September 9, 2020
What to expect in Washington (September 9)
Democratic Presidential nominee Joe Biden travels to Michigan today (September 9) to expand upon the "Made in America" plan announced in early July. A campaign document posted by Politico proposes:
The plan includes the previously announced doubling of the global intangible low-taxed income (GILTI) rate: "Require a true minimum tax on ALL foreign earnings of United States companies located overseas so that we do our part to put an end to the global race to the bottom that rewards global tax havens. This will be 21% — TWICE the rate of the Trump offshoring tax rate and will apply to all income." The GILTI proposal now specifically calls for "ensuring that the minimum tax applies to earnings in each foreign country separately to prevent this form of tax avoidance by US multinational companies."
The Made in America tax credit was called for, without details, in the July plan proposing a combined $700 billion in procurement and research and development (R&D) designed to boost US manufacturers, paid for by ending "incentives in the Trump tax giveaway that allow multinationals to dramatically lower taxes on income earned overseas and allow the largest, most profitable companies to pay no tax at all" and confronting "global tax secrecy and avoidance."
While Democrats have long promoted domestic manufacturing and denounced offshoring, the plan represents an even greater US emphasis not thematically dissimilar from President Trump's "America First" approach and an increased focus on supply chains amid the coronavirus pandemic.
Meanwhile, President Trump yesterday traveled to Florida and North Carolina, both battleground states, and emphasized his strength over Biden in maintaining "law and order" in response to protests. In remarks to reporters beforehand, the President said: "Joe doesn't have the strength" to control protestors; Democrats "are afraid to even talk" about law and order; and "if you elected this guy, the suburbs would be overwhelmed with violence and crime."
The Senate is set to vote, likely on Thursday, on a narrowly targeted roughly $300 billion (factoring in savings from other coronavirus relief) COVID-19 relief package that addresses: liability relief; unemployment benefits through a $300/week add-on through December 27; a second round of the Paycheck Protection Program (PPP); Postal Service assistance; short-term assistance for child care providers; a new temporary credit for educational scholarships; pandemic preparation and strategic stockpiles; an increase in the CARES Act above-the-line deduction for charitable contributions; and additional emergency appropriations for the coronavirus health response.
The narrow bill is not expected to have the 60 votes necessary for most legislation to advance in the Senate, but leaders are said to be aiming to demonstrate a unified position of Republicans and backing of a majority 51 senators. The Senate effort may establish a negotiating position for the chamber but is not expected to materially affect bipartisan negotiations mostly between the Administration and House Democrats that have not budged in the past month. Democrats insist on a coronavirus relief/stimulus package of at least $2.2 trillion and the Administration is now signaling support for $1.5 trillion maximum.
Senate Majority Leader Mitch McConnell (R-KY) stated essentially the same position taken by President Trump: that Democrats don't want a next coronavirus deal and "have taken Americans' health, jobs, and schools hostage." The New York Times reported Senator McConnell as saying yesterday, "I will make sure every Senate Democrat who has said they'd like to reach an agreement gets the opportunity to walk the walk."
House Speaker Nancy Pelosi (D-CA) and Senate Democratic leader Chuck Schumer (D-NY) released a statement saying "this emaciated bill is only intended to help vulnerable Republican Senators by giving them a 'check the box' vote to maintain the appearance that they're not held hostage by their extreme right-wing that doesn't want to spend a nickel to help people."
The Washington Post reported that "Senate Republicans and administration officials believe Pelosi will come under growing pressure from moderate members of her own caucus who face tough reelections and have been uneasy about the failure to act on additional economic stimulus."
White House Chief of Staff Mark Meadows said on Fox Business September 8, "I'm optimistic in the next two weeks that the pressure and the voice of the American people will start to have an impact on members of Congress."
Today is the Senate Health, Education, Labor & Pensions Committee hearing on "Vaccines: Saving Lives, Ensuring Confidence, and Protecting Public Health," with testimony from the NIH Director and the Surgeon General.
On Friday, September 11 at 12:00 p.m. is the EY Webcast, "Tax in the time of COVID-19." The coronavirus (COVID-19) and the resulting economic crisis have made reacting to tax and trade developments more complicated and more difficult. To determine what information your company needs to know now, join our panelists for a series of conversations about operating the tax function in this time of National Emergency created by the COVID-19 virus. Register.