Growing optimism for a framework this week. President Biden wants one before he leaves for the United Nations Climate Summit at the end of the week. Sen. Joe Manchin says he thinks that will happen and expressed support for a proposed billionaire tax. Negotiators have scaled back the Build Back Better plan to about $1.75 trillion.
Wyden’s billionaire income tax: Ambitious but problematic. TPC’s Steve Rosenthal describes the challenges to Senate Finance Committee Chair Ron Wyden’s new tax on annual increases in value of the assets of about 700 billionaires. The tax would apply only to those with more than $1 billion in assets, or $100 million in income for three consecutive years. But there are issues: How would wealthy filers value their holdings annually, especially for privately-held businesses? How would losses be treated? Steve argues that rather than creating a new tax on the wealthiest Americans, it would be fairer, more efficient, and raise more revenue if Congress taxed the unrealized capital gains at death at the same rate wage earners pay.
A two-year SALT cap repeal. Democrats reportedly are considering a plan to repeal the 2017 cap on the state and local tax (SALT) deduction for 2022 and 2023 only. A group of Blue State Democrats has insisted on some SALT fix as their price for supporting Biden’s Build Back Better plan. The problem: Even a temporary repeal would be costly and would largely benefit high-income households.
Next year: R&D capitalization would hit manufacturing and tech sectors the hardest. TPC’s Thornton Matheson and Thomas Brosy detail how capitalizing research and development (R&D) expenditures could significantly reduce investment in intellectual property in the manufacturing and tech sectors. They used TPC’s Investment and Capital Model to calculate effective marginal tax rates (EMTR) on R&D. They conclude it is a “good time to evaluate the fiscal and economic effects of tax subsidies for research, focusing on the relative benefits of tax incentives for investment and those for rents.”
Will a debt ceiling increase end up in budget reconciliation after all? Senate Republicans still want Democrats to raise the debt ceiling through reconciliation without GOP votes. Speaker Nancy Pelosi says reconciliation is one path, but not the preferred path. Roll Call takes a close look at the procedural hurdles.
Will Michigan revive the use of tax incentives to lure and keep employers in the state? Automaker Ford recently announced plans to build new electric vehicle and battery plants in Tennessee and Kentucky in return for nearly $1.3 billion in tax incentives. Some Michigan lawmakers think it’s time to bring back economic development tax incentives that were largely abandoned when former GOP Governor Rick Snyder advanced $1.8 billion in business tax cuts in 2011.
NASCAR wants the Ohio Supreme Court to review the state’s commercial activities tax. Ohio’s tax commissioner determined that the racing giant should have paid $549,520 in commercial activities taxes between 2005 to 2010, including interest and penalties. The state’s Board of Tax Appeals agreed with the tax commissioner’s claim that since NASCAR’s intellectual property is used and viewed in the state it is subject to state tax. NASCAR Holdings is appealing to the state’s high court.
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