It’s increasingly unclear. The Wall Street Journal reports (paywall) that congressional Democrats may not have the votes to pass some of President Biden’s more ambitious efforts to rewrite the 2017 Tax Cuts and Jobs Act or otherwise raise taxes on the corporations and the wealthy. These include raising taxes on multinational corporations and capital gains.
Democrats consider other taxes to pay for their $3.5 trillion budget plan. The Senate Finance Committee is reviewing an excise tax on publicly traded companies that repurchase a “significant” amount of stock, a tax on carbon emissions, and repeal of tax subsidies for fossil fuels.
Tax credits for solar companies? House Ways and Means Committee Democrats have introduced a bill to encourage clean-energy production by making solar companies eligible for a full-value production tax credit. They’d add the measure to the $3.5 trillion domestic spending bill.
Speaking of cleaner energy—what’s the goal of a vehicle-mileage tax? TPC’s Tax Hound considers a paradox. “If we want more of a good thing, don’t tax it. So how should we think about the vehicle-mileage tax (VMT) that drivers of all kinds of vehicles would pay, raising the costs of driving planet-friendly hybrid or electric vehicles?”
For the wealthy, a loophole—for now. Bloomberg details a tax avoidance strategy called private placement life insurance. PPLI allows holders to defer taxes as long as assets are held in the policy. When the owner dies, heirs get the contents, tax-free. Said University of Chicago law professor Daniel Hemel, “PPLI is a massive loophole — entirely legal, easy to exploit, and politically very hard to close.”
But a few wealthy individuals finally are paying tax, in perhaps the largest tax settlement in history. Renaissance Technologies LLC’s executives, past and present, will personally pay up to $7 billion in back taxes, interest, and penalties to the IRS. It’s the culmination of a lengthy dispute with the agency. Renaissance founder James Simons will pay an additional settlement of $670 million. The IRS challenged the manner in which the Medallion Fund converted short-term trading gains into long-term profits between 2005 and 2015.
The IRS is offering another type of support for other individuals. IRS Commissioner Chuck Rettig told senators Bernie Sanders, Elizabeth Warren, and Sheldon Whitehouse that average tax filer call time increased from 13 minutes in 2019 to over 19 minutes in 2021. He blamed the increase, in part, on lonely callers: “Some taxpayers have experienced isolation without anyone else to talk to for a long time… Spending more time on each call… reduces the operator’s ability to handle more calls during a shift. We have encouraged our [customer service representatives] to take that time since we are many taxpayers’ sole contact with the government.”
Why hasn’t the US unleashed a Marshall Plan for COVID-19 vaccines? TPC’s Gene Steuerle argues that it’s because the federal budget has no slack. At the end of World War II, the US could provide foreign aid to rebuild Europe. “[T]he federal government had fiscal space or slack to devote resources to something new without simultaneously having to trim back other commitments….Today… the president must propose new taxes and spending cuts to cover the cost of both any new initiative and unfunded growth in already legislated spending. Or dodge the sustainability issue and pretend that both new and old unfunded programs don’t need to be paid for—just yet.”
Congress is not in session. After today, the Daily Deduction will post Mondays until Congress returns.
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