House Speaker Nancy Pelosi (D-CA) spoke with Treasury Secretary Steven Mnuchin regarding additional coronavirus relief legislation Monday evening and they plan to talk again today (Tuesday). The restarting of talks after a seven-week impasse came after House Democrats released the updated version of the HEROES Act coronavirus relief bill, which, at $2.2 trillion, is narrower than the $3 trillion version from May. A press release said the new bill addresses "needs that have developed since the House passed an earlier iteration and reflect[s] negotiations between Democrats and Republicans," including assistance for airline industry workers.

Tax provisions are similar to the May version and include:

• Economic impact payments of $1,200 ($2,400 for joint filers)
• Making the child tax credit (CTC) fully refundable for 2020 (without the May version's increase in the credit)
• Elimination of the limitation on the deduction for state and local taxes for the 2020 tax year (rather than the May version's two-year repeal)
• An increase in wages reimbursed through the Employee Retention Tax Credit from 50% to 80%, and in the limit on wages taken into account per employee from $10,000 for the year to $15,000 per quarter (limited to $45,000 for the calendar year)
• Reversal of the CARES Act excess business loss relief
• Limiting of net operating loss (NOL) carrybacks permitted by the CARES Act so that losses arising in 2018, 2019 and 2020 cannot be carried back prior to 2018, plus disallowance for companies that do not meet requirements for executive compensation, dividends and stock buybacks

The Senate today is expected to at least hold a procedural vote, and possibly vote on passage, of the House-passed continuing resolution (H.R. 8337) to extend government funding and health extenders through December 11, and surface transportation and flood programs for one year. Government funding expires tomorrow.

Tax

The Wall Street Journal this morning has a new article on the potential tax agenda under a second Trump term, saying the manner in which Congress passed the Tax Cuts & Jobs Act (TCJA), with the scheduled expiration of individual provisions and phase outs and other changes on the corporate side, "forces lawmakers to revisit it, and those deadlines will shape the years ahead." The report cited EY's Ray Beeman as saying lawmakers "kind of have a built-in tax policy agenda … with all the provisions that are sunsetting and sunrising." House Ways & Means Committee Ranking Member Kevin Brady (R-TX) is cited as saying permanence in the tax code is "more important than ever" given the uncertainty of the pandemic.

A New York Times editorial criticized the tax system's benefits to commercial real estate investors — including depreciation, and using past losses to offset income, to defer income and to avoid reporting some kinds of income — and called for increased IRS enforcement funding.

Election

Tonight at 9 p.m. is the first presidential debate, in Cleveland, in battleground state Ohio, which President Trump won in 2016. A Fox News poll released September 23 showed Democratic nominee and former Vice President Biden leading President Trump among likely voters by 50% to 45% in the state, which has 18 electoral votes at stake.

An op-ed in the Washington Post said the loss of manufacturing jobs in Ohio could figure into the debate, and the race.

The Cook Political Report moved the presidential race in Ohio and Iowa from Lean R to Toss Up.

The Washington Post this morning reported Biden leading President Trump 54%-45% in battleground Pennsylvania, "the most populous of three Rust Belt states that proved decisive in the 2016 election," which also include Michigan and Wisconsin, and the state's "20 electoral votes make it the most valuable of the three."

Retirement

Yesterday, Treasury and IRS issued final regulations updating the federal income tax withholding rules for certain periodic retirement and annuity payments made after Dec. 31, 2020.

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