SIFMA Offers Views on Tax Reform

SIFMA released a paper summarizing its stance on several tax policy issues that might be taken up by the Senate Finance Committee over the next year. On the domestic side, the paper raises concerns about the unintended consequences of the 7-basis-point "financial fee" on certain covered liabilities of financial firms proposed in the Obama Administration's FY 2016 budget. SIFMA opposes various proposals that would limit the deductibility of interest expenses for corporate taxpayers, noting that any bias that favors investments in debt over equity should be addressed comprehensively rather than with piecemeal targeted approaches. SIFMA also reiterated its concerns about proposed reforms that would require investors to mark their derivatives to market and use the average basis method to measure their gain. Additionally, the summary addressed the federal tax exemption for municipal bond interest, tax incentives for retirement savings, the tax classification of independent contractors, tax rates for capital gains and dividends and a domestic financial transaction tax.

With respect to comprehensive international tax reform, SIFMA emphasized the need for a permanent active financing exemption. SIFMA underscored its view that "active financial businesses should be treated the same as active manufacturing businesses in order to allow U.S.-based multinationals to compete abroad." SIFMA also supported a fixed dividend exemption for most active foreign income (endorsing the 95% exemption proposed in the Camp and Enzi tax reform bills), thin capitalization rules applicable to net interest expense and a legislative dividend exemption for active business conducted through a U.S. company's foreign branch.

SIFMA includes links to advocacy documents that address the issues set forth in the summary.

See: SIFMA's Views on Tax Reform.