September 27, 2024 What to expect in Washington (September 27) Democratic presidential candidate Vice President Kamala Harris September 25 expressed support for the international tax proposals put forward by the Biden administration. A release on the New Way Forward to Build American Industrial Strength, including America Forward tax credits for emerging industries, said the plan will cost approximately $100 billion and "will be paid for by a portion of the proceeds of international tax reform, which seeks to prevent a global race to the bottom and to discourage inversions, outsourcing, or international tax strategies designed by corporations to avoid paying their fair share to the United States." The broader "America Forward" plan is a continuation of the approach taken in the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act (IRA), using industrial policy to bolster investments in target areas. The release said Harris wants to foster strategic industries essential to economic growth and national security like biotechnology to help "produce critical medicines," AI, expanding clean energy manufacturing and innovation, revitalizing the semiconductor industry, investing in aerospace and automobiles, and industrial tools and machines. The America Forward tax credits will be linked to the treatment of workers, "ensuring the right to organize, and supporting investments in longstanding manufacturing, energy, and agricultural communities," the release said, reminiscent of the IRA's wage and apprenticeship requirements and bonus credits for energy communities and low-income communities. VP Harris also wants to reform tax laws to let workers share in a company's success, including broad-based employee stock ownership and profit-sharing plans. VP Harris said in Pittsburgh September 25, "I will recommit the nation to global leadership in the sectors that will define the next century. We will invest in biomanufacturing and aerospace, remain dominant in A.I. and quantum computing, blockchain and other emerging technologies. Expand our lead in clean energy, innovation and manufacturing. So, the next generation of breakthroughs, from advanced batteries to geothermal to advanced nuclear are not just invented but built here in America by American workers." The Harris campaign released an 82-page document on economic plans that said, "The America Forward tax credits will provide significant additional benefits to investments made in longstanding manufacturing, farming, and energy communities, especially to those who commit to retool or rebuild an existing facility. These new tax credits will also reward companies that engage with industry, workers, unions, and communities to protect jobs, including in light of increasing automation, as well as companies that develop plans to hire existing workers at comparable wages." It further said the "plan will reform the international tax system so that corporations can no longer get big rewards for shifting jobs and profits overseas." A story in the September 26 Washington Post, "Harris urges industry investment but is light on details," said that while in her Pittsburgh speech Wednesday Harris announced plans "for a broad expansion of investment in American industries from semiconductors to clean energy … she was light on specifics, instead focusing much of her speech on emphasizing that she understands the struggles of middle-class Americans." The story said, "The push to expand on the industrial investments undertaken by the Biden administration was especially significant. Industrial policy has long been controversial, and economists tend to warn that federal efforts to plan the economy through government-led investments can be ineffective or even backfire. But Democrats have increasingly embraced this approach after Trump's election in 2016 … " A September 27 Wall Street Journal story, "Harris Champions Government Policy to Support U.S. Manufacturing," said, "Her plans are largely an extension of Biden's years long effort to use government tools and finances to boost key sectors of the economy. The approach, known in economic parlance as 'industrial policy,' is increasingly supported by some Republicans, who have relaxed their free-market convictions to help the U.S. compete … " The newly announced approach competes with Republican candidate Former President Donald Trump's proposals that he restated this week, including a 15% "Made in America" tax rate for companies that make products in America while those that make products elsewhere would be required to pay "a very substantial tariff when you send your product into the United States." Tariffs were previously described to be 10%-20% or 60% for products from foreign adversaries, and Trump said 100% or 200% could apply to foreign automobiles. A particular focus as the two candidates have rolled out their tax proposals is how much they will cost and if and how they will be paid for. Former President Trump has said economic growth would cover the cost of end-of-2025 