Still deciphering the OECD

With help from Aaron Lorenzo

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Interesting: What did Treasury Secretary Steven Mnuchin mean when he said that the G20 basically agrees that any global tax deal should incorporate a key international provision from the 2017 tax law, H.R. 1 (115)?

Do the wealthy pay less in taxes than the average taxpayer? A couple of government economists disagree with Emmanuel Saez and Gabriel Zucman on that point.

Get your tax proposals: Three prominent Democratic contenders rolled out new tax ideas on Monday, just ahead of tonight’s latest Democratic debate.

THANKS FOR JOINING US this Tuesday, where the Morning Tax family has also tried the old “cauliflower in the mashed potatoes” trick to limited success. (For the author, not the children.)

That New York state of mind: Today marks 269 years since NYC hosted the first performance by a monkey to charge admission — one cent.

We can’t even pay a penny for your thoughts, but we’ll take them anyway.

Email: bfaler@politico.com, alorenzo@politico.com, teckert@politico.com and bbecker@politico.com.

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ALREADY GOT WHAT WE NEED? Here’s exactly what Mnuchin told CNBC in an interview held during this past weekend’s meeting of G20 finance ministers in Saudi Arabia: “There’s pretty much consensus now within the G20 that we should have the GILTI.”

That would be the GOP law’s levy on Global Intangible Low-Taxed Income, and Mnuchin’s reference to GILTI could have simply been shorthand for the global minimum tax — a.k.a., Pillar Two — in the plan currently being negotiated through the Organization for Economic Cooperation and Development.

At the same time, GILTI had already been part of the OECD discussions. Multinationals based in the U.S. have made it pretty clear that, while they might have some issues with GILTI, they already have to pay that tax and have put a lot of hours into preparing to do so. With that in mind, business groups have pushed for GILTI to basically be grandfathered in to any deal struck through the OECD, to ensure that American multinationals don’t face any double tax.

Some G20 members have sounded skeptical about the minimum tax being tossed about in OECD talks, and the communique released following the recent meeting in Riyadh didn’t suggest that the group had nailed down how to proceed on Pillar Two. But interestingly, Mnuchin also told CNBC that the second pillar is the most important part of the OECD process, even though the biggest fights so far have seemed to be over Pillar One — which would change rules dealing with how to tax companies that do a lot of business in countries where they might not have much in the way of physical infrastructure. (Case in point: Mnuchin’s safe harbor.)

WHO’S PAYING WHAT? Any close watchers of the 2020 campaign have heard Sen. Bernie Sanders (I-Vt.) exclaim, using data from Saez and Zucman, that the middle class actually has a higher effective tax rate than the richest Americans.

But new research from the Joint Committee on Taxation’s David Splinter and Treasury’s Gerald Auten got much different results on that score than the Berkeley duo, the intellectual firepower behind the wealth tax. Splinter and Auten, in fact, found that that top 0.01 percent have an average effective rate of around 52 percent, a good 17 points higher than Saez and Zucman’s figure, as Pro Tax’s Brian Faler reports.

The government economists’ findings haven’t gotten nearly the attention as Saez and Zucman’s, but their numbers do point out a broader issue — as Democrats strive to reduce income and wealth inequality, it’s actually quite difficult to pin down just how much the rich are paying in taxes.

In other words: It’s tough to say whose figures might be right. “I would say most economists aren’t sure what to think — a lot of the differences are very technical,” said Jason Furman, who was chairman of President Barack Obama’s Council of Economic Advisers. “I’m trying to figure out my own view on the question.

2020 INTERLUDE: First up, the front-runner: Sanders rolled out a plan for universal child care and pre-K, with the $1.5 trillion price tag over the next decade, as Pro Education’s Juan Perez Jr. reported. And how does Sanders propose to pay for it? With the wealth tax, of course. (Addendum: The Committee for a Responsible Federal Budget projected that the wealth tax would fall short of funding all that Sanders has it earmarked for.)

Next up, former Vice President Joe Biden — who might be the favorite for Saturday’s South Carolina primary. Biden put out a housing plan on Monday that would cost $640 billion over a decade, with the centerpiece being a $15,000 tax credit for first-time homebuyers, as the Financial Services team’s Kellie Mejdrich reported. Campaign officials said the credit was meant to help increase wealth for minorities, and would be paid for with higher taxes on corporations and big banks.

And finally, Pete Buttigieg, the former mayor of South Bend, Ind., released a plan that would eliminate the cap on state and local tax deductions put into place by the 2017 tax law for families making less than $400,000 a year — in a move The Los Angeles Times reported seemed especially catered to California voters.

FIRST LOOK: The Rockefeller Foundation is announcing a new $65 million investment today aimed at low-wage workers, in part by promoting the benefits of expanding both the Earned Income Tax Credit and the Child Tax Credit, and by further boosting the Opportunity Zones created by the Tax Cuts and Jobs Act.

The initiative is something of a shift for the Rockefeller Foundation, in focusing more on domestic matters than global issues.

NEED MORE MONEY: Rishi Sunak, the U.K.’s new chancellor of the exchequer, is set to release his first post-Brexit budget next month. And as Reuters reports, a British think tank says that Prime Minister Boris Johnson’s government will have to hike taxes if it wants to pour on more spending. Johnson has already floated the largest increase in spending on day-to-day public resources in well over a decade, and the Resolution Foundation found those ambitions can’t be offset with tweaking budget rules alone. Sunak’s predecessor, Sajiv Javid, was planning on balancing revenues to day-to-day spending within three years, but the Sunday Times reported that Sunak might be willing to push that back to five years. In any event, there’s some question about how open Conservatives will be to higher taxes, and the Resolution Foundation says that pushing back balancing day-to-day spending wouldn’t be a huge windfall.

IS THAT FOR REAL? The Georgia Senate unanimously passed a measure, 54-0, that would force the state to investigate whether tax incentives for certain enterprises are serving their stated purpose, The Atlanta Journal Constitution reports. It’s far from a new idea — the legislature passed a similar bill last year, only for Gov. Brian Kemp to veto it. But the prospects for this year’s measure look much better, with that lopsided vote and because Kemp’s office was involved in the writing process. The bill would allow the chairs of the House and Senate tax committees to seek economic impact studies each year on a handful of tax incentives, a power that the panel’s current leaders sound quite ready to use. Georgia forgoes hundreds of millions of dollars a year in tax breaks, with the state’s incentives for film and television production getting particular scrutiny recently.

Companies that make electric vehicles are getting more and more worried about the political battle over the tax credit for customers.

The Heritage Foundation’s Adam Michel and Stephen Moore go deeper on universal savings accounts.

Alan Viard of the American Enterprise Institute suggests a “more systematic approach to indexation.”

Woody Woodpecker has a niece named Splinter and a nephew named Knothead.

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