A Budget In Two Week; Tracking Pandemic Relief Dollars
White House will release its budget on May 27. President Biden will release his full 2022 budget two weeks from now. It will include projections for mandatory spending such as Social Security, Medicare, and Medicaid as well as more details on discretionary spending and tax proposals. It’s expected to unify his $1.5 trillion annual spending plan for 2022, the $1.9 trillion American Rescue Plan, and his proposed $2.3 trillion infrastructure plan and $1.8 trillion American Families Plan.
Save the date: June 9. What are the effects of the Biden administration’s corporate tax proposals? TPC and the University of North Carolina Tax Center will host a virtual event featuring accountants, lawyers, and economists. They’ll talk about how a tax on corporate book income might work and whether there are better ways to limit corporate tax preferences. The agenda also includes how Biden’s corporate tax plans might affect investment in the US, economic growth, and competitiveness of US-based corporations. And they’ll discuss whether an international agreement on a minimum tax could effectively limit harmful tax competition. Learn more and register here.
How do you monitor over $5 trillion in pandemic relief? Compared to the Trump administration, Biden requires more detailed and frequent reporting by those receiving funds. But The New York Times reports that turf battles, a decentralized and not fully functional tracking system, and the speed of disbursement complicate efforts to police use of the funds.
Understanding Treasury rules for states that take ARP funds and cut taxes. TPC’s Richard Auxier explains how Treasury will determine whether states that take American Rescue Plan money can make tax cuts. Treasury will provide some flexibility. And while the rules won’t stop Republican lawsuits, they will give states necessary guidance to craft budgets — even those that include tax cuts. Says Richard, “Think of the [American Rescue Plan] as a bar and these rules as the bouncer. All states are allowed in and they can even have a drink too many. But if they overdo it, Treasury reserves the right to cut them off and throw them out.”
Businesses want more federal infrastructure spending , but—surprise!—without the corporate tax hikes. The Wall Street Journal reports (paywall) on the Biden’s administration’s efforts to convince corporate leaders to back his $2.3 trillion infrastructure proposal. Some companies prefer that he fund new projects with fees from users of new infrastructure, such as tolls, and with a federal infrastructure bank to fund projects through loans.
Idaho Governor Brad Little signs biggest tax cut in state’s history. He signed a measure that gives residents $220 million in immediate one-time income tax rebates and $163 million in ongoing income tax relief. Anyone who filed a state income tax return in 2019 will receive a rebate of at least $50, or 9 percent their 2019 taxes, whichever is greater. Together with another tax conformity bill earlier this session, lawmakers enacted more than $435 million in tax relief.
Jacksonville, Florida, may double its gas tax. The City Council is considering whether to raise the tax from 6 cents to 12 cents per gallon. Revenue would pay for transportation and other infrastructure improvements. The higher tax rate could raise hundreds of millions of dollars over 25 years, which leaves the council with questions about how to allocate the funding over the long term.
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