April 5, 2021
Some Democrats Cool to Biden’s Plan to Boost Corporate Tax Rate – Andrew Duehren, Wall Street Journal. “ President Biden’s proposed tax increases on corporations as part of a $2.3 trillion infrastructure plan have drawn a skeptical reaction from some Democrats, who instead favor borrowing money to pay for the investments or raising other levies, like the gasoline tax, to do so.”
A 28% Tax Rate Will Cost Companies, but Not Equally – Richard Rubin and Theo Francis, Wall Street Journal. “Corporations had ample warning—an entire presidential campaign—that tax increases were coming. But that doesn’t take the sting out of President Biden’s proposal to raise the corporate tax rate to 28% from 21%. A tax increase, which would take effect as early as January 2022, would cut into corporate profits as the economy recovers, and the Biden plan could reduce the earnings of companies in the S&P 500 by at least 10%, said accounting analyst Dave Zion of the Zion Research Group […] Retailers with heavily domestic income would ordinarily be likely to feel a tax rate rise the most, but they’ve already been hit hard by the pandemic as well as the broader rise of e-commerce."
Republican lawmakers have signaled they won’t support an increase and resistance from moderate Democrats might make a hike to a 25% rate more realistic than 28%, Washington policy analysts say.
Exclusive: Janet Yellen to call for global minimum tax rate – Hans Nichols, Axios. “Janet Yellen will use her first major address as Treasury secretary to argue for a global minimum corporate tax rate, Axios has learned, as she makes the case for President Biden’s plan to raise U.S. corporate taxes to fund his $2 trillion+ infrastructure plan."
The Memo: Biden's bet on taxes – Niall Stanage, The Hill. “President Biden and the Democrats are making a big bet that the politics of taxation have changed. In their view, the American public — frustrated by the economic impact of COVID-19 and years of stagnation for the middle class — is willing to countenance higher taxes, at least on corporations and the wealthy.”
The president and his party are also betting that any proposed shift in taxation will not enfeeble the post-pandemic recovery.
Democratic governors urge Biden to remove SALT cap – Celine Castronuovo, The Hill. “A group of seven Democratic governors is adding to calls within the party urging President Biden to repeal the Trump-era cap on state and local tax (SALT) deductions.”
If Congress Wants the IRS To Collect More Tax from The Rich, It Needs to Pass Better Laws – Steven Rosenthal, Tax Policy Center. “[…] [T] he real solution to tax avoidance and even evasion is better tax law. If Congress enacted simpler laws and required additional reporting, the IRS would do a better job collecting taxes owed by businesses and investors.”
55 big, profitable U.S. companies paid no tax in 2020 – Kay Bell, Don’t Mess with Taxes. “[…] The Washington, D.C. nonprofit found that 55 of the largest U.S. companies paid nothing in federal income taxes last year. The $0 tax payments to Uncle Sam came even though the businesses, as a group, reported almost $40.5 billion in pretax profits, according to the liberal-leaning organization.”
Infrastructure Proposal Is Popular, Biden Says, Defending Tax Plan – Andrew Restuccia and Tarini Parti, Wall Street Journal. “President Biden urged GOP lawmakers to participate in negotiations over his $2.3 trillion infrastructure plan, warning of a political backlash from Republican voters if they oppose the measure and defending the administration’s proposed tax increases on corporations. ‘Debate is welcome, compromise is inevitable, changes in my plan are certain, but inaction is not an option,’ Mr. Biden said Friday at the White House.”
CBO Study: Benefits of Biden’s $2 Trillion Infrastructure Plan Won’t Outweigh $2 Trillion Tax Hike – Scott Hodge, Tax Foundation. “President Joe Biden is preparing to roll out an eight-year, $2 trillion infrastructure plan paid for by $2 trillion in tax increases on U.S. corporations spread out over 15 years. Setting aside the questionable mix of math and years, the premise is that the economic benefits of government infrastructure spending outweigh the economic harm from an increase in corporate taxes. The Biden administration has yet to make that case, and economic studies—including those by the Congressional Budget Office (CBO)—indicate that the benefits of the Biden infrastructure plan won’t outweigh the cost to the economy of the tax increases.”
