thau’s third key finding tied into how the state of the economy directly relates to the likelihood of Trump’s reelection, as many voted for him because of his background in business. If the economy turns, support for him would dwindle as he is weak in key issues important to the swing voter demographic. 

In suburban Minneapolis, participants pointed out that he had made “zero effort” to fix the healthcare system. If a democratic candidate were to run on the platform of better, affordable healthcare, this would garner support from swing voters. Trump’s behavior and presence was also analyzed, and while some were supportive, many participants were embarrassed when seeing him on their TV or device. The main dissidents for Trump’s behavior being the Romney-Clinton voters.

As mentioned in his CNN interview with Michael Smerconish, while he did not follow through on the promise to restore manufacturing jobs, his “America First” agenda in foreign policy has won over the swing voters in the Midwest. Relating to foreign affairs, while Trump has been strong with trade policy, the hot button issue for these voters was immigration. While not interchangeable, swing voters view immigration and trade as two issues on “the same ‘America First’ coin.”  

The swing voters do not view trade as a key voting issue, they know more about negotiations with China than they do about the USMCA. In Wilkes-Barre, PA, when asked about whether they knew anyone who personally benefited or was harmed from Trump’s trade policy, there was no response from the focus group.

To encapsulate the swing voters’ knowledge on trade, Thau stated that one response summarized the entire demographic, “we have used so much out of America, and imposing those tariffs will eventually move those jobs back here even though it will cost us more.” 

To further explain the swing voter’s engagement with trade policy, Thau explained that about 3/4ths believe that America’s efforts to secure a fair trade deal with China will be worth the higher prices on imports from other countries. However there is a limit to their tariff support, as if the trade war with China was prolonged and prices were significantly raised, Trump would lose support. All of the swing voters believed that only American Swing Voters beared the cost for tariffs.

Shown a clip of Senator Klobuchar on trade, her approval rating from the Wilkes-Barre focus group increased drastically as soon as she discussed her support for “Made in America” goods. There is a growing mistrust of corporations, but where Senator Warren’s statements about trade are supported by focus groups, their support for her falls when discussing how she will pay for her programs like “Medicare for All” by taking from big corporations. The participants, while in support of the issue, respond that to expect the top income bracket and big corporations to pay for this plan is unachievable.

Moving on to bonus issues, swing voters believe that the weather is getting “weirder” when asked about environmental policy. There is an awareness of climate change, and they are critical of regulatory rollbacks affecting the environment. When asked about the environmental rollbacks, participants in Wilkes-Barre said that they affected the air and water quality and ultimately the health of the community, which could not afford basic healthcare in most cases. There was an overall sense of fear and worry about the state of the environment, and it was more of a key voting issue than healthcare policy.

Participants were also asked to fill in the blank: “Make America _________ Again.” Overwhelmingly, they responded to make America “America” again and “fair.” But there was no consensus as to what they specifically wanted America to be, and Thau argued that this was one of the key problems for Democrats, as while united against Trump, there is no common platform or idea of what they think America should be. 

Thau discussed his findings relating to the impeachment trial of President Trump. The swing voters viewed the trial was just a distraction and demonstration that the Democratic party leaders are out of touch with “regular” Americans. They blame impeachment for the lack of policy and coverage on issues that matter to them.

To conclude his presentation, Thau summarized his key arguments through the various swing voter trends found in his project thus far. He stated that there needs to be attention paid to those who are low information voters, Trump’s “America First” sentiment maintained his support among the demographic, the economy is a determining factor in his reelection, and there was no consensus on what America should be going forward.

To get updates on the findings from Rich Thau’s project, sign up for his newsletter on SwingVoterProject.com.

Kimberly Ellis of the Monument Policy Group joined Rich Thau onstage for a debrief on his presentation. She first asked for Thau’s thoughts on Mike Bloomberg’s prospects in the upcoming race. Thau responded with the fact that in many of the counties he visited, Bloomberg was, for the most part, an unfamiliar candidate.

One of the respondents in Wilkes-Barre pointed out that there was no grass-roots support for Bloomberg, that instead Bloomberg was just a billionaire spending money on his campaign. In contrast, Trump ran on the platform that his campaign was supported from the bottom up, and not just from large personal donations.

