Democrats may be narrowing their disagreements over budget reconciliation. President Biden pitched a social spending bill that could cost between $1.9 trillion and $2.2 trillion to a group of congressional progressives. That would be significantly lower than the $3.5 trillion version Biden first backed but more than the $1.5 trillion floated by moderate Senate Democrat Joe Manchin. It is not clear whether Manchin will sign on, but he and Biden have been working closely behind the scenes.
The US risks recession absent debt ceiling increase, Treasury Secretary Yellen warns. Yellen told CNBC yesterday that the US could face a recession if Congress does not raise the debt ceiling by Oct. 18. Paychecks to federal workers, military salaries, tax refunds, and Medicare and Social Security benefits all could be delayed. At least one GOP senator, Lisa Murkowski, said yesterday she is looking for a solution to the current impasse. Mitt Romney says he’ll vote to block debate on a stand-alone debt limit bill.
Senate Republicans demand an investigation into IRS research programs. Following the leak of IRS data on very wealthy tax filers to the news organization ProPublica, senior GOP lawmakers asked the Treasury Inspector General for Tax Administration (TIGTA) to audit IRS research activities. Top Finance Committee Republican Mike Crapo and senior Judiciary Committee member Chuck Grassley questioned on-going IRS research projects, including those that involve outside researchers.
US Second Circuit Court of Appeals: Federal SALT cap is constitutional. Law360 reports the Second Circuit Court of Appeals affirmed a district court decision that the $10,000 cap on state and local tax deductions is not coercive and does not violate the Tenth Amendment. Nor does Congress exceed its Sixteenth Amendment taxing powers by limiting deductions. The states of Maryland, New Jersey, and Connecticut challenged the cap.
The American Bankers Association challenges proposed IRS reporting requirement. President Biden wants financial institutions to report to the IRS and customers total annual deposits and withdrawals. The banking industry’s trade association claims the requirement hurts minorities. A spokesperson said “Banks and other stakeholders have made progress in reducing the number of unbanked in the country, and we are concerned that this proposal could deter individuals who would benefit from a bank account from even applying.”
Clean energy tax credits can’t do the work of a carbon tax. TPC’s Thornton Matheson says the congressional debate over climate change and funding green infrastructure misses the mark. “While tax incentives for renewables make clean energy cheaper, they do nothing to raise the cost of dirty energy to reflect the pollution it causes. Given that fossil fuels account for almost 80 percent of US energy consumption, this ignores a powerful policy lever. Even a modest carbon tax could raise significant revenue and curb emissions more effectively than green tax credits alone.”
If you still have not filed your 2021 federal income tax return… The IRS announced yesterday that Free File remains available through Oct. 15. Free File provides free online tax preparation and filing options on IRS partner sites. Taxpayers whose adjusted gross income (AGI) is $72,000 or less qualify. Those who requested a six-month filing extension before April 15 should file their tax returns no later than the Oct. 15 deadline.
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