The Wall Street Journal reported that Senate Majority Leader Mitch McConnell (R-KY) will release a proposal for the next coronavirus bill as soon as today (July 23) after the White House and Senate Republican members resolved their differences Wednesday evening, and cited Senator Rob Portman (R-OH) as saying a separate stopgap extension of expanded unemployment benefits past July 31 is being considered. "We've now had three days of meetings and we're completely on the same page," Treasury Secretary Steven Mnuchin said.

The story said tax provisions expected to be included in the Senate GOP proposal include:

• second-ranking Senate Republican John Thune (R-SD) and Senator Sherrod Brown's (D-OH) updated mobile workforce proposal to exempt employers from withholding state income tax and workers from filing returns in another state if they work there for 30 or fewer days a year and provide that rules for determining worker presence won't apply for 2020
• the proposal by Senator Portman and Rep. Tom Rice (R-SC) to provide a refundable tax credit against payroll taxes for 50% of the costs incurred by the business for COVID-19 testing, personal protection equipment (PPE), disinfecting, extra cleaning, and reconfiguring workspaces (which has per-employee dollar limits)

The story noted that House Republican tax-writers want provisions in the bill to:

• double the R&D credit
• extending expensing beyond the phase-out after 2022
• roll back the requirement for amortization of R&D expense beginning in 2022
• provide a tax credit for investments in equipment for manufacturing pharmaceuticals or devices
• lower tax rates on income from domestically produced drugs and other medical products

This morning on CNBC, Secretary Mnuchin confirmed that a payroll tax cut is not in the forthcoming base GOP bill, saying the President wants to get money to people quickly and a payroll tax cut doesn't work that way, and that unemployment benefits will be based on 70% of wage replacement with the potential for a back to work bonus proposal as well.

Timing of the GOP proposal rollout remains fluid and could slip beyond today, perhaps until Monday.

While details of Senate GOP plans are coming together, there is still the more general matter of some Republican senators not wanting to spend more to respond to the virus, which is significant given the procedural tactics a single senator can use to delay a bill. CNN reported Senator Ron Johnson (R-WI) as saying last night, "I am not going to authorize a dime until I understand what we've done … I don't think at this point in time, in the next three weeks, (we can) quickly rush through another trillion dollars of spending. I just don't see the need for it."

Global tax

Pascal Saint-Amans, director of the OECD's Centre for Tax Policy and Administration, said on an OECD Webcast yesterday that blueprints on both Pillar 1 and Pillar 2 of the BEPS 2.0 project — regarding allocating profits to market jurisdictions and a minimum tax, respectively — will be released to the Inclusive Framework on BEPS during their next meeting October 8-9. The OECD-led negotiations among 137 countries continue to seek to develop a global solution that would avoid unilateral implementation of digital services taxes (DSTs).

Senate Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) yesterday released a joint statement regarding the UK DST taking effect: "Unilaterally imposing a discriminatory tax that unfairly targets U.S. businesses damages efforts to achieve a multilateral solution and unnecessarily complicates the path forward for a U.S.-U.K. trade deal. In the course of its ongoing investigation under Section 301 of the 1974 Trade Act, the United States Trade Representative should explore all available options to respond appropriately. The U.K should reconsider this punitive action against its ally."

Tax

UC-Irvine tax professor and former Senate Finance Committee tax counsel Victor Fleischer is in a Financial Times Head-to-Head feature on the tax deductibility of business interest payments, saying in part that it encourages more borrowing than would occur without it.

The global EY Tax COVID-19 Response Tracker has been updated through July 21.

On Friday, July 24, from 12:00-1:00 p.m. EDT is the next webcast in the EY series discussing Tax in the time of COVID-19. This week's panelists will provide updates on: (i) The US legislative and economic landscape; (ii) Global tax policy developments; (iii) Treasury and IRS regulatory projects; and (iv) any IRS and breaking developments. Click here to register.

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