What Is Down May Not Go Up

Fed Chair Powell: Rampant inflation is “not a problem.” In his testimony before the Senate Banking Committee yesterday, Federal Reserve Chairman Jerome Powell said while prices may rise when the pandemic subsides, the increase won’t be enough to reverse past decades of downward pressure on inflation. And he was unconcerned about the inflationary effects of another large relief bill. “We don't really see how a burst of fiscal support or spending that doesn't last for many years would actually change those inflation dynamics.”

Rettig: Tax Day will remain April 15. In congressional testimony yesterday, IRS Commissioner Charles Rettig said the agency is sticking with the traditional tax filing deadline despite pressure from tax preparers to delay the date. He also said the agency would need about $400 million in special funding to administer a monthly Child Tax Credit payment. The House pandemic relief bill happens to include that amount.     

Romney and Cotton propose smaller increase to minimum wage. GOP senators Mitt Romney and Tom Cotton unveiled a proposal to raise the current $7.25 hourly minimum wage to $10 over four years while making it harder for firms to hire undocumented workers. Democratic leaders continue to push for an increase to $15 by 2025—but some Senate Democratic centrists are not fully sold on the idea. West Virginia’s Joe Manchin favors $11. President Biden suggests the size and pace of the increase is negotiable. 

State and local governments still need federal aid. TPC’s Lucy Dadayan and Kim Rueben argue that while some states have enjoyed better than expected revenues through the pandemic, many others have not. Local governments have suffered even more. Key factors including state revenues, overall economic growth, public sector employment, and  unemployment rates could fine-tune federal assistance and better target aid. They conclude that without state and local federal aid, the nation’s economy will suffer.

California enacts a $7.6 billion coronavirus relief package. Residents who earn $30,000 a year or less will receive $600 stimulus checks within four to five weeks of filing their state tax returns with direct deposit. The package also includes over $2 billion in grants for small businesses, $30 million for food banks, and $5 million for diaper banks. The legislation also cancels $25 million in restaurant and hair salon fees.  

Will there be a soda tax in Washington State? The state senate has modeled legislation after Seattle’s soda tax. The bill would tax beverage distributors 1.75 cents for every ounce of sweetened drinks with more than 20 calories in a 12-ounce serving. The price of a 12-ounce can of regular soda would climb 21 cents. Revenue would fund public health programs and a health equity account for communities of color. 

For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].