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Silent Sinema stresses Dems as they race to pass Manchin-blessed deal – Marianne Levine, Anthony Adragna and Burgess Everett, Politico:
[O]ne person who spoke to Sinema described her as ‘frustrated’ at not being looped in, while another person who talked to her said she was 'totally shocked.' And Republicans think she’s their only chance at stopping the deal.
‘She was not consulted,’ said Sen. John Cornyn (R-Texas), who worked with Sinema last month to pass a bipartisan gun safety bill and lambasted Manchin repeatedly over the past 24 hours. By contrast, he added, ‘I know I can trust her when she tells me something. I’m beginning to think I can’t trust other people around here when they tell me something, because they so routinely lie about it.’
Yes, Senator Cornyn, lawmakers lie.
Senate Tax, Climate, Drug Bill in Limbo as Sinema Reviews It – Zach Cohen and Erik Wasson, Bloomberg ($):
Arizona Democratic Senator Kyrsten Sinema has emerged as a potential obstacle to her party’s efforts to pass a landmark tax, climate and health-care package next month, in part due to long-standing opposition to closing the carried-interest loophole.
Senate Majority Leader Chuck Schumer and West Virginia moderate Joe Manchin announced a deal on a package of $369 billion in climate and energy spending and $313 billion in corporate tax increases, along with an increased tax rate on carried interest and increased tax-audit funding, on Wednesday. Many Democratic caucus members have embraced the agreement, but all 50 need to be on board for it to pass the Senate using a special budget process in the face of united Republican opposition.
It only takes one Democratic “no” vote for this bill to not pass the Senate. In the past, Sinema has opposed modifications to carried interest, and this bill modifies that provision. Sinema has yet to publicly say where she stands on this bill. If she is a "no" the bill does not pass.
Prior Eide Bailly coverage on this bill is here.
Assuming the Senate Democratic bill passes the upper chamber, it then moves to the House. The bill does not modify the SALT cap. And plenty of House Democrats have vowed to oppose the bill if the SALT cap is not adjusted. In fact, enough of them have vowed to do so that their opposition would kill the bill. That is, if they don’t change their minds:
The Dust Begins Settling on Reconciliation - Richard Tzul, Bloomberg ($):
A number of Democrats from high-tax states like New Jersey, California, and New York are softening their opposition to the reconciliation deal because it doesn’t include a fix they have sought for the $10,000 state and local tax deduction cap.
Rep. Tom Malinowski (D-N.J.) said that judging by the framework of the agreement he was prepared 'to wholeheartedly embrace this.'
‘No SALT, No Deal’ Becomes No More – Doug Sword, Tax Notes ($):
For more than a year, a group of New Jersey and New York Democrats had linked their support for a reconciliation bill to a rollback of the $10,000 state and local tax deduction cap. The SALT cap, a key pay-for in the Tax Cuts and Jobs Act, hit taxpayers in blue states like California, New York, and New Jersey far harder than those in red states.
But the draft bill released July 27 by Senate Majority Leader Charles E. Schumer, D-N.Y., included no SALT provisions.
That was OK, though, with Rep. Tom Malinowski, D-N.J., and House Ways and Means Committee member Thomas R. Suozzi, D-N.Y., who both said July 28 that they’re dropping their objections to a reconciliation bill that doesn’t include some sort of rollback of the SALT cap.
House Dems find a surprise unifier: Joe Manchin – Jordain Carney and Sarah Ferris, Politico. “House Democrats met Joe Manchin‘s surprise deal with a bigger twist: unity behind it.”
Not that I’m counting, but there were over 100 House Democrats who vowed to oppose the bill if their pet provision was absent from the legislation. Those provisions are missing, and yet they support it.
House Dems aren’t the only ones flipping on prior positions:
Manchin Desire to Tax Corporations Helped Resurrect Biden Agenda - Laura Litvan, Bloomberg ($). “Senator Joe Manchin said he resurrected negotiations on a tax, energy and climate bill that had formed the core of President Joe Biden’s economic agenda, in part, to target corporations that aren’t paying taxes.”
