March 19, 2021
What to expect in Washington (March 19)
Politico reported March 17 that White House Chief of Staff Ron Klain told progressive members of Congress at a White House meeting that options are being explored for the forthcoming Build Back Better infrastructure-plus plan, including breaking it up into as many as three bills, with some moving in a bipartisan manner and others through reconciliation. Congressional Progressive Caucus Chair Rep. Pramila Jayapal (D-WA) said she pressed for a commitment that the President’s plan will go beyond transportation and address climate change, health care, and family benefits, and she told officials, “We can either go green, or we can go bipartisan, because I just don’t think that Republicans are ready to have a transformative package.”
Punchbowl News today said, “Top Democrats expect Congress will pass a number of infrastructure and public works bills through the summer and potentially into the fall.” The report suggested the large plan will be laid out, probably with a corporate tax increase; Congress will first try to pass smaller pieces of legislation over spring and summer; and a final vote on a large bill is eyed for end-of-summer or early fall.
Still, there has been no official word about the Build Back Better plan’s scope, processing, or potential to include tax increases, and it may be a while before the picture is clearer. The full House is gone for three weeks after today, with committees holding virtual hearings next week but the chamber in recess the following two weeks, like the Senate. That puts President Biden’s address to Congress to detail the plan around mid-April.
Congressional schedule – It could be something of an infrastructure week in the House next week, with the Ways & Means Committee holding a members’ day hearing on the subject March 23 and the Transportation & Infrastructure Committee hosting Secretary Buttigieg March 25 (11:00 a.m.) for a hearing on “The Administration’s Priorities for Transportation Infrastructure.”
The Senate Finance Committee will hold a hearing on the impacts of US international tax policy on American jobs on Tuesday, March 23. The Senate is out today and comes back in on Monday with a vote on Marty Walsh to be Labor Secretary. Majority Leader Chuck Schumer (D-NY) has taken procedural steps (i.e., filing cloture) to set up action next week on:
Tax – Discussion of potential tax increases, for the Build Back Better plan and generally, continues. On March 17, Senators Bernie Sanders (I-VT), Elizabeth Warren (D-MA), Ed Markey (D-MA), and Chris Van Hollen (D-MD), along with Reps. Barbara Lee (D-CA), and Rashida Tlaib (D-MI), introduced the Tax Excessive CEO Pay Act (S. 794/H.R. 1979), to increase the corporate tax on companies that pay top executives at least 50 times more than a median worker. Under the plan, which Sanders offered as a presidential candidate, the corporate tax rate would increase by 0.5% for companies reporting a ratio of 50-1, up to 5% for companies reporting a ratio of 500-1 or higher.
Senator Brian Schatz (D-HI), joined by Senators Warren, Van Hollen, and others, March 18 reintroduced the Wall Street Tax Act to impose a 0.1% tax on each sale of stocks, bonds, and derivatives, raising $752 billion/10 years. Senators Sanders and Warren proposed financial transactions taxes as presidential candidates. Biden did not, and Treasury Secretary Janet Yellen expressed polite skepticism of a FTT February 22, saying, “That’s something that one would have to examine closely, what impact it would have on ordinary retail customers who are active in the stock market. It could deter speculation, but it might also have negative impacts.”
The Treasury Department and IRS announced that the federal income tax filing date for individuals for the 2020 tax year has been automatically extended to May 17, 2021. Individuals will also have until May 17, 2021, to pay their 2020 income tax liabilities, which would otherwise have been due on April 15, 2021, without penalties or interest. This relief does not apply to estimated tax payments due on April 15, 2021.
On March 17, Senator Susan Collins (R-ME) introduced a bill (S. 804) to eliminate the marriage penalty for purposes of limits on State and Local Property Tax deductions. The amount of state and local taxes that both single and married filers may deduct from their annual income taxes is capped at $10,000; single filers and married filers are treated the same.
Ways & Means Republicans announced that “Ohio’s attorney general is suing the Biden administration over the new $1.9 trillion spending bill’s unconstitutional attack on states’ ability to set their own tax policies,” and other AG’s wrote to Treasury on the issue. State and local funding under the American Rescue Plan Act is restricted from being used to “offset a reduction in the net tax revenue of such State or territory resulting from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase.” An editorial in today’s Wall Street Journal said, “Democrats didn’t flip a single state legislative chamber or governor’s mansion in the 2020 election … yet through their Covid bill Democrats are trying to partially nullify these election results by mandating that state governments cannot pass tax cuts as a condition of receiving aid.”
Senate – During a March 18 MSNBC interview, Kate Bedingfield, White House Communications Director, said of calls for changes to the Senate filibuster, “What the president is not willing to do, Hallie, is to allow progress and to allow benefits to the American people to be held hostage in the process. And, so, there are going to be conversations … and he’s open to hearing different ideas… He is interested in the conversations that are happening. There are a lot of different ideas out there. He again, as you said, yesterday, signaled his openness to reverting to the talking filibuster.” The President’s comments about a talking filibuster were a shift and so is the new openness to changes, as progressives and others express concern about the ability for Democrats to move on their agenda even with control of the presidency and both chambers of Congress.
Health – During Thursday’s Senate HELP Committee hearing on the COVID-19 response, Dr. Tony Fauci and others testified and, while there was bipartisan support and appreciation for the panel and their staff’s work to combat the virus, there was also push back regarding recent guidance coming out of the agencies. In particular, several Republicans on the committee pushed back on the restrictive guidelines for vaccinated persons, with Senator Rand Paul (R-KY) calling it “theater” to wear a mask after vaccination, and others saying that we must reward people for getting vaccinated by allowing them to engage in additional activities. Drs. Fauci and Walensky noted the importance of being cautious and letting data drive guidance.
Xavier Becerra was confirmed as HHS secretary yesterday, with Senator Collins crossing party lines to vote in favor.
On March 25, the Ways & Means Oversight Subcommittee holds a hearing on “Examining Private Equity’s Expanded Role in The U.S. Health Care System.”
Today, March 19 (12:00 p.m.), is the EY Webcast, “Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments.” It’s been one year since we first launched this webcast series to discuss how businesses can navigate the tax policy environment in the time of COVID-19. Now that a year has passed, we will explore how everyone – from the IRS to tax departments to other countries – has been responding. Join our panelists for a conversation about how to continue effectively operating the tax function in this time of crisis and change. Panelists will provide updates on: (i) US economy and tax policy; (ii) Breaking developments; and (iii) What’s happening at the IRS. Register.