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Senate Majority Leader Mitch McConnell (R-KY) confirmed his intention to produce a plan for the next coronavirus response bill, saying "when my members come back next week we'll start socializing it with them, begin to discuss it with the Democrats and start the legislative process." CNN reported that Senate Republicans and the Administration have been in discussions and trading proposals for a plan that could cost around $1.3 trillion. In comments to reporters in Kentucky, Senator McConnell drew some red lines, saying "no bill will pass the Senate without liability protection for everyone related to the coronavirus." The plan would serve as a counteroffer to the $3 trillion House-passed HEROES Act, and Speaker Nancy Pelosi (D-CA) has drawn red lines of her own over unemployment benefits and direct payments.

On timing, Treasury Secretary Steven Mnuchin has said the goal is to begin negotiations July 20 and complete the bill by the end of the month, and the expiration of the unemployment benefit expansion on July 31 is seen as an action-forcing deadline. Perhaps anticipating protracted negotiations, House Majority Leader Steny Hoyer (D-MD) is said to have advised members to keep their schedules flexible for the first full week in August. (The summer recess for the House is scheduled to begin August 3.)

The Washington Post reported July 14 that $150 billion for state and local governments in the CARES Act was less than they sought, and restrictions on how funds may be used in the swiftly written law and confusion over disbursements have resulted in struggles to take advantage of the Coronavirus Relief Fund. Speaker Pelosi has assertively said the next bill must include more funding, but Senator McConnell has been less certain. A spokesman said the White House is "open to targeted assistance for states and localities."

Some Republicans are wary of providing additional virus-related funding due to deficit concerns, while Speaker Pelosi warned July 13 that without additional investments "we're going to pay a big price" in terms of the economy. The Wall Street Journal reported on the 12-month budget deficit headed toward $3 trillion, saying the "gap could widen even further" with a next bill and "unemployment and business shutdowns have pushed down tax revenue while also boosting spending on safety net measures." The Congressional Budget Office said in April the FY2020 budget deficit is projected to be $3.7 trillion.

Another Washington Post story focused on expiring unemployment benefits noted that the White House and congressional Democrats are "far apart on the terms of any renewal" and cited the deficit, at $864 billion just for June, as weighing on the impending negotiations.

Tax

The Office of Management and Budget Office of Information and Regulatory Affairs (OIRA) has completed its review of Final Rules Regarding Business Interest Limitation Under Section 163(j) and a related Proposed Rule on the Limitation on Deduction for Business Interest Expense.

The July 13 IRS news release IR-2020-152 addresses syndicated conservation easement transactions.

At the global level, Politico reported an official as saying the European Commission is ready to wait for an OECD global tax solution that would avoid unilateral implementation of DSTs before rolling out its own plans and accepts that a global deal might not happen in 2020, contrary to the Commission's "previous plans to propose an EU digital tax if the OECD fails to agree on a deal by end-2020."

Tax Notes reported Pascal Saint-Amans, director of the OECD's Centre for Tax Policy and Administration, as saying during a July 13 European Parliament Committee on Economic and Monetary Affairs hearing that work on global tax reform has advanced to the point that blueprints may be ready by October, setting the stage for agreement after the US election, possibly in 2021, but EU member states should not assume that the US position on the issue would change under a Democratic administration.

Election

There are primaries in Maine and primary runoffs in Texas and Alabama, which has one of the most high-profile contests between former Senator and Attorney General Jeff Sessions and former Auburn football coach Tommy Tuberville. The winner would face Senator Doug Jones (D-AL) in a race already rated by the Cook Political Report as leaning toward Republicans.

A Wall Street Journal column discusses presumptive Democratic presidential nominee Joe Biden as "trying to identify a new center on taxes, and adapt to what may be emerging as a new national consensus on trade," and his proposals on the corporate rate, capital gains taxes, and tax increases on wealthy individuals. After talking to the candidate Monday, the report said, "Coming soon are more traditionally Democratic plans to help workers with child and family care, and address racial inequalities in the economy — as well as a big proposal to improve the nation's infrastructure."

The global EY Tax COVID-19 Response Tracker has been updated through July 9.

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