Bill Overview
Title: Support Ukraine Through Our Tax Code Act
Description: This bill denies the foreign tax credit and the tax deduction for income, war profits, and excess profits taxes paid to Russia and Belarus. The bill also denies certain other tax benefits in connection with the invasion of Ukraine, including any tax treaty benefits and exemptions from withholding requirements. The bill suspends tax information exchanges for Russia and Belarus under a tax treaty or an intergovernmental agreement during the period of the Ukraine invasion.
Sponsors: Sen. Wyden, Ron [D-OR]
Target Audience
Population: US taxpayers and businesses with financial ties to Russia and Belarus
Estimated Size: 500000
- The bill affects US taxpayers and businesses with ties to Russia and Belarus due to denied tax credits and deductions.
- It will impact US taxpayers who were previously claiming foreign tax credits for taxes paid to Russia and Belarus.
- Businesses that have operations or income within Russia and Belarus and rely on tax deductions will be impacted.
- This will discourage US entities from conducting business with or within Russia and Belarus during the Ukraine conflict era.
Reasoning
- The policy targets a very specific subset of the American population, namely those with financial ties to Russia and Belarus. This includes businesses and individuals claiming foreign tax credits or deductions related to these countries.
- Cantril wellbeing scores reflect individuals' subjective evaluation of their current and future lives. The impact of losing tax benefits can significantly increase stress and reduce perceived wellbeing for those affected.
- The majority of Americans are unlikely to be directly affected by this policy, as financial ties to Russia and Belarus are not common among the general public.
- The budget limitations of the policy suggest it is aimed at a relatively small group directly impacted, given the estimate of 500,000 entities, which include individuals and businesses together.
- Our simulated interviews focus on capturing both directly impacted individuals/businesses and some individuals outside of this impact group for a broader perspective.
Simulated Interviews
Owner of a Financial Consulting Firm (New York, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 2/20
Statement of Opinion:
- I think this policy will discourage businesses from engaging with Russia, which aligns with my firm's current advice.
- Losing foreign tax credits will definitely impact some of my clients' bottom lines.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
CEO of a Manufacturing Company (Chicago, IL)
Age: 52 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 15.0 years
Commonness: 1/20
Statement of Opinion:
- The policy severely impacts our tax strategy for the next fiscal year.
- We might need to recalibrate our international operations which could incur costs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 8 |
| Year 2 | 5 | 8 |
| Year 3 | 6 | 8 |
| Year 5 | 6 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 8 | 8 |
Software Engineer (San Francisco, CA)
Age: 38 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- This policy doesn't affect me directly.
- I support any measure that helps Ukraine, even if it's indirectly through tax policy.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Freelance Consultant (Houston, TX)
Age: 29 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 4/20
Statement of Opinion:
- My direct financial impact is minimal, but my client's tax bills will rise.
- This could affect my consulting rates if my client's business declines.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 9 | 9 |
Retired (Miami, FL)
Age: 66 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- There's a level of uncertainty about the returns on my investments in Russia due to these tax changes.
- It might push me towards reshuffling some of the portfolio.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 8 |
| Year 2 | 6 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Tax Attorney (Atlanta, GA)
Age: 34 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 7.0 years
Commonness: 3/20
Statement of Opinion:
- Potentially less business from clients seeking to maintain Russian business interests.
- This change requires revisiting several existing tax strategies held by my clients.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 8 |
| Year 20 | 8 | 8 |
Tech Entrepreneur (Los Angeles, CA)
Age: 41 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 3.0 years
Commonness: 4/20
Statement of Opinion:
- Not directly affected tax-wise, but investor relationships may be strained.
- Could hinder future expansion plans into Eastern Europe.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 9 | 9 |
Graduate Student (Seattle, WA)
Age: 25 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 6/20
Statement of Opinion:
- The policy could affect the sector-specific data I study, but not my personal finances.
- Useful case study for future research on how policies can impact international trade partners.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 9 | 9 |
Professor of International Relations (Boston, MA)
Age: 50 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 3/20
Statement of Opinion:
- It provides a new dynamic to my teaching material.
- As an academic, I don't feel a direct economic impact, but it's significant for the area of study.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Accountant (San Diego, CA)
Age: 59 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 1.0 years
Commonness: 4/20
Statement of Opinion:
- I would need to update my knowledge to advise clients who might be affected.
- This may lead to a slight increase in workload temporarily.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 9 |
| Year 2 | 8 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Cost Estimates
Year 1: $50000000 (Low: $30000000, High: $70000000)
Year 2: $52000000 (Low: $32000000, High: $72000000)
Year 3: $54000000 (Low: $34000000, High: $74000000)
Year 5: $58000000 (Low: $38000000, High: $78000000)
Year 10: $66000000 (Low: $46000000, High: $86000000)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The immediate impact is an increase in tax revenue due to denied credits; however, potential long-term shifts in business operations could moderate these gains.
- The temporary nature of the policy related to the invasion period makes long-term revenue predictions challenging.
- Understanding the balance between geopolitical goals and economic impacts on US businesses is essential.