St. Louis wins U.S. approval to explore airport privatization
WASHINGTON The U.S. Transportation Department said on Monday it has granted preliminary approval to St. Louis to explore putting its city-owned airport under private management.
WASHINGTON The Supreme Court on Wednesday heard arguments in a dispute between U.S. utility PPL Corp and the Internal Revenue Service that could influence U.S. multinational corporations' scope for claiming credits to offset overseas tax payments.
In a rare instance of the high court tackling a tax case, Pennsylvania-based PPL argued it is entitled to claim $39 million in U.S. foreign tax credits against a 1997 British windfall tax.
Like PPL, at least two other U.S. utilities -- Entergy Corp and American Electric Power Co -- were hit by the windfall tax after they acquired British utility companies that were privatized in the 1980s and 1990s.
The IRS has rejected the companies' foreign tax credit claims, arguing that the windfall tax did not meet the definition of a tax for which credits can be claimed.
Foreign tax credits are normally available to U.S. companies so they do not pay the same tax twice at home and abroad.
Two appellate courts had offered different opinions in the dispute, leading the nine-member Supreme Court to intervene to settle the matter.
The dispute hinges on a fairly fine distinction between value and income that attorneys for both sides argued over.
The UK windfall tax is "not an income tax, in the U.S. sense, and it should not be entitled to a credit," said U.S. Assistant Solicitor General Ann O'Connell, arguing for the IRS.
PPL, backed by the U.S. Chamber of Commerce and the conservative Cato Institute and Goldwater Institute, argued that the windfall tax should be eligible for a foreign tax credit.
Paul Clement, a regular advocate before the Supreme Court and a partner at law firm Bancroft PLLC, argued for PPL. He said the windfall tax "looks exactly like a U.S. excess profits tax. ... It's a tax on income by our eyes."
Former British Prime Minister Margaret Thatcher privatized many state-owned businesses in the 1980s. One of them, South Western Electricity PLC, was partially acquired by PPL.
After Thatcher stepped down, her political rivals in the British Labour Party slapped windfall taxes on acquirers they thought had paid too little for former state enterprises.
PPL's British utility was hit in 1997 with a windfall tax bill of about $140 million. The company paid it, and PPL claimed a U.S. foreign tax credit against it. The IRS disallowed the claim, in part saying the tax was politically influenced.
At issue before the Supreme Court is whether the windfall tax constituted a tax on income or on some other measure of the value of South Western Electricity unrelated to income.
The equation used to calculate the windfall tax in 1997 seemed to have been derived from income, said Justice Stephen Breyer, one of the most vigorous questioners during the hour-long session. "So there is nothing there but income."
Breyer also said that the Supreme Court should take into account a 2010 judgment won by PPL in U.S. Tax Court, citing that court's expertise in tax matters in comparison to other courts. Breyer did not suggest by his question how he might vote. There was no indication from the majority how the case might be decided.
A Supreme Court opinion is expected by June.
U.S. multinational companies claimed $93.5 billion in foreign tax credits in 2009, the most recent IRS figure.
The case is No. 12-43 PPL Corporation and Subsidiaries v. Commissioner of Internal Revenue.
(Editing by Kevin Drawbaugh and Leslie Adler)
Five people, including a 2-year-old toddler and two other children, died on Sunday in a house fire in the New York City borough of Queens, the city's deadliest such blaze in two years, Mayor Bill de Blasio said.