President-elect Biden’s Treasury will have to hit the ground running. Biden is expected to announce this week that Janet Yellen will be his nominee for Treasury Secretary. The former Federal Reserve Chair and head of the White House Council of Economic Advisers will play a lead role in crafting policy responses, including tax provisions, for an economy that has 10 million fewer jobs compared to the beginning of the pandemic. TPC’s Howard Gleckman writes that Yellen favors additional short-term stimulus; has been a strong supporter of a carbon tax; and has argued that insufficient tax revenue, not rising costs for programs such as Medicare and Social Security, are largely to blame for exploding budget deficits. “If confirmed,” Howard concludes, “Yellen would arguably be the most influential public policy economist of our time.”
Biden fleshes out his economic team. Biden reportedly also will name Center for American Progress CEO Neera Tanden as Budget Director and Princeton economist Cecilia Rouse as head of the White House Council of Economic Advisers. Other CEA members will be Jared Bernstein and Heather Boushey. Bernstein was a top economic aide to Vice President Biden. Boushey is president and CEO of the progressive Washington Center for Equitable Growth.
Batchelder leads IRS transition. NYU law professor Lily Batchelder is heading Biden’s IRS transition team. Batchelder was chief tax counsel for then-Senate Finance Committee Chair Max Baucus from 2010-2014 and senior economic adviser to President Obama from 2014-2015.
How much will future retirees receive in lifetime Social Security and Medicare benefits? TPC’s Eugene Steuerle and Erald Kolasi highlight their latest annual report that finds typical millennial couples born in 1995 who claim benefits at age 65 are scheduled to receive about $2.2 million in lifetime benefits--if the two programs continue to pay their scheduled benefits. That’s about double what an average couple retiring this year will receive, according to Gene and Erald. Some higher-earning couples will get more than $3 million in lifetime benefits. Social Security’s retirement trust fund is scheduled to become insolvent in 14 years, however.
Intuit spins off Credit Karma’s tax prep business. After the Justice Department raised anti-trust concerns over the merger of Intuit and Credit Karma, Intuit has agreed to sell off Credit Karma’s tax prep business. Intuit’s Turbo Tax already is the dominant player in the DIY tax prep business. Free online tax prep is a small piece of Credit Karma’s business and Intuit will spin it off to Square.
About President Trump’s executive action to defer payroll taxes … The Wall Street Journal reports (paywall) that Congress hasn’t figured out what to do about it. Few employers took up Trump’s offer to defer employee payroll taxes until January. But at firms that did, workers soon will have to pay the deferred tax plus their regular payroll taxes. If Congress does nothing, those employees would take a financial hit in the winter. But if Congress turns the deferral into a holiday, workers whose taxes continued to be withheld will feel short-changed. Said TPC’s Mark Mazur, “No one will be happy no matter how that gets resolved. It’s kind of like a no-win thing.”
The National Rifle Association admits abusing tax-exempt funds. The Washington Post reports the organization’s new tax filing acknowledges current and former executives used the nonprofit’s money for personal benefit. The 2019 filing acknowledges that NRA chief executive Wayne LaPierre and five former executives received “excess benefits,” a term the IRS uses to describe executives’ enriching themselves at the expense of a nonprofit entity. For years, the NRA denied allegations of lax financial oversight.
Under pressure, Netflix will recognize United Kingdom for UK tax purposes. A Netflix spokesman said “As Netflix continues to grow in the UK and in other international markets we want our corporate structure to reflect this footprint. So from next year, revenue generated in the UK will be recognized in the UK, and we will pay corporate income tax accordingly.” Netflix’s UK holding company, Netflix Services UK, declared revenue of £43 million, or $57 million in 2018. At that time the streaming service had 10 million British subscribers.
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