Manchin’s position change from ‘no’ taxes to ‘yes’ taxes took roughly two weeks.
Article way-back from July 15th:
Manchin says he won’t support new climate spending or tax hikes on wealthy – Tony Romm and Jeff Stein, Washington Post. “Sen. Joe Manchin III (D-W.Va.) told Democratic leaders Thursday he would not support an economic package this month that contains new spending on climate change or new tax increases targeting wealthy individuals and corporations…”
Worth noting: This isn't the first time that Joe Manchin has changed position on taxes. Eide Bailly documented his vacillation in this blog.
And now my phone won’t work! Thanks Joe!
5G Rollout Imperiled by Manchin-Schumer Tax Deal, Groups Warn - Maria Curi, Bloomberg ($):
Broadband groups are sounding the alarm over a provision in a Democratic tax, climate, and health-care package they say will hurt consumers and US competitiveness.
Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va) on Wednesday broke through months of stalled negotiations with the introduction of a reconciliation package that includes a 15% minimum tax on the amount of income corporations publicly report in their financial disclosures, also known as book income.
Biden Poised to Get Win on IRS Funding in Reconciliation Package – Naomi Jagoda, Bloomberg ($):
President Joe Biden is poised to see his goal of significantly increased IRS funding become a reality, with the funding boost forming a key portion of the reconciliation package brokered by Senate Majority Leader Charles Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va.)
It might be too early to declare a win. Details on proposal are below:
The funds, which are outside of the regular annual appropriations process, would be available to the agency until Sept. 30, 2031. The measure would provide $45.6 billion for enforcement, $25.3 billion for operations support, $3.2 billion for taxpayer services, and $4.8 billion for business systems modernization. The money is aimed at strengthening the IRS’s efforts to enforce tax laws against wealthy individuals and businesses. The agency has seen a decline in audit rates over the past decade as a result of budget cuts.
Dets on the carried interest provision:
Reconciliation Tax Reform Limited by Delicate Negotiations – Benjamin Guggenheim, Tax Notes ($):
Congressional Democrats scored a major win with the recently announced reconciliation deals, but months of fraught negotiations have pared down the slate of major tax reforms to a watered-down carried interest provision and a much-maligned minimum book tax.
What began as aspirations for monumental tax reform that amounted to roughly $2 trillion in the House-passed Build Back Better Act (H.R. 5376) has been cut down to a 15 percent minimum tax on the book income of companies and a carried interest proposal that some observers say doesn't go far enough.
The carried interest provision would extend the holding period for investors from three to five years before they can avail themselves of the long-term capital gains rate of 20 percent rather than the ordinary income tax rates of up to 37 percent.
Black Lung Benefits for Miners Included in Manchin Spending Deal - Kellie Lunney, Bloomberg ($). “Coal miners sick from black-lung disease would get a permanent income stream to help fund disability benefits under a spending deal reached by Democratic Sens. Joe Manchin and Chuck Schumer.”
What Penn Wharton Budget Model has to say about the bill:
INFLATION REDUCTION ACT: PRELIMINARY ESTIMATES OF BUDGETARY AND MACROECONOMIC EFFECTS – Penn Wharton:
Key Points
- PWBM estimates that the Inflation Reduction Act, as written, would reduce cumulative deficits by $248 billion over the budget window.
- The Act would very slightly increase inflation until 2024 and decrease inflation thereafter. These point estimates are statistically indistinguishable from zero, thereby indicating low confidence that the legislation will have any impact on inflation.
- We project no impact on GDP by 2031 and an increase in GDP of 0.2 percent by 2050. These estimates include the impact of debt and carbon reduction as well as capital and labor supply distortions from rising tax rates.
- As written, the Inflation Reduction Act contains a sunset for the Affordable Care Act (ACA) subsidies provision at the end of 2025. Under an illustrative scenario where that provision was extended indefinitely, the 10-year deficit reduction estimate falls to $89 billion. The impact on GDP remains zero through 2040.
