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October Surprise, Sort Of | Tax Policy Center


We’ll likely hit the debt ceiling on October 18. Treasury Secretary Janet Yellen told Congress yesterday that “It’s uncertain whether we could continue to meet all the nation’s commitments after” October 18. Senate Majority Leader Chuck Schumer attempted to set up a simple-majority bill to suspend the debt ceiling, but Senate Minority Leader Mitch McConnell blocked it. 

Tomorrow’s infrastructure bill vote remains uncertain. House Progressives still say they’ll block a bipartisan infrastructure bill until Senate centrists commit to the social spending package central to President Biden’s agenda. Senator Bernie Sanders is urging House liberals to vote no. Yet there are hints of progress towards a deal. House progressives had demanded both bills come to the floor at the same time. Now, they just want a specific public commitment from key moderate senators for some kind of big social spending bill.  And some appear to acknowledge the social spending bill must shrink. Speaker Pelosi told The Hill, “We don’t even know where we are…so there’s no use speculating on what may or may not happen.” 

TPC analysis: House Ways & Means reconciliation bill would raise taxes on high income households, cut taxes for nearly everyone else. TPC’s Howard Gleckman reports on a new TPC analysis of the panel’s budget reconciliation tax bill. It would cut 2022 taxes on average for households making $200,000 or less but raise taxes substantially for those making $1 million or more. Concludes Howard, “The Ways & Means bill is one step towards a major 2021 tax bill. It dropped or scaled back some key provisions of Biden’s campaign agenda. But at 30,000 feet, it roughly tracks the president’s wish list.”

Will there be a SALT deal? Rep. Tom Suozzi hopes for an agreement this week on changes to the federal $10,000 cap on state and local tax (SALT) deduction. He said, “If they try to advance a bill that does not include a fix of SALT, there will not be sufficient votes to pass the bill.” A full repeal could cost as much as $88.7 billion in 2021 alone, according to the Joint Committee on Taxation. Some options: Restore the full deduction for two years or repeal the cap for moderate-income households. 

Meanwhile, in one-fifth of California restaurants… A five-year audit of the state’s businesses found “zappers,” illegal software applications used to evade sales and income taxes. Nearly 20 percent of California restaurants had the software, reducing tax revenue by more than $30 million over the five-years. But fewer than one percent of the restaurant owners who had the illegal software faced state criminal charges. 

 

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