Inflation, Rocky Markets, Corporate Tax Incidence, and Cheesesteak

Biden: Whip inflation now. He didn’t quite say that but at a White House event yesterday, Biden said controlling inflation is now his top priority: “I know families all across America are hurting because of inflation. I want every American to know that I am taking inflation very seriously.” Biden’s said his agenda still includes higher taxes on “corporations and the wealthiest Americans.” But he said the money would go to reduce the deficit, not new social spending. He also said he may lift tariffs on some Chinese imports to lower prices.  

Buckle-up investors. Treasury Secretary Janet Yellen told the Senate Banking Committee yesterday that market fluctuations will likely continue for the near term. “There is the potential for continued volatility and unevenness of global growth as countries continue to grapple with the pandemic. Russia’s unprovoked invasion of Ukraine has further increased economic uncertainty,”

Falling: Bitcoin. The price of the cryptocurrency bitcoin fell Monday to $31,075.70, less than half of its November record high price of $67,802. The last time bitcoin traded lower was in July of 2021, when its price sank to $29,839.80. Prices stabilized yesterday after five days of steep declines.

Rethinking: The incidence of corporate income tax. TPC’s Bill Gale writes about a new TPC project that examines who benefits from excess returns, or rents, earned by some corporations. It looks at how that distribution affects the burden of corporate taxes—and who benefits when Congress cuts those levies. In the traditional view, tax cuts broadly go to workers and shareholders. Gale and colleague Samuel Thorpe find that the most affluent employees – managers and executives – receive the lion’s share of worker benefits, not rank-and-file staff. 

Signed: A Connecticut tax cut. Gov. Ned Lamont signed a $600 million tax cut for fiscal year 2023. The budget bill suspends the state’s gasoline tax through November, creates a $250-per-child tax credit for low- and  middle-income families, increases the property tax credit, and  accelerates a plan to eliminate taxes on pensions and annuities. 

Climbing: Property assessments and taxes in Philly. The city released its first reassessments of 580,000 properties in three years. Officials expect the updated valuations to generate $92 million more in property tax revenue, with the value of the average home climbing 31 percent. Lawmakers still are trying to figure out how to offset the associated tax hikes. 

And… messy: A decade of making cheesesteaks under the table in Philly. The US Department of Justice reports that two owners of South Philadelphia’s iconic Tony Luke’s cheesesteak restaurant pleaded guilty to conspiring to defraud the IRS. They admitted to concealing more than $8 million in business receipts and conspiring to evade employment taxes by paying a portion of salaries in unreported cash for ten years. They also admitted they caused their accountant to file false tax returns that understated business income, wages and taxes due. 

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