In regard to trade policy, Ellis went on to ask whether or not the swing voters supported Trump’s trade policy. Thau stated that they were in absolute support, and that it was not necessarily his specific agreements and policy work, but his messaging of “being on the case”. There is no awareness of the economic effects of his deals, but they are more focused on progress overall.

Featuring:

Rich Thau, President & Co-Founder, Engagious

Kimberly Ellis, Principal, Monument Policy Group

To view more details about the event, visit the event page here.

The post WITC 2020: Trade and the 2020 Elections: The Swing Voter Project appeared first on WITA.

The post E-commerce, Trade, Tax and the WTO Moratorium on Customs Duties on Electronic Transmissions appeared first on WITA.

Tax, Trade, & Investment: Examining Tax Reform

By: Mia Rudd & Sydney Riley

The discussion was guided by Ed McClellan, a Partner at Covington & Burling, LLP and former Tax Counsel on the U.S. Senate Finance Committee. As an experienced tax policy analyst, he provided background on the new tax provisions, detailing implications for domestic and international business. Prior to the law’s implementation, the U.S. had the highest corporate tax rate among developed economies. The TCJA cut the corporate rate dramatically and permanently from 35 to 21%, one of the few provisions that doesn’t expire. There is an immediate 100% expensing for certain assets and limits on interest deduction to 30% of cash flows. Future net operating losses is limited to 80% of taxable income and there is a future amortization of research and experimentation expenditures. Regarding international provisions, McClellan noted the U.S. is one of six OECD countries with an old tax system that taxes every dollar of American corporations’ profits overseas. Companies are thus resistant to bring money back to the States, creating a “lockout effect.”

Gail Fosler, who serves as President of the Gail Fosler Group LLC and was formerly Deputy Staff Director and Chief Economist of the U.S. Senate Budget Committee, was first to speak following McClellan’s opening remarks. An advocate of the tax act, she’s hopeful it will be transformative for the American economy. While Fosler commented on the lack of instant gratification, she notes that the promise of success instead is administrated from the incentive structures that will take years to result in beneficial location and investment decisions. She believes it is one of the most important laws to improve trade policies around the world and will likely reduce trade tensions within the Trump administration. Noting that more than 75% of U.S. corporations generate two million or less in revenue annually, the TCJA gives these companies lines of slight to a much lower tax rate. Despite Fosler’s preference for the new tax provisions, she admits the bill has technical flaws, seeing that no provisions will take place in the immediate form.

Dan Mitchell, Co-Founder of the International Liberty Blog and former economist for Senator Bob Packwood and the Senate Finance Committee, provided a libertarian perspective on the act. He thinks people are misled by the true impact of the bill and sees minimal future benefit for business. Although the economy will experience nine years of tax cuts, revenue increases begin in year ten, suggesting the new provisions fail to reduce the aggregate tax rate. Using raw estimates, he guesses the U.S. was 60% worldwide before the act, but has since shifted to a 60% territorial system. The new territorial system exempts multinationals from paying taxes on profits earned abroad. Mitchell also compared direct and indirect investment, highlighting the significance of indirect investment flows over relatively smaller direct investment flows from multinationals. Over-taxation of the government was Mitchell’s major concern, believing it will lead to excess spending without the presence of constraints. He predicts the 14% reduction in the U.S. corporate tax rate will pressure international governments to cut taxes.

Rob Shapiro, Founder of Sonecon and former Under Secretary of Commerce for Economic Affairs, was last to speak, expressing his opposition to the tax law. He sees the negative impact on investment outweighing any benefits of the act, suggesting overall effects are marginal. Shapiro believes the new system is hybrid territorial because relative tax rates play only a limited role in the location of company investment. He favors true and full territoriality, but sees no benefit to a hybrid system. One of his major oppositions to the act are the new penalties for companies heavily reliant on intellectual property, which slows innovation – one of the main U.S. trade advantages.

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Two expert panels were part of WITA’s signature event looking at the Brady-Ryan tax reform blueprint and their proposal to tax imports from around the world. One panel examined the Brady-Ryan plan in the context of existing US and global tax regimes, and the second heard from industry supporters and opponents of the proposal.

The post Border Adjustment Taxes, Tax Reform and Trade appeared first on WITA.