September 10, 2020
What to expect in Washington (September 10)
The Presidential race is focused on the rust-belt battleground states of Pennsylvania, Wisconsin, and Michigan, where Democratic Presidential nominee Joe Biden yesterday (September 9) delivered a rebuke of the President's handling of the coronavirus pandemic and other issues but focused on the economy, providing new details of his Made in America plan: an offshoring surtax, a tax credit and a more stringent approach to the global intangible low-taxed income (GILTI). President Trump is set to hold a campaign rally in Michigan today and may continue to warn of higher taxes and a faltering market if Biden is elected.
Biden said yesterday: "If your big corporate strategy is to boost your shareholders' profits and your CEO's bonuses by moving jobs out of America, we're going to make sure you not only pay full US taxes on those profits, we're going to add an extra 10% Offshoring Penalty Surtax to your bill. And no more deductions or writing off expenses for the cost of sending jobs overseas that could be done here at home by qualified American workers. I'm not looking to punish American businesses but there's a better way. Make it in Michigan. Make it in America." Biden's proposals include:
The Washington Post reported, "The president won Michigan by three-tenths of a percentage point in 2016, part of a shocking Upper Midwestern sweep that propelled him into the White House. Four years later, Michigan, along with Wisconsin and Pennsylvania, where both candidates will be on Friday, have captured the attention of the two campaigns." The article said "while Trump promised to bring back manufacturing jobs and crack down on the practices of some multinational companies," the number of manufacturing jobs is below past levels, "critics have argued his tax law encouraged firms to move abroad," and trade actions hurt farmers. Biden is being criticized for past support of free trade deals and copying Trump's ideas.
A New York Times opinion piece discussed the formula for Pennsylvania presidential races as, "Come away with huge margins in the state's two big urban centers to offset deficits in the rural counties," and that "Pennsylvania Democrats have some solid reasons for optimism. In 2018, the party picked up a net of three House seats, and Tom Wolf, the state's Democratic governor, routed his Republican opponent by about 855,000 votes."
A Wall Street Journal story this week observed, as in 2016, "the president is again traveling to these blue-collar counties to appeal to workers in manufacturing, energy production and other blue-collar jobs," while Biden is "trying to build on Democratic margins in recent elections in and around Philadelphia and in the state's smaller cities, pointing to trade wars under the Trump administration and the job losses during the pandemic to make the case that Mr. Trump's promises to blue-collar workers have gone unfulfilled."
CNBC polls released this week show Biden ahead of Trump by six percentage points in Michigan and Wisconsin, four points in Pennsylvania, and leading in other battlegrounds (Florida, Arizona, North Carolina.)
An NBC News/Marist poll released this week showed Trump and Biden tied at 48% in Florida.
The Senate is set to hold a procedural vote this afternoon (probably between 1-2 p.m.) on a narrowly targeted roughly $300 billion (factoring in savings from other coronavirus relief) COVID-19 relief package and, while the number of Republican votes the package gets is being watched, the measure won't pass (Democratic support would be needed for the requisite 60 votes) and won't affect bipartisan negotiations between the Administration and Democrats. In widely reported comments on prospects for a bipartisan deal, Senate Appropriations Chairman Richard Shelby (R-AL) said yesterday, "Unless something really broke through, it's not going to happen."
Asked yesterday following the regular party lunch whether virus relief will have to wait for a post-election lame-duck session, Senate Majority Leader Mitch McConnell (R-KY) said, "it's pretty obvious the coronavirus doesn't care about the American election. And what we've tried to do with the proposal we'll vote on tomorrow is to target things that there should be broad bipartisan agreement on … look at what's in this proposal and ask them what they disagree with in the proposal we're going to vote on tomorrow."
The Washington Post reported that the White House is considering additional executive action addressing the airline industry and unemployment benefits as well as "more money for school vouchers and changing President Trump's recent payroll tax changes to make it more effective."
EY has published survey results, "Are employers participating in the employee Social Security tax deferral program?"
During yesterday's Senate Health, Education, Labor & Pensions Committee hearing on "Vaccines: Saving Lives, Ensuring Confidence, and Protecting Public Health," NIH Director Dr. Francis Collins noted recent developments showing that "even a single case of an unexpected illness is sufficient to require a clinical hold" in a vaccine trial and, referencing speculation over whether a vaccine will be ready by the November 3 election, said "certainly to try to predict whether it happens on a particular week before or after a particular date in early November is well beyond anything that any scientist right now could tell you."
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.