Excess Business Loss Limitation Needs More Clarity, Tax Pros Say – Erin Slowey, Bloomberg ($). “The excess business loss limitation under Section 461(l), in effect again for the 2021 tax year after a previous repeal, applies to taxpayers who operate a business that is not a C corporation, such as pass-through entities.”
Further down the article:
If the taxpayer incurs a business-related loss in 2021 of more than $262,000 for an individual, or $524,000 for married taxpayers filing jointly, the part of that loss over the threshold can’t be deducted against the non-business-related income. Filers who exceed the threshold, which is indexed for inflation, fill out Form 461…
The limitation was created as a revenue raiser in the 2017 Tax Cuts and Jobs Act, but it was temporarily repealed under the CARES Act after December 2020. The American Rescue Plan extended the application of the limitation to sunset before January 2027.
House Sends $52 Billion Chip Bill to Biden for His Signature – Daniel Flatley and Erik Wasson, Bloomberg ($). “The US House of Representatives passed a bill that includes $52 billion in grants and incentives for domestic semiconductor manufacturing, sending it to President Joe Biden for his signature and delivering a win for his administration more than a year after legislation was first introduced in Congress.”
‘This legislation is a major victory for American families and the American economy,’ House Speaker Nancy Pelosi said in a statement before the vote. ‘Once enacted, the Chips and Science Act will bolster our nation’s production of semiconductor chips -- reinvigorating American manufacturing and creating nearly 100,000 good-paying, union jobs.’
IRS Statement on balance due notices – IRS:
The IRS is aware that some payments made for 2021 tax returns have not been correctly applied to joint taxpayer accounts, and these taxpayers are receiving erroneous balance due notices (CP-14 notices) or notices showing the incorrect amount.
Who is affected: Generally, these are payments made by the spouse (second taxpayer listed) on a married filing jointly return submitted through their Online Account. Some other taxpayers may also be affected outside of this group.
No immediate action or phone call needed: Taxpayers who receive a notice but paid the tax they owed in full and on time, electronically or by check, should not respond to the notice at this time.
Montana Tax Agency Must Face Ex-Billionaire’s Bankruptcy Suit - Alex Wolf, Bloomberg ($). “The Montana Department of Revenue must face a bankruptcy court lawsuit over its role in pursuing disputed creditor claims against former billionaire Timothy Blixseth, a judge ruled, finding the state waived its constitutional right to sovereign immunity.”
Idaho Tax Commission Denies Taxpayers’ Capital Gain Deduction Claim, Upholds Individual Income Tax Deficiency Determination – Bloomberg ($). “The Idaho State Tax Commission March 14 denied Taxpayers’ claim for a capital gain deduction and upheld the Income Tax Audit Bureau’s notice of deficiency determination for individual income tax purposes. The audit bureau reviewed Taxpayers’ income tax returns and determined that Taxpayers underreported their federal capital gain. The audit bureau issued a notice of deficiency determination and Taxpayers protested…”
Pennsylvania: Philadelphia Mayor Signs Law Modifying Parameters of Property Tax Exemptions for Longtime Residential Owner-Occupants – Bloomberg ($). “The Philadelphia Mayor June 27 signed a law modifying parameters of property tax exemptions for longtime residential owner-occupants…”
Wisconsin DOR Publishes August Tax Professionals Calendar Providing Income, Withholding, Sales, Excise Tax Due Dates – Bloomberg ($). “The Wisconsin Department of Revenue July 1 published the August tax professionals calendar providing corporate income, individual income, withholding, sales and use, and excise tax filing and payment due dates.”
From the ‘I’m outta here’ file:
Quarterly Publication of Individuals, Who Have Chosen To Expatriate – Federal Register:
This listing contains the name of each individual losing United States citizenship (within the meaning of section 877(a) or 877A) with respect to whom the Secretary received information during the quarter ending June 30, 2022.
It’s National Chicken Wing Day and National Lasagna Day! Hold my calls! Feasting time is upon us!