The Macroeconomic Consequences of the American Jobs Plan – Mark Zandi and Bernard Yaros, Moody’s Analytics. “President Biden’s American Jobs Plan is a large program that would touch nearly every community in America. It addresses a long-developing problem with our inadequate public infrastructure that is widely understood to be an impediment to the competitiveness of our businesses, economic growth, and the well-being of American households. The plan calls for higher corporate taxes to help pay for the increased infrastructure and the government will experience larger budget deficits, but the economic benefits of the plan substantially outweigh these negatives. Passage of the American Jobs Plan would ensure that the economy quickly returns to full employment, and the plan would provide a meaningful boost to long-term growth.”
Join the Taxpayer Advocacy Panel and help improve the IRS; apply by May 14 – press release, IRS. “The Internal Revenue Service today announced it is seeking civic-minded volunteers to serve on the Taxpayer Advocacy Panel (TAP). The TAP is a federal advisory committee that listens to taxpayers, identifies major taxpayer concerns and makes recommendations for improving IRS service and customer satisfaction. Taxpayers interested in serving on the panel may apply between April 5 and May 14.”
State Revenue Forecasts Before COVID-19 and Directions Forward – Lucy Dadayan, Daily Deduction. “The global pandemic caused by the novel coronavirus outbreak will dramatically affect state tax revenues over the next months and possibly years. This brief summarizes how state revenue forecasters viewed their state economies before the COVID-19 pandemic, as documented in governors’ proposed fiscal year 2021 budgets. Although forecasters are now radically revising those projections, knowing the prior trajectories of personal income, corporate income, and sales tax collections is useful for planning purposes. This brief also identifies forecast inputs to watch in the coming months for signs of the magnitude and breadth of state budget turbulence.”
Biden calls out Amazon for not paying federal income tax: ‘I’m going to put an end to that’ – Taylor Soper, GeekWire. “The debate over how much Amazon pays in federal income tax is heating up yet again. President Joe Biden called out the Seattle tech giant twice during a speech Wednesday outlining his new infrastructure spending plan.”
He cited a 2019 analysis highlighting 91 Fortune 500 companies that didn’t pay federal income tax in 2018 — ‘including Amazon,’ Biden noted, while not mentioning any other companies. Biden noted that companies ‘use various loopholes so they pay not a single solitary penny in federal income tax.’ Later he said: ‘A fireman, a teacher paying 22% — Amazon and 90 other major corporations paying zero in federal taxes? I’m going to put an end to that.’
IRS provides guidance for employers claiming the Employee Retention Credit for first two quarters of 2021 – press release, IRS. “The Internal Revenue Service today issued guidance for employers claiming the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act).”
Arizonans Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike – John Kartch, Americans for Tax Reform. “If President Biden and Sens. Kyrsten Sinema and Mark Kelly raise the corporate tax rate, Arizona households and businesses will get stuck with higher utility bills. Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%. Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.”
An Employee Home Office Expense Deduction for the New Normal – Samuel Brunson and Christian Johnson, Tax Notes ($). “In this article, Brunson and Johnson argue for a limited above-the-line deduction to cover the costs of working from home and suggest that if Congress expands the deduction for unreimbursed home office expenses, it reconsider the requirements.”
What's Next in International Tax Policy: Transcript – Barbara Angus, Cara Griffith, Lee Sheppard, Louise Weingrod, Tax Notes ($). “With the Biden administration indicating a new openness to the OECD’s two-pillar approach to taxing the digital economy, international taxation could soon face a shakeup. In a March 17 “Taxing Issues” webinar, Barbara Angus, global tax policy leader at EY, and Louise Weingrod, vice president for global taxation at Johnson & Johnson, joined Tax Notes contributing editor Lee A. Sheppard to explore the OECD plan’s implications for the G-20, developing countries, and business.”
IRS Expands Guidance on Employee Retention Credit Extension – Kelley Taylor, Tax Notes ($). “The IRS has expanded on previous guidance on the employee retention credit, addressing changes Congress made to the credit at the end of 2020 that apply to the first two quarters of 2021.”
It’s official: Give it your all today! National Go For Broke Day derives from soldiers giving their all during World War II.
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.