Biden offers tax concession in infrastructure talks with key Republican – Seung Min Kim and Tony Romm, Washington Post. “President Biden signaled at a private meeting on Wednesday that he would be open to significant revisions on the size of his infrastructure package and how it would be paid for in order win Republican backing, outlining a plan for about $1 trillion in new spending financed through tax changes that do not appear to raise the top corporate rate.”
At issue is the component of Biden’s original infrastructure plan that would raise the corporate tax rate from 21 percent to 28 percent, unwinding the tax cuts the GOP adopted in 2017.
In its place, Biden emphasized a different part of his proposal, which would amount to a new, minimum corporate tax of 15 percent. This change would seek to take aim at dozens of profitable U.S. corporations that pay little to nothing to the federal government annually, the source said. The White House also proposed stepping up enforcement on corporations and wealthy earners who rely on loopholes to lessen their tax burdens, according to the person familiar with the talks.
Anyone closely following the Biden/GOP negotiations on the American Jobs Plan, aka, Biden's infrastructure plan, knows that there are two minimum tax proposals in the Jobs Plan: a global minimum tax and a minimum tax on book earnings.
White House Press Secretary Jen Psaki confirmed on Thursday that the White House is looking to include a minimum tax on book earnings. The reason is because it would not violate Republicans' opposition to undoing the Tax Cut and Jobs Act that was enacted in 2017.
A 15% minimum tax on book earnings would not raise as much revenue as increasing the corporate income tax rate from 21% to 28%. It misses the mark by roughly $700 billion over ten years, according to the Treasury Department.
Closing this shortfall would apparently be cracking down on corporate and wealthy individual tax cheats, which was originally included in the American Families Plan. Improving compliance would raise $778 billion over ten years, according to the Treasury Department. Congressional Republicans could oppose increased compliance efforts as it harkens back to the IRS targeting conservative groups under the Obama Administration.
They also aren't thrilled with the minimum tax idea:
GOP ready to reject Biden counteroffer of 15% minimum corporate tax to pay for infrastructure – Haris Alic, Washington Times. “Senate Republican negotiators are poised to reject President Biden’s proposal to pay for massive spending on infrastructure by imposing a minimum 15% tax on corporations, The Washington Times has learned. They view the compromise offered by Mr. Biden as merely substituting one tax hike for another, said a congressional aide with knowledge of the negotiations. ‘The country is still dealing with the economic impact of the coronavirus, including labor shortages and rising prices. Hiking taxes would only make this situation worse,’ said the GOP aide."
Meanwhile, all this tax talk is making Congressional Democrats nervous:
Dems start to get tax-hike anxiety – Brian Faler and Aaron Lorenzo, Politico. “Democrats hung with former President Barack Obama when he campaigned for higher taxes on the rich. And they didn't blink when Republicans passed another round of tax cuts in 2017, without a single Democratic vote, after years of getting clubbed by the GOP for being the tax-and-spend party. But President Joe Biden’s proposed tax increases are another breed, even if they are focused on people making over $400,000 a year.”
There’s a small but growing list of Democratic lawmakers who’ve expressed reservations. And it’s not just moderates desperately trying to cling to their seats next year who are going public — it’s also committee chairs and senior lawmakers in no real electoral danger.
Most people watching the situation still believe that Democrats will pass some serious amount of tax increases in the months to come, though even the most optimistic of Democratic aides say that passing all of the new revenues being proposed by Biden will be almost impossible to pull off.
Quick reminder, corporate income tax rate increases remain on the table:
Biden Signals Flexibility on Taxes for Infrastructure – Kristina Peterson, Andrew Restuccia and Richard Rubin, Wall Street Journal ($):
Ms. Psaki said Mr. Biden isn’t abandoning his goal of raising the corporate tax rate and would continue to push the measure in other negotiations, while reiterating the White House wouldn’t support higher user fees on drivers. She also played down Monday as a deadline for significant movement, as administration officials had said.
