Pelosi tries to thread the fiscal needle. The House will meet this week to try to advance the Senate-passed infrastructure bill and budget resolution. But first, the House speaker will have to settle a dispute between Democratic moderates who want to vote on the infrastructure bill right away and progressives who want to House to delay a vote on the public works measure until the Senate adopts a full--blown budget, a process likely to take months. Pelosi wants the House to vote on a rule this week to set debate parameters for both bills, as well as voting rights legislation.
A larger question looms… The Senate’s budget resolution allows for $3.5 trillion in spending, half of which would be funded by tax increases. Senate Democrats Kyrsten Sinema and Joe Manchin say they want a smaller top-line number but haven’t specified a figure. The House and Senate tax-writing panels are drafting tax increases that leadership wants by mid-September, but don’t yet know how much to raise. Stay tuned: The Senate returns Sept. 13. After its brief session this week, the House will return Sept. 20.
Wyden to release a more detailed international tax plan. This week, the Senate Finance Committee chair is likely to flesh out the plan he first described in April. There may be important differences between his plan the President Biden’s.
Treasury Secretary Yellen backs reappointment of Fed Chair Powell. Treasury Secretary Janet Yellen supports the reappointment of Federal Reserve Chair Jerome Powell to a second four-year term. Biden is expected to decide around Labor Day.
ProPublica: Top pass-through business owners cut their tax bills by cutting their salaries, but not their income. The nonprofit news service explains how the Tax Cuts and Jobs Act allowed people who are both owners and employees of a company to save millions of dollars in taxes by changing how they label the income. Wages face a top individual income tax rate of 37 percent, as well as payroll taxes. But qualified profits are taxed at a top federal rate of 29.6 percent, with no payroll tax. For example, one construction firm executive cut his salary from more than $4 million in 2017 to $105,000 in 2018 without reducing his income.
TaxVox round-up… Last week, TPC”s Jake Fisher urged states to restructure financing models that limit the ability of local school boards to achieve adequate and equitable school funding. TPC’s Howard Gleckman showed how the COVID-19 pandemic and the policy response to it drove a huge but temporary increase in the share of households that paid no federal income tax in 2020. And TPC’s Gene Steuerle argued that policymakers should fund broad-based investments in human capital by demanding more from the wealthy. At the same time, it should use tax policy to encourage broader-based ownership of wealth.
In case you missed your TPC Prescription with Google’s Adam Cohen. Google’s London-based director for economic policy Adam Cohen joined TPC’s Thornton Matheson last week. They discussed global efforts to modernize the corporate income tax, including the implementation of digital service taxes and the OECD's Base Erosion and Profit Shifting (BEPS) initiative.
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