Tax Update Blog

Yellen becomes first woman Treasury Secretary as lawmakers prepare to roll out tax legislation

By Mel Schwarz, J.D., CPA and Jay Heflin

The Senate on Monday voted 84 to 15 to confirm former Federal Reserve Chair Janet Yellen to be the next Treasury Secretary. Thirty-four Republicans and all 50 Democrats supported her confirmation. Senator Marco Rubio (R-Fla.) did not vote.

  • Yellen is the first female Treasury Secretary, after accomplishing the same feat as chair of the Federal Reserve under the Obama administration.
  • The Senate Finance Committee on January 22, 2021, unanimously approved her nomination.  
    • During her confirmation hearing, Yellen repeatedly told lawmakers that now it not the time for tax increases.
    • “The focus right now is providing relief and on helping families keep a roof over their heads and food on the table, and not on raising taxes,” she said.

Yellen made it clear that tax increases are currently not a top priority for the Biden administration. However, as the pandemic comes under control and the economy improves, the subject of tax increases will likely be raised more frequently by lawmakers on Capitol Hill. 

Still, advancing legislation through Congress that includes tax increases will be difficult.  The partisan split in the Senate is evenly divided. This means that, barring the use of a budgetary measure, it will take 60 votes to pass a bill out of the Senate that increases taxes.  This would require at least ten Republican Senators to join all Senate Democrats in support of such legislation, which is highly unlikely. Also, certain Senate Democrats, like Joe Manchin (W.Va.) and Jon Tester (Mont.), may not support legislation that increases taxes.

In developments regarding tax legislation, House Representatives Susan DelBene (D-Wash.) and Rosa DeLauro (D-Conn.) are expected to introduce the American Family Act that seeks to advance President Biden’s agenda on expanding the Child Tax Credit.

  • The bill increases to the Child Tax Credit to $3,000 ($3,600 for a child under age 6) for each child 17 and younger. The credit would also be fully refundable.

This same bill was introduced in 2019 and went nowhere in the prior Congress. At the time, the tax-writing committees in both chambers never took up the measure. It was also never subject of a floor vote in either chamber.

President Biden’s support for the bill could improve its chances for passage in the House. However, in the Senate, as stated above (barring the use of a budgetary measure), it will take ten Senate Republicans to support the measure for it to pass that chamber, which is unlikely if the 2019 bill is any indication on GOP support for it. No Republican in the Senate or House supported the bill that year.

We will continue to monitor developments on these and other tax-related issues. If you or your clients would like to discuss this or other issues, please contact Mel Schwarz or Jay Heflin.

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