Biden, top GOP negotiator agree to continue infrastructure talks Friday – Morgan Chalfant, The Hill. “President Biden and Sen. Shelley Moore Capito (W.Va.), the lead Republican negotiator on infrastructure talks, met for about an hour at the White House on Wednesday and made plans to speak later this week as the two sides discuss a potential bipartisan agreement.”
SALT cap confounds doomsayers as fears of exodus prove overblown – Jonathan Levin, Accounting Today. “Contrary to the dire predictions at the time, the massive overhaul of the nation’s Tax Code during Donald Trump’s presidency had a negligible initial impact on the nation’s domestic migration patterns, new data from the Internal Revenue Service show.”
The Tax Cuts and Jobs Act of 2017 capped the deduction on state and local taxes at $10,000, further increasing — at least for top earners — the overall tax savings of states such as Florida and Texas over New York or California. The change prompted concerns that there would be a wealth exodus from traditional finance and technology hubs and an accompanying windfall for the nine states without a wage tax, which include the Sunshine and Lone Star states.
The data is finally in, and it didn’t happen. In the first year after the cap was put in place, zero-wage-tax states netted about $1.24 in new earnings from migrants for every $100 already earned there — slightly less than the net migration rates in the previous three years. Florida, the top destination among zero-tax states, netted $2.65, also a drop from the previous years’ rates.
Democrats at Crossroads to Merge Biden, Wyden Clean Energy Plans – Kaustuv Basu and Dean Scott, Bloomberg ($). “The Biden administration’s clean energy plan shares common goals with a tax incentive overhaul championed by Senate Finance Committee Chairman Ron Wyden, with some important differences to resolve as infrastructure negotiations continue. President Joe Biden’s plan would extend energy-based tax credits for five years or more, including extensions through the end of the decade for wind, solar, nuclear, and electric vehicle chargers. The Wyden legislation (S. 1298) is more goal-oriented, extending tax credits for wind, solar, and other energy sources until they essentially hit certain targets for reducing greenhouse gas emissions.”
Yellen Says Private Capital Needed to Build Green Infrastructure – Christopher Condon, Bloomberg ($). “Treasury Secretary Janet Yellen says the U.S. government will work to help mobilize private capital flows into green infrastructure.”
‘The transition to a global, low-carbon economy represents one of the most important and consequential economic transitions in human history,’ Yellen says in text of remarks she’s scheduled to deliver Thursday in a pre-recorded speech to the 2021 G-20 Infrastructure Investors Dialogue, a virtual conference sponsored by the Organization for Economic Cooperation and Development
Bill Would Ease Tax on California Home Sales to New Buyers – Laura Mahoney, Bloomberg ($). “California homeowners who sell to first-time buyers would be able to exclude more of their capital gains from income tax under a bill passed in the Senate. The bill (S.B. 601) would increase the tax exclusion amount to $300,00, from $250,000, for sellers who are single filers, and to $600,000, from $500,000, for those filing jointly. If enacted, the measure would be in effect from Jan. 1, 2021 to Jan. 1, 2026, and only if lawmakers appropriate money to pay for the increased tax break.”
Nevada Governor Signs Law Raising Taxes on Gold and Silver Mines – Brenna Goth, Bloomberg ($). “Nevada will raise taxes on gold and silver mines to fund education under a law signed Wednesday by Gov. Steve Sisolak.”
Wealth Tax Proposal May Go Before Massachusetts Voters in 2022 – Adrianne Appel, Bloomberg ($). “A five-year effort to make Massachusetts millionaires pay higher taxes is approaching an important crossroads now that legislative leaders have decided to convene a June 9 constitutional convention. ‘We have a unique opportunity to move towards a Commonwealth that truly works for all residents,’ the leaders said Thursday in a joint statement.”
Maryland Legislature Enacts Emergency Law Concerning Digital Advertising Gross Revenues, Income, Sales, Tobacco Taxes – Bloomberg ($). “The Maryland General Assembly May 30 enacted an emergency law concerning digital advertising taxes for corporate income, individual income, sales and use, and excise tax purposes.”
