A middle ground on COVID-19 relief? House Speaker Nancy Pelosi said she’d meet Republicans halfway on the top-line amount of COVID-19 relief—at about $2 trillion. Then, she’d revisit efforts for additional funding after the November elections or early next year. Senate Republicans are circulating language on a smaller bill with some money for the Postal Service, limited supplemental unemployment payments, and aid for small businesses and school re-openings. Congress is unlikely to act on any bill until September.
An action without reaction? President Trump’s executive actions on unemployment benefits and payroll taxes have done little to deliver financial relief. Relatively few employers will implement Trump’s plan that allows them to defer payment of workers’ payroll taxes. They say technical and logistical challenges are likely to prevent them from passing any extra income back to their employees. At the same time, few states have taken Trump up on his plan for a $300 weekly federal unemployment benefit.
Interest because of delayed action. The IRS will pay interest to 14 million taxpayers on refunds issued after April 15, because of the delayed filing deadline of July 15. To date, the IRS said the average interest payment is about $18. If interest exceeds $10, it will count as taxable income for the 2020 tax year. Of the 14 million taxpayers receiving interest payments, about 12 million will get them via direct deposit. The remaining taxpayers will receive checks.
Yet another rejection of yet another motion. A federal judge has thrown out Trump’s latest attempt to block Manhattan District Attorney Cyrus Vance’s subpoena of Trump’s financial records, including his tax returns. Trump’s attorneys said the subpoena was “overbroad” and issued “in bad faith.” The court found that the president’s plea was insufficient. Trump’s lawyers are likely to appeal.
Will Trump flesh out his tax agenda in the GOP convention? This week’s Republican convention is an opportunity for the president to flesh out what has been a remarkably thin second-term tax platform. Will he take it? Probably not. Will he criticize Democratic presidential nominee Joe Biden’s proposed tax increases? Probably.
Could Biden convince Congress to raise taxes? Biden would raise taxes by about $4 trillion over the next decade, nearly all on businesses and high-income households. TPC’s Howard Gleckman says “the real question for Biden is how much of his ambitious tax plan could Congress realistically pass next year. Straight-up tax increases may be a tough sell, but combining them with low- and middle-income tax cuts could make the job easier.”
To be an employee or not to be an employee? That is the taxing question. TPC’s Richard Auxier explains that taxes are the real issue behind Uber and Lyft threatening to shut down operations in California. If they treat their drivers as employees, their tax costs go up. Why? Drivers pay the employer share of payroll taxes in the form of lower pay—but not if they are making less than the state minimum wage. If a business cannot shift the employer share of the payroll tax to the worker, the business either must raise prices or pay the additional cost itself.
Michael Stern dies. Mike Stern, the long-time staff director of the Senate Finance Committee under chairman Russell B. Long, died in early August at age 81. Mike was the classic old-school Hill staffer who knew just about everything but kept a low profile.
Members of each chamber of Congress will be in their home districts until Congress and the White House reach a deal on coronavirus relief. Barring such a deal, the Daily Deduction will post Mondays only until September.
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