Key Takeaways
- Roughly two-thirds of voters in next year’s election who participated in a poll said they would support expanding the Child Tax Credit, but respondents differ on how it should be expanded.
- Senate tax leaders warn Canada against employing a DST.
- The House situation is a situation.
A poll shows that a majority of likely-voters in next year’s election want Congress to expand the Child Tax Credit, but differ on how it should be expanded.
What Went Down:
- Roughly two-thirds of voters in next year’s election who participated in a poll said they would support expanding the Child Tax Credit, but respondents differ on how it should be expanded.
- Senate tax leaders warn Canada against employing a DST.
- The House situation is a situation.
Let’s Get To It:
Polling Report:
A lot of people apparently want to expand the Child Tax Credit, according to a poll conducted by American Policy Ventures.
The poll found that roughly two-thirds of respondents (who are planning to vote in next year’s elections) support expanding the Child Tax Credit. However, they don’t agree on how it should be expanded:
- 22.7% of respondents support renewing the Child Tax Credit in the American Rescue Plan, which would cost more than $1 trillion over the next ten years.
- 41.1% of respondents support expanding the Child Tax Credit if it includes work requirements and costs less regarding federal spending compared to the provision in the American Rescue Plan.
These are basically the positions that Democrats (the first position) and Republicans (the second position) have taken when it comes to including an expanded Child Tax Credit in legislation that would allow for R&D expensing, broaden the 163(j)-interest deduction and up Bonus Depreciation to 100%.
The talks between the political parties have gone nowhere. A poll showing that voters feel the same as politicians on expanding the Child Tax Credit suggests that lawmakers are representing their constituents. It does not suggest that an agreement on this issue is in the offing.
The political parties remain miles apart on how to expand the Child Tax Credit. This disagreement has stopped all movement for passing tax legislation. This dispute could also keep Congress from passing a year-end tax bill that would include the aforementioned-business tax measures.
There is also the anti-SALT-cap faction that wants to repeal the cap, which has also stymied progress on tax legislation. However, this group does not have a unified position. Some want to repeal of the cap while others would agree to upping the cap above the current $10,000 threshold. Their lack of a cohesive position has weakened their standing in modifying the cap.
Legislative Outlook: The prospect of a year-end tax bill is considered to be a longshot in the current political environment, according to D.C. insiders (which includes tax lawmakers and staff). If tax legislation does not pass this year, the next opportunity for passage will be 2025.
Warning to Our Neighbor North:
The leaders of the tax-writing Senate Finance Committee issued a warning to Canada this week to not move forward with a 3 percent tax on large digital services companies that would basically be aimed at U.S.-based companies.
The tax leaders urged U.S. Trade Representative (USTR) Katherine Tai to make clear to Canada that the U.S. will not take this tax lightly and would impose trade repercussions on our northern neighbor if the country follows through with it.
“You must now make clear that your office will immediately respond using available trade tools upon Canada’s enactment of any DST [digital services tax]. When you take these steps, you will do so with our full support,” Senate Finance Chairman Ron Wyden (D-Ore.) and Ranking Member Mike Crapo (R-Idaho) wrote in a letter to Tai.
The lawmakers added: “[W]e want the strong economic relationship between the United States and Canada to continue growing. That will become immensely challenging, however, if Canada subjects innovative American companies to arbitrary discrimination without facing any consequences. We stand ready to assist and support you to ensure that you apply the requisite response immediately, if and when Canada may adopt its proposed DST.”
Canada’s DST would hit companies in the social media, advertising and commerce arenas that gross roughly $800 million a year in global revenue and nearly $15 million in Canada.
In related news, Crapo separately criticized the Treasury Department for slow walking its analysis on Pillar One getting rid of DSTs.
“While I oppose discriminatory digital services taxes (DSTs) targeting US companies, I also want to ensure that the OECD cure is not worse than the DST disease for U.S. businesses and workers. Unfortunately—despite repeated requests—Treasury has been unwilling to provide information to determine Pillar One’s impact on U.S. companies and revenue,” Crapo wrote to Treasury Secretary Janet Yellen.
The letter was written over two years ago, but Crapo released it this week.
Legislative outlook: Threatening Canada with trade retaliation is one thing; getting a retaliatory tax increase through a divided Congress is another – especially when the House isn’t fully functional.
Last but not Least:
Question: Will the House of Representatives return to being a functioning arm of the Federal government?
Answer: Who knows?
As last week’s Recap reported, the House of Representatives fired its speaker.
House Republicans are now trying to garner enough support to install a new Speaker. So far, there is no House Republican who has enough support to become Speaker.
FWIW: Anyone can become Speaker. The person doesn’t even need to be a House lawmaker.
Currently, House Democrats are firmly supporting their leader for Speaker, Rep. Hakeem Jeffries (D-NY). But there aren’t enough Democrats in the House to vote Jefferies into the office.
All of Washington is basically waiting to see how the House fixes this situation before the Federal government runs out of funding on November 17th.
Legislative outlook: As for passing tax legislation by year end, it is not a top priority right now. Many D.C. insiders are hoping that if the House can get its act together and settle its funding dispute so lawmakers could be able to make tax legislation a top priority.
Bottom line: Stay tuned.
Pardon if this recap missed a monumental moment, but we can recap it next time!
Adios amigos!