Setting Senate deadlines. Majority Leader Chuck Schumer scheduled a test vote for next Wednesday on a roughly $1 trillion infrastructure package, even though the bill hasn’t been written yet. And he’s pushing Democrats to resolve disputes by next week over details of the $3.5 trillion budget reconciliation bill he wants to use to pass President Biden’s domestic spending along with big tax increases on corporations and wealthy households. Already, senators say the infrastructure timetable is too aggressive. The real deadline may be the following week, just before the Senate is due to leave for its August recess.
Will Biden’s IRS tax gap initiative fall out of the infrastructure plan? Growing GOP opposition to increased funding for the IRS suggests it may fall out of the bipartisan infrastructure bill. While 11 Senate Republicans agreed to support the new money, GOP activists have been pushing back. If the added enforcement is dropped from the infrastructure package, it is likely to land in the bigger social spending bill, where it began life.
What about carbon taxes, here and abroad? The infrastructure spending deal includes an unspecified tax on imports from nations that lack sufficient climate change policies. The tax is comparable to the European Union’s proposed carbon tariff on imports from countries that aren’t taking aggressive steps to reduce greenhouse gas emissions. Will trade policy be the new front in the fight against climate change?
As for the child tax credit… President Biden wants to permanently extend the expanded child tax credit (CTC). The enhanced credit is due to expire in December. Biden wants to extend it for four more years, though to reduce budget costs, Congress may agree on a shorter extension. The IRS began distributing monthly CTC payments yesterday. The agency estimates it will distribute $15 billion to about 39 million families and 65 million children.
All Indiana tax filers will get a refundable credit toward their 2022 state return. The state closed out its June 30 fiscal year with reserves of $3.9 billion. It will split $1.1 billion between retirement funding and a refundable individual income tax credit. Single filers could receive up to $170 and joint filers could see $340 in refunds.
And cheers to Connecticut tax cuts on beer? Gov. Ned Lamont announced that the newly enacted state budget cuts taxes on beer by 16.7 percent. Why? There are more than 120 breweries in the state, supporting 17,892 jobs and generating $2.9 billion in economic output. “We should be doing everything we can to support locally-owned small businesses, including craft breweries,” said Lamont. “This reduction in taxes is another way we can support them.”
Next week on The Prescription: Tony Nitti on pass-through taxes. The special deduction for pass-through business, Section 199A, was one of the most controversial provisions of the 2017 Tax Cuts and Jobs Act. Next Thursday from Noon to 12:30, Tony Nitti, a partner in RubinBrown’s Tax Services Group, will talk all things 199A with TPC’s Howard Gleckman. Register here.
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