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Senate nears pivotal vote on bipartisan infrastructure deal that's still unwritten – Marianne Levine and Burgess Everett, Politico. “Senate Majority Leader Chuck Schumer will force a vote next Wednesday on advancing the bipartisan infrastructure package, a hardball tactic aimed at moving President Joe Biden’s domestic agenda forward before the August recess... The fate of Wednesday’s vote, however, remains uncertain. Although Democrats expressed optimism about the timetable, Republicans were less sure. At the moment, it’s not clear whether 10 Republicans will vote to advance the bipartisan bill.”
When asked whether he was confident the bipartisan group would meet Schumer’s deadline, Sen. Mike Rounds (R-S.D.), a member of the group negotiating the bipartisan framework, had a blunt response: ‘No.’
‘We’re not done yet,’ Rounds said. ‘I don’t think we’re going to have any artificial deadlines. I think we’re going to do our best to get done in an expeditious fashion, but if we were successful in coming to an agreement, it’d be great to have it done before’ August recess.
GOP fumes over Schumer hardball strategy – Alexander Bolton, The Hill. “Republicans are bristling over Senate Majority Leader Charles Schumer’s (D-N.Y.) hardball strategy to try to force them to finalize a bipartisan infrastructure deal in a matter of days. Republican negotiators and members of leadership believe Schumer is trying to jam them and warn that they won’t vote to start debate Wednesday even on a shell bill that the Democratic leader is intending to use as a vehicle for the bipartisan deal once it’s finalized.”
‘It’s a bad idea if the bill’s not ready. ... Our guys aren’t going to vote for a bill they haven’t seen,’ said Sen. John Thune (S.D.), the No. 2 Senate Republican.
Reconciliation bill may limit GOP support for infrastructure – Jessica Wehrman and Joseph Morton, Roll Call. “The $3.5 trillion reconciliation agreement reached late Tuesday by Senate Democrats and the White House has renewed the debate over whether passing it alongside the bipartisan infrastructure plan agreed to last month could tank the bipartisan plan. Key Senate Republicans said Wednesday the reconciliation agreement, which would push through some of President Joe Biden’s domestic priorities over GOP objections, could imperil Republican support for the bipartisan infrastructure plan, which includes $579 billion in new spending."
‘It muddies the picture,’ said Senate Minority Whip John Thune, R-S.D. ‘I think it's a distraction from the infrastructure bill, which was building, you know, good bipartisan support,’ Thune said, adding that the two bills ‘are going to have to ride together,’ which ‘certainly complicates any effort to secure Republican votes for the infrastructure bill itself.’
Catalog this in the ‘I’ll believe it when I see it’ file:
Pigs fly: McConnell weighs giving Biden a bipartisan win – Burgess Everett and Marianne Levine, Politico. “Something strange is happening in Washington: Mitch McConnell might go along with a central piece of Joe Biden’s agenda. The self-appointed ‘Grim Reaper’ of the Senate, a minority leader who said just two months ago that ‘100% of my focus is on standing up to this administration,’ has been remarkably circumspect about the Senate’s bipartisan infrastructure deal. He’s privately telling his members to separate that effort from Democrats’ party-line $3.5 trillion spending plan and publicly observed there’s a ‘decent’ chance for its success.”
Let’s look at the bigger picture: Senator McConnell will allow at least ten Senate Republicans to support the infrastructure bill – while its failure could help him win back the majority and reassume the helm of that chamber. Not sure if McConnell is that much of a Biden-enthusiast.
The vulnerable Democrat who could get reelected by an infrastructure deal – Burgess Everett, Politico. “Maggie Hassan toiled during the Trump era as a quiet, minority-party senator. Now she’s close to a bipartisan infrastructure deal that seems scripted for her. The reserved New Hampshire Democrat is preparing for a possible challenge from Chris Sununu, a popular GOP governor whom Washington Republicans are wooing both privately and publicly. And while she can’t control whether Sununu runs against her, she’s in prime position to define herself in the coming weeks with the exact sort of bipartisan breakthrough she’s been talking about for nearly six years."
‘It is important to people that we work together. I also think it is important to get results. I do not think those two things are mutually exclusive,’ Hassan said in an interview. ‘What I am hearing about from people is, ‘Get the infrastructure bill done.’
Yes, the failure of one bill can kill a political career. Will it? Who knows. But Hassan’s chance for re-election is better if the infrastructure bill passes the Senate. Also, it only takes one seat change to shift the power in the Senate from Democrat to Republican.
