Does Congress need to make a deal if the President can cut taxes by himself? Senate Majority Leader Mitch McConnell thinks it’s time to get back to the negotiating table and make a coronavirus relief deal. At the same time, White House advisers are investigating whether President can cut or at least defer collection of not only payroll but also income taxes from households and businesses. As for Trump’s proposal to make permanent a payroll tax suspension, Senate Finance Committee Chairman Chuck Grassley said he’d only support the idea if it was part of a larger discussion of assuring the Social Security Trust Fund’s solvency.
Understanding the unemployment insurance mess. TPC’s Tracy Gordon walks through the Administration’s ever-evolving—and ever-shrinking—plan to top up state unemployment insurance benefits. The added benefit seems to have dropped to $300 from the $400 the President touted last Saturday. Tracy says there is a better way.
The payroll tax deferral may be shrinking too. Firms won’t have to participate in the Administration plan to defer payroll taxes from Sept. 1 through December, says Treasury Secretary Steven Mnuchin. “We can’t force people to participate, but I think many small businesses will and pass on the benefits,” Mnuchin told Fox Business. Many firms are unlikely to defer payroll tax withholding, both because of the complexity and the challenges employees will face if they must pay the deferred tax in January.
South Dakota’s tax revenue collections in July beat expectations. In the first month of its fiscal year, South Dakota collected $14.7 million or 8 percent more than the state legislature estimated. Businesses collected these taxes in June and remitted them to the state in July. The state’s Bureau of Finance and Management warned, however, that the situation could get worse because federal financial aid to the state is ending.
AICPA, 180 other organizations, urge deductibility of PPP expenses. The certified public accountants’ organization signed a letter asking that Paycheck Protection Program loan forgiveness-related expenses remain deductible. They argue that in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress intended to allow firms to deduct these expenses, since it allows loan forgiveness to be excluded from a borrower’s taxable income.
In Ohio: A call to repeal a tax on commuters. A state senator proposes repeal of a state law that lets cities continue to tax people who used to commute to work before the pandemic. Governor Mike DeWine signed the state law in March, which allows employers in a pandemic-closed business in Cleveland, for example, to continue to withhold local income taxes as if their employees are working from their homes outside Cleveland.
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