As lawmakers tussle over the size, substance and timing of a next coronavirus response bill, a group of economists from Administrations past – including former Obama-era Treasury Secretary Timothy Geithner and economic adviser Jason Furman, and Bush economic adviser Glenn Hubbard – are calling for between $1 trillion-$2 trillion in relief that includes:

• Continued increased federal Unemployment Insurance (UI) benefits with a phasedown over time based on economic circumstances, plus Supplemental Nutrition Assistance Program (SNAP) benefits
• Temporary employment subsidies for workers to reward and incentivize employment and compensate workers who continued to work in the form of a pandemic Earned Income Tax Credit
• Lending support for small and mid-size businesses
• Federal support to state and local governments, including a block grant for states and localities that cannot be used for tax cuts or pension increases, expansions in federal matching for state Medicaid and Children’s Health Insurance Program (CHIP), and an extension of higher ed federal block grants

Witnesses have been announced for the Thursday House Ways and Means Select Revenue Measures Subcommittee hearing on “Tax Relief to Support Workers and Families during the COVID-19 Recession.”

On June 16, Senator Ted Cruz (R-TX) introduced the Work Safe Act to provide tax credits to businesses that test employees for COVID-19 every week in states where the infection rates are above the national average.

During a post-party luncheon news conference, second-ranking Senate Republican John Thune (R-SD) said, “We’ve got a bill that would eliminate the taxation for people have been helping out in the coronavirus relief efforts by going into other states and providing frontline support, particularly those that are involved in the medical field. I hope we can get that included in the next bill.” He previously pitched his Mobile Workforce State Income Tax Simplification Act (S. 604), saying it has relevance in the age of coronavirus.

In the June 17 Wall Street Journal, former CDC Director Thomas Frieden said we should be thinking not of a further lockdown but ways to increase distancing through outside activities, work practices, curbside pickup and other innovative ways; NIH Dr. Anthony Fauci expressed concern about a resurgence due to lack of vigilance, like “people congregating at bars when the location they are indicates they shouldn’t be doing that;” and Vice President Pence published an op-ed downplaying concerns over increases in cases.

A Washington Post story on research on wearing masks said “Politicization has complicated the issue.”

Police reform

President Trump on June 16 signed an Executive Order on Safe Policing for Safe Communities, including setting a standard that a ”State or local law enforcement agency’s use-of-force policies prohibit the use of chokeholds – a physical maneuver that restricts an individual’s ability to breathe for the purposes of incapacitation – except in those situations where the use of deadly force is allowed by law.”

Senate Majority Leader Mitch McConnell (R-KY) said the chamber will move to consideration of Senator Tim Scott’s (R-SC) police reform bill rather than the National Defense Authorization Act (NDAA) for the period before July 4. (The Senate will first finish the Great American Outdoors Act and confirm two judges.)

GILTI High Tax Exclusion regulations at OIRA

Newly listed as under review by the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) are a Final Rule Regarding the Global Intangible Low-Taxed Income High Tax Exclusion [TCJA] and a related Proposed Rule Under Section 954(b)(4) (Rules for High-Taxed Subpart F Income) and Section 964 (Rules for Determining the Earnings and Profits of a Foreign Corporation) [TCJA].

Trade & infrastructure

Full day of trade on tap June 17 asUS Trade Representative Bob Lighthizer will testify before both tax-writing committees (Ways and Means at 10am; Finance at 3pm). Press reports said he will call for a ‘broader reset’ of World Trade Organization tariffs.

Beginning June 17 is also the House Transportation & Infrastructure Committee markup of a nearly $500 billion/five years surface transportation bill, ahead of the current authorization expiring September 30. More than 200 amendments have been filed and the markup could reportedly go into a second day. Press reports continue to suggest President Trump is readying a $1 trillion infrastructure plan.

Election

A Politico story reported Senator McConnell as saying June 16 he would stay on as Republican leader even if the party loses control of the chamber in the election; the Senate map is so rough for Republicans in 2022 that a loss this cycle could make for a long-term stay in the minority; and cited high-ranking GOP Senator John Cornyn (R-TX) as saying “Mitch McConnell will be our leader as long as he’s still interested in the job,” and that he wants to be the next leader when the time comes.

EY COVID-19 Alerts and other resources are here.

The global EY Tax COVID-19 Response Tracker has been updated through June 15.

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