TCJA expirations and has called for tariffs and terminating Inflation Reduction Act (IRA) funds. VP Harris continues to call for "fair share" tax increases on corporations and high-income individuals. Asked during a September 25 MSNBC interview where revenue will come from for priorities like a Child Tax Credit (CTC) expansion or assistance for first-time homebuyers if corporate taxes can't be raised because of a GOP-controlled Senate, Harris said, "We're going to have to raise corporate taxes. We're going to have to make sure that the biggest corporations and billionaires pay their fair share." She further said, "I work with a lot of CEOs, I have spent a lot of time with CEOs," and they "agree that people should pay their fair share." Further, Harris said, "Part of my plan for the economy is investing in new industries in a way that we have active partnership with the private sector. I have worked with the private sector my entire career." In Congress, Democrats led by Senate Finance Committee Chairman Ron Wyden (D-OR) are drafting Harris' tax proposals into legislation to have ready for the start of her administration if she wins the election. Health — The Harris-Walz 82-page document described proposals intended to lower health care costs — expand and make permanent the tax credit enhancements for Affordable Care Act marketplace plans, strengthen health care for veterans, and help tackle the opioid crisis and help Americans access treatment — and lower prescription drug costs by extending the $35 cap on insulin and $2,000 cap on out-of-pocket costs to all Americans, accelerating the speed of Medicare prescription drug negotiations, and increasing competition and demand transparency in the health care industry. On September 25, Senators Jeanne Shaheen (D-NH) and Tammy Baldwin (D-WI) introduced the Health Care Affordability Act (S. 5194) to make permanent the Affordable Care Act's (ACA) enhanced premium tax credits (PTCs) for Health Insurance Marketplace coverage as extended through the Inflation Reduction Act, which are currently set to expire at the end of 2025. Tax — During the September 25 Senate Finance Fiscal Responsibility and Economic Growth Subcommittee hearing, "Providing Small Business Relief from Remote Sales Tax Collection," Subcommittee Chair Maggie Hassan (D-NH) asked about protections for small business in the wake of the Wayfair decision, which are reflected in a discussion draft she is releasing. She said sales tax collection has hit small businesses especially hard in states that don't have sales taxes like New Hampshire and, "It is past time for Congress to take steps to alleviate these burdens and lower costs for small businesses." Senator Hassan said Congress should: require out-of-state governments to increase the simplicity and consistency of sales tax laws for remote sellers; ensure that out-of-state sales tax paperwork is as simple as possible; and require state governments to provide small businesses with no-cost compliance services. Ranking Member Chuck Grassley (R-IA) raised concerns about states that aren't Streamlined Sales and Use Tax Agreement (SSUTA) members not enacting reforms to limit burdens on interstate commerce and businesses ignoring their obligation to collect and remit sales tax, making a case for adoption of simplification requirements. Full Committee Chairman Ron Wyden (D-OR) said, "small businesses in Oregon have been just tied up in a sea of red tape since the decision in Wayfair allowed other states to require them to collect sales taxes on online purchases. You almost have to be an accounting Einstein to collect taxes for 10,000 different jurisdictions." As Politico noted, it isn't clear whether the remote sales tax issue can be taken up next year when Congress will be faced with other pressing tax issues with the expiration of some TCJA provisions. During the September 25 Hamilton Project and Tax Law Center at NYU Law Webinar, "Taking on tax: Modernizing partnership taxation," Chairman Wyden said the partnership rules were written years ago and, with Congress expected to look at issues driving activity in the private sector around tax next year, it would be "legislative malpractice" to ignore partnerships. Chairman Wyden proposed partnership tax changes in a 2021 discussion draft. A Hamilton Project-NYU Tax Law Center policy proposal made recommendations including supplementing related party basis shifting regulation with additional legislation. Government funding — The House and Senate September 25 approved, and President Biden subsequently signed, a continuing resolution (CR) to extend government funding through December 20. The Senate is adjourned until Tuesday, November 12, which is also the date the House is slated to return to session. Publications — Recent WCEY and EY Alerts and publications include:
With Congress away, What to Expect in Washington will be published less frequently, though WCEY Alerts will be issued as events warrant.
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