The law was enacted without executive approval. The law includes measures: 1) exempting a broadcast entity and news media entity from the digital advertising gross revenues tax; 2) prohibiting a person from directly passing on the cost of the digital advertising gross revenues tax to a customer through a separate fee, surcharge, or line-item; 3) altering the date when certain cigarettes and other tobacco products are subject to tax; 4) allowing a state income tax subtraction for certain utility arrears forgiven in tax year 2021; and 5) clarifying the implementation of sales and use tax on specified digital products, including for marketplace facilitators. The law was cross-filed with and is identical to H.B. 1200 and generally took effect May 30. [S.B. 787, became law without signature 05/30/21]
Minnesota DOR Issues Reminder Regarding June 15 Due Date for Partnership, S Corporation Estimated Payments – Bloomberg ($). “The Minnesota Department of Revenue June 2 issued a reminder for partnerships and S corporations that quarterly estimated tax payments are due June 15 for corporate income and individual income tax purposes. The estimated taxes are for the: 1) minimum fee; 2) nonresident withholding; and 3) composite income tax.”
Montana Governor Announces Tools to Help Individual Income Taxpayers Navigate State’s ARPA Program – Bloomberg ($). “The Montana Governor June 2 announced the launch of a website and call center to help individual income taxpayers navigate the state’s American Rescue Plan Act (ARPA) program. The website provides information on funding projects and grants under the purview of Montana’s four ARPA commissions.”
Biden Targets Crypto Tax Evaders in Global Data-Sharing Pitch – Allyson Versprille, Bloomberg ($). “The Biden administration has proposed requiring the collection of data on foreign cryptocurrency investors active in the U.S., aiming to bolster international cooperation to help in a broader crackdown on tax evasion.”
TCJA int'l tax rules proved onerous for multinationals – Michael Cohn, Accounting Today. “The Tax Cuts and Jobs Act of 2017 included international tax provisions whose rules turned out to be burdensome for multinational companies, even though they saved through lower tax rates. A report issued Friday by the Government Accountability Office found the Internal Revenue Service and the Treasury Department didn’t do enough to address the impact of the international tax regulations they drew up for the TCJA in terms of the paperwork burden, economic analysis requirements and public comments on tax guidance.”
The GAO report can be found here.
Yellen Faces Deal-Making Test in Wrangle Over Global Tax – Saleha Mohsin, William Horobin and Alex Morales, Bloomberg ($). “Treasury Secretary Janet Yellen is facing pressure to move toward a global tax deal by the end of the week as she meets her Group of Seven counterparts for the first time as the world’s most powerful finance minister at a summit in London. Yellen’s team is downplaying expectations for progress this month, seeing the meetings over the coming days as an opportunity to build momentum toward an international tax agreement at the Group of 20 meetings in July, a U.S. Treasury official said.”
Former Treasury Official Sentenced to Six Months for Leaks – Rebecca Davis O’Brien, Wall Street Journal ($). “A federal judge sentenced a former senior U.S. Treasury Department official to six months in federal prison for leaking a trove of sensitive financial information about Paul Manafort and others, capping a case that emerged from a Trump administration crackdown on government leaks to journalists. Natalie Mayflower Sours Edwards, who served as a senior adviser in the Treasury’s Financial Crimes Enforcement Network, or FinCEN, pleaded guilty last year to one count of conspiracy to make unauthorized disclosure of “suspicious activity reports,” known as SARs, which banks are required to file to FinCEN."
Donut? Yes, please! It’s National Doughnut Day! Don’t fret, the word “doughnut” is not misspelled. It is actually its original spelling, according National Day Calendar.
Each year on the first Friday in June, people participate in National Doughnut or Donut Day, celebrating the doughnut and honoring the Salvation Army Lassies. The Salvation Army Lassies are the women who served doughnuts to soldiers during WWI. In 1917, the original ‘Salvation Army Doughnut’ was first served by the ladies of the Salvation Army. It was during WWI that the Salvation Army Lassies went to the front lines of Europe. Home-cooked foods, provided by these brave volunteers, were a morale boost to the troops. The doughnuts were often cooked in oil inside the metal helmets of American soldiers. American infantrymen were then commonly called ‘doughboys.’ A more standard spelling of the word is ‘donut.’
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