Democrats Roll Out $3.5 Trillion Budget to Fulfill Biden’s Broad Agenda – Jonathan Weisman, Emily Cochrane and Jime Tankersley, New York Times. Buried in the article is news on 199A:
Senator Ron Wyden of Oregon, the chairman of the Finance Committee, said that he was preparing to overhaul a deduction for companies not organized as corporations, like many small businesses and law firms. Such a change would cut small businesses’ taxes but raise additional revenues from wealthy business owners.
…
The budget measure is expected to include language prohibiting tax increases on small businesses, farms and people making less than $400,000, fulfilling a promise Mr. Biden has maintained throughout the negotiations. Asked on Wednesday whether the proposed carbon tariff would violate that pledge, Mr. Wyden replied, 'We’ve not heard that argument.'
In reconciliation, Democrats eye border tax for carbon – Joseph Morton and Paul Krawzak, Roll Call. “Senate Democrats are taking initial steps toward a major policy shift of enacting fees on imported goods from countries with weaker limits on carbon emissions than the U.S. A summary released Wednesday of the coming budget resolution said it will include ‘methane reduction and polluter import fees.’ Such import fees could help pay for some of the trillions of dollars worth of spending expected in the Democratic budget reconciliation package, which could be forced through without Republican support.”
SALT Relief May Win Inclusion in Senate Democrats Budget Package – Colin Wilhelm and Laura Davison, Bloomberg ($). “Democrats may include at least a partial expansion of the state and local income tax deduction in the $3.5 trillion budget outline that Senate Democrats agreed upon earlier this week, according to one of the lead senators fighting to restore the full deduction. The so-called SALT deduction was capped at $10,000 in the Republican tax cut act of 2017, and lawmakers from high-tax states have been battling to include an expansion in the longer-term fiscal packages being debated in Congress this year.”
House Democrats might not accept the Senate budget written as-is:
Pelosi Says House Will Tweak Senate’s $3.5 Trillion Budget Plan – Billy House, Bloomberg ($). “Speaker Nancy Pelosi on Thursday said the House will “realign” some of the priorities in a $3.5 trillion Senate Democrat budget blueprint to expand the proposal’s social and environmental programs. ‘Many of the priorities of the House are already in the bill. The question is the top line -- how we stay under the top line, as we perhaps realign some of those priorities,’ Pelosi said at an event Thursday in Los Angeles."
Progressives in the House, whose votes Pelosi needs to pass the budget measure that carries the bulk of President Joe Biden’s agenda, are pressing to add more climate and social spending provisions to the outline developed by Senate Budget Committee Democrats. But that risks the support from moderate Democrats in both chambers. The party will have to be united to overcome solid Republican opposition.
Biden hails 'transformative' child tax credit payments – Morgan Chalfant, The Hill. “President Biden on Thursday hailed the expanded child tax credit as a “transformative” achievement that would offer needed relief for families and made the case for Congress to further extend the payments in forthcoming legislation. In remarks from the White House, Biden said the payments would spur the largest one-year decrease in child poverty in the United States and outlined how eligible families can expect to receive payments or sign up to receive them. Experts say that the tax credit could slash child poverty in half.”
Child tax credits roll out amid tech woes, opt-out concerns – Laura Weiss, Roll Call. “As Democrats tout the start Thursday of advance monthly payments of a tax credit for parents of children up to age 18, some advocates for taxpayers are concerned about issues of accessibility and confusion around the program intended to reduce child poverty. After receiving a series of pandemic relief checks already, recipients may not realize that the new monthly payments they’ll get through the end of this year mean a lower refund or bigger tax bill in 2022. And Internal Revenue Service tools are posing problems for households, tax experts say, including difficulty in navigating the program website on a smartphone, which is also required if a taxpayer wants to opt out.”
Child Tax Credit Is 2021 Boon for Dems, but Election-Year Risk – Doug Sword, Tax Notes ($). “Democrats across the country crowed about the $15 billion in child tax credit checks that began flowing into bank accounts July 15, although the focus on the payments boosts pressure on the party to extend the one-year benefit as part of a massive reconciliation bill.”
[T]he higher benefit expires this year, and the credit snaps back to $2,000 per child in 2022 and $1,000 in 2026. Democrats point to academic studies claiming the one-year expansion of the tax credit will pull 4 million children out of poverty, cutting the country’s child poverty rate a record 50 percent in 2021.
But that means when the credit returns to its 2020 level next year, the child poverty rate would increase 100 percent, which Senate Finance Committee member Michael F. Bennet, D-Colo., said would be another record, though an unwanted one.
IRS Moving Forward With Fresno Facility Closure Amid Backlogs – Allyson Versprille, Bloomberg ($). “The IRS is proceeding with the planned closure of a large tax return processing site in California at the end of September despite the agency’s struggle to sift through backlogs caused by the coronavirus pandemic. The looming closure of the Fresno site, announced in 2016, is part of a broader plan initiated more than a decade ago to consolidate the number of facilities processing paper tax returns down to two by the end of fiscal year 2024."
