What will Senate Democrats do now? They will meet today for what is likely to be a contentious lunch to sort out an agenda now that Sen. Joe Manchin appears to have doomed the party’s once-ambitious social spending, climate, and tax plan. Some lawmakers want to pass a bill to allow Medicare to negotiate drug prices and extend health insurance subsidies—an effort Manchin appears to support. Others, including Finance Committee Chair Ron Wyden still want to push for a broad package of green energy incentives.
Cornyn: Republicans now may back semiconductor bill. Senate Republicans threatened to hold hostage a bipartisan bill aimed at making US firms more competitive with China if Democrats moved on a party-line budget reconciliation bill. Now that Manchin appears to have killed the budget measure, GOP leader John Cornyn says Republicans will release the hostage and once again back the semiconductor bill.
What will become of the TCJA’s endowment tax? The Tax Cuts and Jobs Act’s endowment tax is a 1.4 percent excise levy on investment income earned by deep-pocket funds held by some private colleges. Nineteen more endowments increased in value enough to become subject to the tax this year, bringing the total number to about 100. One of the richest, Harvard University, wants Congress to lower the rate for colleges that provide a minimum amount of aid to low-income students. The measure was included in the now-dead Build Back Better budget reconciliation bill.
Pennsylvania boosts educational tax credit funding but not oversight. The state’s new budget adds $125 million to its Educational Improvement Tax Credit—the largest one-time funding boost since its enactment in 2001. In 20 years, the state increased the credit cap from $30 million to $340 million. Spotlight PA reports the program still lacks accountability and collects no data on its efficacy. Efforts to increase transparency remain stuck in the legislature.
IMF to UK: Tax cuts are a bad idea right now. Candidates for Conservative Party leadership are promising tax cuts but the International Monetary Fund’s UK director Mark Flanagan says “debt-financed tax cuts at this point would be a mistake.” The IMF, among other groups, expects UK growth to slow and inflation to rise in 2023. Flanagan says tax cuts could boost inflation by increasing spending.
It pays to check your internet bill. The 2016 Internet Tax Freedom Act barred states from levying a tax on internet access after June 30, 2020. But Houston-based telecom company Phonoscope continued to collect internet taxes. One customer noticed $98 in taxes on his bill in 2021 and alerted the company. The firm corrected its sales tax accounting and promises to refund between $100 and $200 to customers who paid the tax in error.
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