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June 22, 2020

What to expect in Washington (June 22)

White House trade adviser Peter Navarro said on CNN Sunday that the Administration is preparing for a worsening of the coronavirus in the fall — "you prepare for what can possibly happen, I'm not saying it's going to happen, but of course you prepare" — and that President Trump's remark during a rally that he told officials to "slow the testing down" was "tongue in cheek."

On NBC's Meet the Press, Michael Osterholm, infectious disease epidemiologist from the University of Minnesota, said he doesn't think the virus will come in waves nor will it slow down through the summer or into the fall — "I think we're going to see one very, very difficult forest fire of cases." He said even as the virus persists "we don't really have a national plan that really puts together what we're trying to do," with states "all kind of with their own plan and you've seen in the past week how disjointed that is."

Senate Democratic Leader Chuck Schumer (D-NY) and HELP Committee Ranking Member Patty Murray (D-WA) June 22 sent a letter to HHS Secretary Alex Azar calling for the Trump Administration to immediately distribute the remainder of funds Congress appropriated to ramp up testing and contact tracing capacity, saying the Administration is sitting on nearly $14 billion in funding for various relevant testing and tracing purposes that has not yet been allocated, dispersed or designated.

The June 22 Wall Street Journal reported on tension between GOP senators who want more coronavirus response legislation and conservatives wary of further spending, noting that "Republicans have postponed deliberations until mid-July," just weeks before expanded unemployment benefits expire, and citing fourth-ranking Senate Republican Roy Blunt (R-MO) as saying "the White House's strong conviction" that there needs to be another bill could help things along. The online version noted that Republican lawmakers are "looking at business tax breaks for retaining workers, a back-to-work bonus for employees and accelerated use of tax credits for corporations," and observed that the "next phase of the congressional negotiations will shape the final months of the election campaign."

The weekend Wall Street Journal reported that some lawmakers are seeking opportunities in the next stimulus legislation to aid the clean energy sector, saying "companies want emergency tax relief and extensions to certain tax credits that were set to be phased out this year, along with more funding for clean energy research."

BEPS 2.0

The weekend Wall Street Journal also followed up on Treasury Secretary Steven Mnuchin's letter calling for a pause in OECD negotiations to develop a new regime for taxing local profits of global companies under Pillar 1 of the BEPS 2.0 project, through the lens of investors. European leaders reiterating the desire for a multilateral agreement "might buy some time for behind-the-scenes meetings to see if there is a way through. If it doesn't, politicians in Europe face a difficult choice: Proceed with their new taxes on digital giants' revenues and risk tariffs on exports to the U.S.; or back down on what is a popular proposal in many European countries, particularly France," the report said. "If a fix isn't found, though, European leaders will have to show their hand. Tax news may become harder for investors to ignore."

Bloomberg Tax cited a Treasury spokesman in reporting "The U.S. plans to participate in a meeting in early July to discuss an OECD-led effort to overhaul how the digital economy is taxed."


The June 22 Washington Post reports that Democrats are treating presumptive Democratic nominee Joe Biden's strength in polls with caution given the 2016 election result and there is still a long time to go before this year's election. The report said: "Biden's campaign believes the pathway to the presidency runs through states in the industrial Midwest — such as Wisconsin, Michigan and Pennsylvania, the three usually Democratic states Hillary Clinton lost in 2016. But they are also increasingly optimistic about once-unthinkable states such as Arizona, Texas and Georgia."


Politico reported the House Transportation & Infrastructure Committee's nearly $500 billion/five years surface transportation bill is set for a vote June 30 as part of a broader infrastructure bill, The Moving Forward Act, H.R. 2, and the effort is complicated by a smaller proposal in the Senate, expectations that the Trump administration will release its own surface transportation proposal or priorities imminently, and the entire effort for now relying on deficit spending as Ways & Means Committee Chairman Richard Neal (D-MA) seeks buy-in on pay-fors from the White House.

Text of the bill was posted June 22. A summary is also available.

The global EY Tax COVID-19 Response Tracker has been updated through June 17.

EY Webcasts this week include, Friday, June 26, at 12:00 p.m. ET, Tax in the time of COVID-19: Preparing for potential future tax changes. This week's panelists will provide updates on: (i) the legislative and economic landscape — what's happening now and what may be around the corner; (ii) what's on the horizon for the Tax Cuts and Jobs Act; (iii) how companies should prepare for potential future tax changes; and (iv) any IRS and breaking developments. Register.


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