Accounting Methods Are Hot Topics for 2021 Tax Planning – Ryan Vaughan and Andrew Kosoy, Bloomberg Tax ($). “The tumultuous 2020 tax year, combined with expected tax increases in the future, make 2021 a key year for tax planning. Ryan Vaughan and Andrew Kosoy of Mazars outline common accounting methods and considerations for business taxpayers regarding such methods.”
New Research Suggests Estimates of Wealth Inequality Likely Overstated – Alex Durante, Tax Foundation. “Some of President Biden’s tax proposals, such as taxing unrealized capital gains at death, are specifically aimed at reducing wealth inequality. Indeed, it is commonly asserted that wealth inequality is too high and rapidly growing over time. However, new research from Federal Reserve Bank of Boston economists suggests wealth inequality has grown less than previously estimated and that shares of wealth held by top earners drops significantly when accounting for sources of lower- and middle-class wealth that are often overlooked.”
SALT Cap Workaround Blocked by Michigan Governor’s Veto – Sam McQuillan, Bloomberg ($). “Michigan Gov. Gretchen Whitmer vetoed a bill that would have given small businesses a tax break that is already available in 20 other states, despite strong bipartisan support for the measure. The bill (H.B. 4288) would have allowed some pass-through businesses, where income normally flows through to individual owners to be taxed, to pay an entity-level tax instead. The change, which would give the individuals a state tax credit, would have helped those individuals circumvent the federal $10,000 cap on deductions for state and local taxes in exchange for a tax credit.”
Iowa Department of Inspections and Appeals Finds Divorce Decree Didn’t Absolve Taxpayer From Tax Liability – Bloomberg ($). “The Iowa Department of Inspections and Appeals, Division of Administrative Hearings (department) March 19 affirmed the Department of Revenue’s (DOR) modified individual income tax assessment. Taxpayer and his former spouse filed a combined return as married filing separately. The DOR found Taxpayer didn’t substantiate the claimed out-of-state credit and issued an assessment notice. Later, the DOR modified the assessment. After his divorce, Taxpayer inquired whether a divorce decree absolved him of liability for the due tax."
Kansas DOR Issues Notice on Privilege Tax Deduction for Interest Income From Agricultural, Residential Loans – Bloomberg ($). “The Kansas Department of Revenue July 13 issued a notice on a privilege tax deduction for interest income from certain qualified agricultural real estate and single-family residence loans for excise tax purposes.”
Extra Indiana state revenue means a tax credit for your 2022 tax filing – Briana Brownlee, Wane.com. “The state of Indiana will provide a refundable tax credit to all tax filing Hoosiers. State Auditor Tera Klutz, CPA (Certified Public Accountant) announced Wednesday that Indiana closed the 2021 fiscal year with reserves of $3.9 billion. Of the total, $1.1 billion of the funding will be transferred and split between retirement funding and a refundable income tax credit for Hoosier taxpayers.”
‘It’s pretty unique for a state to send money back to their residents in a form of a tax refund. Not only that, we were able to pay a billion dollars down on debt in this last budget and to be able to take another $545 million and pay the additional debt down. While other states continue to add debt, this is going to add more flexibility to the budget in future years,’ said Rep. Chris Judy (R-Fort Wayne). ‘It’s a very unique and exciting time in the state of Indiana. Looking forward I hope that we can cut some taxes.’
States Respond to Strong Fiscal Health with Income Tax Reforms – Katherine Loughead and Jared Walczak, Tax Foundation. “It is not unusual for a theme to emerge from state legislative sessions, as each state responds to similar economic or national trends. From the perspective of a year ago, however, it is remarkable that the dominant tax policy trend in the states during their 2021 legislative sessions—concluded now, in many states—was income tax relief. With burgeoning revenues and the prospect of workplace flexibility greatly enhancing the salience of tax competition, 11 states have cut individual or corporate income taxes—or both—thus far in 2021, and there is every reason to believe that more states will follow, if not this year, then undoubtedly in 2022.”
Ireland cannot be part of current global tax reform proposals, Donohoe says- Vivienne Clarke, The Irish Times. “Minister for Finance Paschal Donohoe has said that Ireland cannot be part of an international agreement on a minimum global tax rate of 15 per cent. ‘What is on the table is an agreement that we cannot be part of,’ he told RTÉ radio’s Morning Ireland. However, Mr Donohoe said he was committed to seeing if an agreement could be reached at some stage, just not now.”
Beer Me Constitution State! Connecticut next year will cut taxes on beer by 16.7% to stimulate job growth. The state’s craft brewery industry has been an employment boon and state leaders want to keep that mojo going.