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July 20, 2020

What to expect in Washington (July 20)

Negotiations on a next coronavirus response bill begin today (July 20) and pressures to act include the expiration of expanded unemployment benefits July 31, the planned start of the congressional recess soon after, and economic and health care needs created by the coronavirus. The New York Times reported that the package is "likely to be the last opportunity before the election in November for a wide range of industries and interests to push for narrower provisions that would benefit them," and that the persistence of the virus means "Congress and the administration are under pressure to come together on a substantial stimulus bill."

President Trump and Treasury Secretary Steven Mnuchin meet with Senate Majority Leader Mitch McConnell (R-KY) and House Republican leader Kevin McCarthy (R-CA) this morning at 10:30 a.m. Republican senators are set to be briefed during their regular Tuesday policy lunch tomorrow, with Administration officials present, on the Republican plan. Senator McConnell is expected to release the proposal later in the week. The House recess is set to begin August 3 but may be delayed if a bill can't come together quickly. Speaker Nancy Pelosi (D-CA) said she would cancel the recess if a deal can't be reached. The Senate recess is set to begin August 10.

In a wide-ranging Fox News interview, President Trump said of the next bill, "I would consider not signing it if we don't have a payroll tax cut," and "we do need protections because businesses are going to get sued just because somebody walked in." At least some Democrats are opposed to liability protections that are a top priority of Republicans, with Senator Sheldon Whitehouse (D-RI) expressing his derision of the proposals in tweets over the weekend. Others don't rule out a compromise, including Rep. Stephanie Murphy (D-FL), who said in the Wall Street Journal, "I'm not opposed to having a discussion."

The Wall Street Journal reported on efforts to include an acceleration of general business credits in the next bill, amid efforts by some Democrats to block new benefits for businesses in the bill.

Axios reported last night that the Senate GOP proposal is "likely to include a tax credit for vaccine R&D."

Today's Washington Post, continuing on reporting from the weekend, said the Administration has "upended talks over the relief bill by trying to block billions of dollars for states to conduct testing and contact tracing, angering some Republican senators. Some White House officials argue that they have already approved billions in funding for testing and that some of that money remains unspent." A separate story said of the emerging Republican proposal in the $1 trillion range, which will serve as a counteroffer to the $3 trillion House-passed HEROES Act, "expected provisions include a workplace tax credit to help businesses with costs associated with testing and protective equipment, and an employee retention tax credit." (The House bill includes an expansion of the employee retention tax credit.)

Meanwhile, European leaders are in the midst of tough negotiations on a 1.85 trillion-euro ($2.1 trillion) EU budget and coronavirus recovery fund.

Rep. Lewis

Tributes continued following the passing of Rep. John Lewis (D-GA), a civil rights leader and member of the Ways & Means Committee. Chairman Richard Neal (D-MA) said Rep. Lewis's leadership guided some of the Committee's most important work. Majority Whip James Clyburn (D-SC) said the House may name pending voting rights legislation after Rep. Lewis as a tribute. The House will hold a moment of silence today.


A Wall Street Journal op-ed on bringing manufacturing back to the US, which was the subject of a recent proposal by presumptive Democratic presidential nominee Joe Biden, said decoupling key sectors of the economy from China will require federal assistance, preferably through "tax incentives, deregulation and highly targeted investment in research and development."

A Washington Post editorial on another Biden plan, on climate change, noted that "Biden nodded to carbon pricing during his primary campaign, but he proposed this past week instead a more complex web of federal spending, subsidies and mandates. For example, he would mandate that the electricity sector steadily eliminate fossil fuel burning by 2035 using a system of credits that utilities would have to obtain to certify their compliance. The market for these credits would create a price on emissions, but only in the electricity sector. Mr. Biden would then layer on top of this mandate direct financing of renewables deployment and an extension of renewable tax subsidies."

Global tax

A G20 communique released over the weekend stressed "the importance of the G20/OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) to continue advancing the work on a global and consensus-based solution with a report on the blueprints for each pillar to be submitted to our next meeting in October 2020. We remain committed to further progress on both pillars to overcome remaining differences and reaffirm our commitment to reach a global and consensus-based solution this year."

An OECD Tax Talk Webinar on Wednesday July 22 could provide more insight on the BEPS 2.0 effort.

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

EY Webcasts this week include:

  • Tuesday, July 21, US corporate income tax compliance,1:00 p.m. ET. Register
  • Friday, July 24, Tax in the time of COVID-19, 12:00 p.m. ET. Registration information is forthcoming.


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
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