May 12, 2021
What to expect in Washington (May 12)
Treasury official Kim Clausing said during an ABA meeting that the Green Book will be coming out the last week of May, with details and revenue estimates on the president’s tax proposals, the tax press reported. Those details are awaited by lawmakers to determine how the proposals work and how much they raise as the Administration pushes for transportation and human infrastructure plans financed with tax increases.
There has been some movement toward compromise on infrastructure – President Biden suggesting he’d compromise on a corporate tax increase to 25%, and Senate Republican leader Mitch McConnell (R-KY) saying he’d go up to $800 billion on the cost of a plan – but as White house Press Secretary Jen Psaki said May 10, “We’re in the early sausage-making stage of the discussion with members of both parties.” On May 11, Psaki said of timing for the package, the Administration wants “progress by Memorial Day and hope to sign it by the summer.” House Speaker Nancy Pelosi (D-CA) wants passage by July 4 or at least the start of the August recess. Today, Biden meets with Speaker Pelosi, GOP leader Kevin McCarthy (R-CA), Senate Majority Leader Chuck Schumer (D-NY), and Sen. McConnell at the White House.
On Thursday, the President hosts Republican senators, led by Senate Environment & Public Works Ranking Member Shelley Moore Capito (R-WV), who have a $568 billion infrastructure plan without TCJA rollbacks. Axios said other attendees are Senators John Barrasso (R-WY), Roy Blunt (R-MO), Mike Crapo (R-ID) and Pat Toomey (R-PA).
The Senate Finance Committee (SFC) has scheduled a hearing on “Funding and Financing Options to Bolster American Infrastructure” for Tuesday, May 18 (10 a.m.).
Tax – A May 11 Washington Post story on Democratic trepidation over Biden’s tax increase proposals said:
An SFC subpanel held a hearing May 11 on the tax gap, which has taken on a higher profile following IRS Commissioner Rettig’s estimate of $1 trillion annually. Some policymakers are calling for narrowing the gap as part of the initiative to provide revenue for other priorities, including President Biden, whose Families Plan calls for financial institutions to report information about aggregate account outflows and inflows. Republicans expressed reluctance over concerns about privacy and, as Senator John Thune (R-SD) said, that banks could be viewed as an extension of IRS tax enforcement efforts. Former IRS Commissioner Rossotti discussed his plan, which like others calls for more reporting, better technology, and enforcement.
The Administration plan calls for $80 billion in funding to gain $700 billion in revenue from narrowing the gap, and Republicans noted that those sums seem too large and that the varying estimates of the gap/necessary investment/revenue gain are confusing. Both Thune and subpanel Chairman Sheldon Whitehouse (D-RI) noted that budget rules don’t allow projected revenue from increased enforcement to be counted for revenue scores, which presents a hurdle to using the proposal as a revenue offset. Whitehouse said that rule should be changed. CBO’s latest Revenue Options report said regarding an enforcement proposal, “Because of the budget scorekeeping guidelines used by the Congress, the revenue changes attributable to this option would not be counted for budget enforcement purposes.”
Restrictions on conservation land deals could be part of eventual tax gap legislation, an SFC Democratic aide told the ABA meeting, Bloomberg Tax reported.
Today, May 12 (2:00 p.m.), is the House Ways and Means Select Revenue Measures Subcommittee hearing, “Funding Our Nation’s Priorities: Reforming the Tax Code’s Advantageous Treatment of the Wealthy.” Witnesses:
On Friday, May 14 (12:00 p.m. ET), is the EY Webcast, Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments, COVID-19 and the resulting economic crisis have made reacting to tax developments more complicated than ever. Join us for the next webcast in our series as we discuss how businesses can navigate the tax policy environment and continue to effectively operate their tax function in this time of crisis and change. Panelists will provide updates on: (i) The US economy and tax policy; (ii) Breaking developments; and (iii) What’s happening at the IRS. Register.