Senators Eye ‘Targeted’ Infrastructure Deal

Bloomberg

June 14, 2021 1:51 pm

A $1.2 trillion infrastructure proposal developed by a bipartisan group of 10 senators doesn’t include a roll back of the 2017 tax law or a gas tax increase, according to Sen. Susan Collins.

Collins (R-Maine) suggested Sunday that a “targeted” infrastructure plan could be paid for by three different options: an infrastructure financing authority, re-purposing already approved pandemic aid funds, and charging electric vehicle drivers “their fair share” for use of roads and bridges.

President Joe Biden has been interested in pursuing a bipartisan bill, but hasn’t been able to find common ground with Republicans on the size and scope of the legislation. Biden’s infrastructure and social spending plans call for a variety of tax code changes focused on corporations and the wealthy.

Collins, during an interview on CBS’s “Face the Nation,” said infrastructure talks should focus on repairing roads and bridges, rather than elder care and some of the other issues highlighted in Biden’s economic proposals.

“We can look at these issues, but they are not infrastructure and they should be considered separately,” she said.

House Speaker Nancy Pelosi (D-Calif.) said on Sunday that she hasn’t seen the details of the bipartisan proposal, but acknowledged that a slimmed-down bill could be tough to sell to her caucus “unless we know there is more to come.”

“Let’s see if we can come to a reasonable amount of money to get that work done, but I have no intention of abandoning the rest of my vision about the better—building back better,” Pelosi said during an appearance on CNN’s “State of the Union” program Sunday.

Rep. Dan Kildee (D-Mich.) said he worries about the idea of cutting a bipartisan deal with the intention of later using the budget reconciliation process—a tool that allows the Senate to avoid a filibuster—to pass the rest of Biden’s economic agenda.

“Sometimes, later never comes,” Kildee said. “I’m concerned about delegating the future of the economy to a small group of senators who have appointed themselves to be in charge.”

Read more from Erik Wasson and Billy House.

Eyes on Schumer: Senate Majority Leader Chuck Schumer‘s ability to navigate an evenly-divided chamber will be key to advancing Biden’s economic agenda.

So far this year, the chamber’s focus has included passing a massive stimulus law and approving Biden’s nominees. The summer is expected to bring trickier fights over everything from government funding to the debt limit—not to mention dozens of judicial nominees to fill open seats at the district and circuit court level.

“We’re moving now into the difficult phase,” said Bill Hoagland, senior vice president of the Bipartisan Policy Center. “The honeymoon’s over.”

Schumer (D-N.Y.) is also facing a time crunch: Senators have less than 30 official workdays between now and mid-September. The end of September brings the annual deadline for extending government funding, as well as the expiration of several key programs.

Read more from Nancy Ognanovich.

Ways & Means Meeting: Democratic members of the House Ways and Means Committee will meet Monday in Washington to discuss ways to move Biden’s economic agenda forward, according to four sources familiar with the plans.

Ways and Means Chair Richard Neal (D-Mass.) is expected to play a crucial role steering any legislative package with tax provisions.

ProPublica Probe: Senate Finance Republicans want the Treasury Inspector General for Tax Administration to investigate the source of an anonymous leak to ProPublica.

The data showed several of the country’s wealthiest individuals reportedly paid little to no federal income tax in some years. The leak included information on Jeff Bezos, Elon Musk, Bloomberg LP founder Michael Bloomberg, and others. Bloomberg Tax is operated by entities controlled by Michael Bloomberg.

If the IRS is the source, the leak “constitutes a serious breach of privacy and is a criminal violation of our tax laws,” the lawmakers wrote Friday in a letter.

Tax Credit Guidance: The IRS on Friday issued a pair of FAQs, including one on paid leave tax credits available for caretakers and businesses.

The March pandemic aid package (Public Law 117-2) expanded eligibility for the child and dependent care tax credit and allowed small and mid-sized businesses to claim tax credits for providing employees with paid leave due to Covid-19.

Read more from Isabelle Sarraf.

Regulatory Agenda

Two projects related to popular charitable-giving vehicles were included in the regulatory agenda for the first time Friday. The packages would regulate donor-advised funds—tools that allow individuals to make donations to a fund sponsor in exchange for an immediate tax benefit, even though the donations are distributed to charities over time.

Guidance on the funds has been highly anticipated as they have become increasingly popular in recent years. Both packages added to the agenda would further regulate the nonprofit sector, and are expected to codify tax changes made by Congress 15 years ago.

“These will be big news for charities that sponsor DAFs and DAF holders,” said Steven Woolf, senior tax counsel at The Jewish Federations of North America.

One of the packages would give additional guidance under tax code Section 4958, which imposes excise taxes on transactions considered “excess benefit.” Those transactions involve nonprofit insiders receiving unwarranted compensation from the organization. The second package concerns distributions from the donor-advised funds that result in any donor or related person receiving more than an incidental benefit from the transaction.

Read more about the agenda.

Corporate Side: The SEC is also planning rules on corporate disclosures on climate risks, board diversity, and corporate workforces. Read more.

What to Watch This Week

Tax Court: The U.S. Tax Court will begin a trial today in medical device maker Medtronic’s $1.4 billion tax dispute. Aysha Bagchi has a full preview of the trial.

Gender Equity: On Tuesday, the OECD will hold a conference focused on gender equity and tax. Planned speakers include Grace Perez Navarro, deputy director of the Centre for Tax Policy and Administration at the OECD.

Biden Budget: Treasury Secretary Janet Yellen will testify on Wednesday before the Senate Finance Committee on Biden’s fiscal 2022 budget.

Infrastructure Needs: Senate Banking, Housing, and Urban Affairs Committee will hear from local leaders on infrastructure needs in states, cities, and towns on Tuesday.

Women Entrepreneurship: The House Small Business Economic Growth, Tax, and Capital Access Subcommittee will meet Tuesday to discuss women entrepreneurship and opportunities to rebuild the economy.

BTAX Forum: Bloomberg Tax is hosting a two-day leadership forum starting Wednesday. Register here.

Nonprofit Updates: On Friday, the TEGE Exempt Organizations Council will meet. Panelists include Yael Fuchs, co-section chief, in the Charities Bureau Enforcement Section at the Office of the New York State Attorney General, and Catherine Jackson, Chief Public Integrity Section at the District of Columbia Office of the Attorney General.

Beyond the Beltway

PPP Taxes: New Hampshire is the latest state to pass legislation exempting Paycheck Protection Program loans from state taxes. The small business loan program, which stopped accepting new applications a few weeks ago, facilitated hundreds of billions in government-backed loans.

Richard Auxier, a senior policy associate at the Urban-Brookings Tax Policy Center, said more states are deciding to offer the tax relief because of improving finances. “More states can now afford to do this so they are,” he said.

Read more from Sam McQuillan.

Murphy Re-Election: New Jersey Gov. Phil Murphy (D) is seeking re-election, and if he wins he would be the state’s first two-term Democrat governor since 1977.

With five months to go, Republican challenger Jack Ciattarelli is arguing that Murphy has worsened the state’s high-tax, high-regulation reputation and failed to rein in sprawling local spending.

Elise Young has more on Murphy’s bid.

To contact the reporters on this story: Colleen Murphy in Washington at cmurphy@bloombergtax.com; Patrick Ambrosio in Washington at pambrosio@bloombergtax.com