The Treasury Department unveiled guidelines for how new electric vehicles can qualify for the tax credits established by the Inflation Reduction Act. In a press release, Treasury Secretary Janet Yellen said the department “is taking an important step that will help consumers save up to $7,500 on a new clean vehicle and hundreds of dollars per year on gas, while creating American manufacturing jobs and strengthening our energy and national security.” The public has 60 days to comment, but Sen. Joe Manchin made it immediately clear that he does not think Treasury’s proposal does enough to support domestic production. “It is horrific that the administration continues to ignore the purpose of the law, which is to bring manufacturing back to America and ensure we have reliable and secure supply chains,” Manchin said in a statement to the media.
A rundown of Biden’s proposed changes to the taxation of foreign income. President Biden’s fiscal year 2024 budget plan included several changes to the tax treatment of foreign income. Although prior attempts to rewrite these tax rules stalled in Congress, the European Union and others are moving ahead on Organization for Economic Cooperation and Development proposals for minimum taxes on income of multinationals. TPC’s Thomas Brosy examined the latest changes proposed by the Biden administration.
Social Security’s trust fund will run go insolvent a year earlier than expected, according to the Social Security and Medicare Boards of Trustees. The new projections show the disability insurance fund will be able to pay promised benefits through 2096, but the fund for retirees will only make it to 2033. “At that time, the fund's reserves will become depleted and continuing program income will be sufficient to pay 77 percent of scheduled benefits,” the report says. Meanwhile, the Medicare hospital insurance trust fund is projected to be insolvent after 2031.
Biden’s child tax credit proposal would help many households but would present administrative challenges. President Biden’s fiscal year 2024 budget would revive 2021’s enhanced child tax credit with some new twists that seek to make the credit work better for families. But in doing so, the plan would likely deliver extra benefits to some very well-off families, according to a new TaxVox blog by Elaine Maag. It could also increase complexity – pushing against a key argument for operating benefit programs through the tax system.
Sen. Todd Young (R-IN) is looking to build support for a compromise pairing changes to the R&D deduction with expanded support for affordable housing efforts. CQ Roll Call has the details. Reviving the more generous version of the R&D tax break – which allowed businesses to write off costs in the year they occur, instead of over multiple years – has bipartisan support. But congressional Democrats have balked at making any business tax changes unless changes to the Child Tax Credit are included. Those efforts have gone nowhere, so Young is talking to members on both sides of the aisle about an R&D and affordable housing deal.
Virginia became the latest state to tweak its pass-through entity tax workaround for the state and local tax (SALT) deduction cap. Legislation signed by Gov. Glenn Youngkin (R) on Monday will allow pass-through entities to pay the elective entity tax even if the business is partially owned by an estate or trust. However, only “natural persons” will still be able to claim the corresponding income tax credit, according to Tax Notes (paywall), which reports that several other states – including Illinois and Kansas – are considering policy changes to clarify how the SALT workaround is applied.
The Daily Deduction will post Mondays only until Congress returns to session.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].
