Threading the infrastructure needle. On Thursday, to keep progressive congressional Democrats happy, President Biden said he would not sign a $1 trillion infrastructure bill unless it is paired with a larger package of social spending. Republicans immediately objected, saying last week’s infrastructure agreement with a small bipartisan group of senators included no preconditions. On Saturday, Biden said he’d still do everything he can to win congressional passage of the bigger social spending package, but he’d sign the public works bill even without the second measure.
The infrastructure deal includes $40 billion for the IRS. The package reportedly includes $40 billion more in new funding for the agency over several years. While the amount would be significantly less than President Biden proposed, it would help reverse years of budget cuts. The IRS has not been “in a strong position to dispute the argument” that many are engaging in legal tax avoidance rather than illegal evasion, says TPC’s Janet Holtzblatt. The agreement is silent on another key White House enforcement proposal—an expansion of bank reporting requirements.
Oregon lawmakers set to give businesses a big PPP tax break. Businesses and self-employed individuals could save between $450 million and $600 million in state taxes if they received forgivable loans through the Paycheck Protection Program (PPP). Oregon will conform its tax code to federal law and allow business to deduct PPP expenses from their state income taxes.
Congress can keep monthly CTC payments coming and limit risk of overpayments. TPC’s Elaine Maag writes that current rules for expanded and advanced child tax credits could require some recipients to repay some or all of the advance payment. “By using information from only one prior tax year and keeping the credit fully refundable, Congress can markedly reduce that risk.”
How some taxpayers can avoid the SALT cap at no cost to states. TPC’s Kim Rueben explains that at least 14 states have found a way to allow some taxpayers to avoid, at least partially, the federal cap on the deductibility of their state and local taxes. They are doing it by allowing owners of some pass-through businesses to pay tax on their business income at the entity level, rather than on their individual income tax returns. Since the SALT cap applies only to individual income taxes, states can give their residents some relief from the federal limit without lowering state revenue.
On the Hill this week. The House Ways & Means Committee Subcommittee on Oversight will host a hearing on expanding access to higher education
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