State and local governments can now apply for federal COVID-19 aid. Yesterday, Treasury opened its application portal for state and local governments. Eligible recipients can apply for grants to help fight COVID-19, replace public revenue lost to the pandemic, offer financial relief to individuals and businesses, and address the public health and economic challenges that have disproportionately affected vulnerable populations.
Infrastructure talks heat up. President Biden has begun meeting with Democratic senators and plans to sit down tomorrow with the bipartisan congressional leadership to see if compromise is possible. Senate GOP leader Mitch McConnell now says he’d go for an $800 billion bill, up from less than $600 billion. But he says it must be funded with unspecified user fees and can’t include “revisiting” any provision of the 2017 Tax Cuts and Jobs Act that “in any way that creates additional problems for the economy.” Unclear if that leaves room for any corporate tax hikes. Biden says any new spending has to be paid for.
Unclaimed: Over $2 billion in March 2020 stimulus payments. Residents of Pennsylvania, Vermont, and Michigan were the most likely to leave money on the table after Congress passed the first COVID-19 relief bill last year. Residents of Arizona and Texas were most likely to cash their stimulus checks. About 1.2 million payments never were cashed, representing only 0.78 percent of the total $270 billion distributed.
Will global corporate tax reform leave some countries behind? The Financial Times reports (paywall) on concerns of senior diplomats and lobbying groups from developing economies. Under the White House proposal for a global minimum tax, companies would pay most of their taxes in the country where they are headquartered, not where their profits are made. Many of those countries are not participating in the negotiations at the Organization for Economic Cooperation and Development and fear the eventual agreement is unlikely to reflect their interests—namely their need for tax revenues.
Puerto Rico or Bust? Bloomberg reports that some hedge fund managers are seeking refuge in Puerto Rico to avoid higher taxes on the wealthiest Americans that are being pushed by Biden and Hill Democrats. Two hedge funds have established subsidiaries in Puerto Rico, which could pave the way for their portfolio managers to relocate to the island and receive substantial tax breaks. Island residents are exempt from federal income tax and new residents may be exempt from Puerto Rican taxes on certain investment income.
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