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After President Trump announced the Administration was pulling out of coronavirus relief/stimulus bill negotiations, then called for action in discrete areas that have been part of the discussions — airline relief, the Paycheck Protection Program, and stimulus checks — the two sides have continued to talk about narrower approaches with the prospect of a larger deal still in the background. A spokesman for House Speaker Nancy Pelosi (D-CA) said on Twitter October 7 that the Speaker and Secretary Mnuchin had a 20-minute phone call at approximately 6 p.m. on a standalone airline bill and agreed to talk again today (Thursday).

On Fox News October 7, White House Chief of Staff Mark Meadows said given that Speaker Pelosi was continuing to insist upon a $2.2 trillion-$2.4 trillion bill, while Treasury Secretary Mnuchin had not only offered $1.6 trillion and was willing to go to $1.7 trillion, "maybe perhaps the best way to do it is take all the things that we agree upon, start building those back, and passing those out." He said Senate Majority Leader Mitch McConnell (R-KY) "is willing to look at a separate bill for airlines and PPP. If we can look at some of those and start to add to it," Meadows said. "But, at the same time, if she thinks that she can come back with something that's closer to where Secretary Mnuchin has come up to, I'm sure the president is more than willing to look at a counterproposal."

On "The View" October 7, Speaker Pelosi said of the President pulling out of the talks then calling for relief in some areas: "he saw the political downside of his statement of walking away from the negotiations … from our opportunity to crush the virus so we could open our schools and our economy safely, and he walked away from putting money in the pockets of the American people in a way that will make a difference in their lives. It's interesting that he said he would send out the checks if we just sent him that bill."

Some Senate Republicans continue to call for negotiators to come back to the table for a comprehensive deal. Senator Lindsey Graham (R-SC), whose race was moved to 'Toss Up' by the Cook Political Report, tweeted October 7: "Strongly recommend all my colleagues and President @realdonaldTrump look at the House Problem-Solvers bipartisan $1.5 trillion stimulus relief package. It has many good things for individuals and businesses." Senate Majority Leader Mitch McConnell (R-KY) was reported by Politico as saying, "What's really going to help the Senate races, I think, is putting the Supreme Court justice front and center."

Election

During the October 7 debate between Vice President Pence and Democratic Vice Presidential nominee Senator Kamala Harris (D-CA) at the University of Utah, tax policy was a primary focus, including the question of whether a Biden/Harris ticket would repeal the entire Tax Cuts & Jobs Act (TCJA). Following are partial excerpts:

• Senator Harris: "Donald Trump … measures the strength of the economy based on how rich people are doing. Which is why he passed a tax bill benefiting the top 1% and the biggest corporations of America, leading to a $2 trillion deficit that the American people are going to have to pay for. On day one, Joe Biden will repeal that tax bill. He'll get rid of it, and what he'll do with the money is invest it in the American people. And through a plan that is about investing in infrastructure … It's about upgrading our roads and bridges, but also investing in clean energy and renewable energy. Joe was going to invest that money in what we need around innovation. There was a time when our country believed in science and invested in research and development, so that we were an innovation leader on the globe. … That's how Joe Biden thinks about the economy, which is about investing in the people of our country, as opposed to passing a tax bill which had the benefit of letting American corporations go offshore to do their business."
• VP Pence: " … President Trump cut taxes across the board. Despite what Senator Harris says, the average American family of four had $2,000 in savings in taxes. And with the rise in wages that occurred, most predominately for blue-collar, hard-working Americans, the average household income for a family of four increased by $4,000 following President Trump's tax cuts. But America, you just heard Senator Harris tell you. On day one, Joe Biden's going to raise your taxes."
• Senator Harris: "That's not what I said."
• VP Pence: " … We've already added back 11.6 million jobs because [we] had a President who cut taxes, rolled back regulation, unleashed American energy, fought for free and fair trade and secured $4 trillion from the Congress of the United States to give direct payments to families, save 15 million jobs through the Paycheck Protection Program. We literally have spared no expense to help the American people and the American worker through this. Joe Biden and Kamala Harris want to raise taxes. They want to bury our economy under a $2 trillion Green New Deal. … "
• Senator Harris: " … Joe Biden has been very clear, he will not raise taxes on anybody who makes less than $400,000 a year."
• VP Pence: "He said he's going to repeal the Trump tax cuts … Joe said twice in the debate last week that he's going to repeal the Trump tax cuts … that gave the average working family $2,000 in a tax break every single year … is he only going to repeal part of the Trump tax cuts?"
• Senator Harris: " … Joe Biden will not raise taxes on anyone who makes less than $400,000 a year. He has been very clear about that."

Partial excerpts on health care:

• Senator Harris: "You have Joe Biden, who was responsible with President Barack Obama for the Affordable Care Act, which brought health care to over 20 million Americans and protected people with pre-existing conditions. And what it also did, was it saved those families who otherwise were going bankrupt because of hospital bills they could not afford. On the other hand, you have Donald Trump who's in court trying to get rid of the Affordable Care Act, which means that you will lose protections if you have pre-existing conditions. … "
• VP Pence: "Well, I hope we have a chance to talk about healthcare because Obamacare was a disaster. The American people remember it well. President Trump and I have a plan to improve health care and to protect pre-existing conditions for every American."

The Commission on Presidential Debates (CPD) announced today that the next debate, on October 15, will be virtual. President Trump said on Fox Business today he will not participate in that format.

In New York Times/Siena polls released October 7:

• Democratic presidential nominee and former VP Joe Biden leads President Trump 48%-42% among likely voters in Nevada
• Biden leads President Trump among likely voters 45%-44% in Ohio

The New York Times report said: "The results illustrate the shifting political dynamics in a pair of states each party has been hoping to flip from its 2016 results. When The Times polled Nevada last month, Mr. Biden held a four-point lead. And Ohio, a state critical to Mr. Trump's Electoral College prospects, appears to be a tossup after Republicans and many Democrats had assumed the state's demographics made it virtually certain to remain in Mr. Trump's column. The president carried Ohio by eight percentage points in 2016."

Tax

Reuters reported on the status of the OECD BEPS 2.0 project.

Treasury and IRS October 7 released final regulations (TD 9926) that provide guidance related to the withholding of tax and information reporting with respect to certain dispositions of interests in partnerships engaged in a trade or business within the United States. The final regulations affect certain foreign persons that recognize gain or loss from the sale or exchange of an interest in a partnership that is engaged in a trade or business within the United States, and persons that acquire those interests; and partnerships that, directly or indirectly, have foreign persons as partners.

This Friday, October 9 (at 12:00 p.m. ET), is the EY Webcast, "Tax in the time of COVID-19: update on legislative, economic, regulatory and IRS developments." The coronavirus (COVID-19) and the resulting economic crisis have made reacting to tax and trade developments more complicated and more difficult. Panelists will provide updates on: (i) the US legislative and economic landscape; (ii) breaking developments — federal and state; and (iii) what's happening at the IRS. Register for this thought Center Webcast.

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