Infrastructure progress at last. After weeks of talks and wheel-spinning, the Senate has agreed to begin debate on a roughly $1 trillion bipartisan public works bill. The vote came after a group of nearly two dozen senators reached a consensus on a framework bill. The measure includes about $550 billion in new spending but apparently no new taxes and no revenue from tougher IRS enforcement. The next step will be a laborious series of Senate floor votes on amendments to specific provisions.
Which taxes will House Democrats raise in a reconciliation bill? The House Ways & Means Committee is working through the alternatives. Chairman Richard Neal told Tax Notes (paywall) that “I want people to know what the options are.” If they want the bill to be revenue neutral, lawmakers will need to raise between $2 trillion and $3.5 trillion. The amount will depend on whether it includes prescription drug price savings or if the Senate Democrats will back a bill without full offsets.
Senate Finance Talks Retirement. At a panel hearing yesterday, lawmakers on both sides of the aisle sounded like they’d like to pass their version of a bill expanding incentives for retirement savings. Democrats also say they’d like to shut down mega IRAs, those accounts that the very wealthy use to shelter income.
Would corporate tax hikes be unfair to US territories? Sen. Bob Menendez thinks so. He’s urging Democrats to protect US territories as they consider proposals to raise corporate taxes. If Congress rates the rate on the global intangible low-taxed income, or GILTI, he wants relief for companies operating in Puerto Rico and other territories. “The three-and-a-half million citizens who live in Puerto Rico are US citizens, and they deserve to be treated in every respect as every other US citizen. If GILTI has a disproportionate effect on the economy on the island of Puerto Rico, then ultimately that’s simply not fair.” Residents of the island pay no federal income tax on Puerto Rico income.
IMF: Global economy will grow by 6 percent this year but there will be winners and losers. The International Monetary Fund has boosted its economic forecast for developed countries including the United States and lowered its forecast for emerging markets and developing countries: "Economies are diverging even further, influenced by differences in the pace of vaccine rollout and policy support. However, smooth and durable recoveries are not assured even in places where infections are seemingly under control."
Will today’s GDP figures show faster US growth than expected? The Commerce Department will release figures today. S&P Global Ratings’ chief US economist Beth Ann Bovino expects they’ll show the economy “expanded at an 11 percent pace during the second quarter, well above the consensus estimate of 8 percent.”
New York State sales tax revenue surges. Sales tax revenue for municipalities grew by 49 percent from April through June compared to the same period last year, during the pandemic. Collections were up by 19 percent since the beginning of the year, reflecting an increase of $1.5 billion. The most recent quarter’s sales tax revenue was higher than the same period in 2019.
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