It’s Going To Be A Long Summer

Still no progress on President Biden’s domestic agenda. Democrats are not likely to agree on a slimmed-down budget reconciliation bill before their informal Memorial Day deadline. One plan would raise taxes on corporations and high-income households, curb climate change, lower the cost of prescription drugs, and reserve some revenue to reduce the deficit. Senate Democrats now hope to reach a deal before their August recess because passing major legislation in September of an election year is… easy? 

More optimism on an EU corporate minimum tax deal. French Economy Minister Bruno Le Maire predicted the European Union will reach agreement on “Pillar 2” at its June meeting. The plan has been held up by Poland, but Le Maire says, “Everyone knows the issues [and] I am convinced that these could be removed on the 17th of June.” Not coincidently, the European Commission is expected to OK an economic recovery plan for Poland through its pandemic rescue fund next week. The tax regime still must be approved by individual EU countries. 

TIGTA and IRS disagree over how to handle improper COVID- 19 payments. TaxNotes reports (paywall) the IRS won’t follow the Treasury Inspector General for Tax Administration’s (TIGTA) recommendations for reviewing claims for pandemic recovery rebate credits. TIGTA identified 355,015 individuals who may have erroneously claimed $603 million. The IRS agreed to examine 20,000 of those returns, but says it doesn’t have the resources to review every problematic return.

Kansas legislature adjourns without passing a tax rebate. Democratic lawmakers tried to repeal the sales tax on food and enact a $250 tax rebate. They argued there was time to give the bills this year but lawmakers chose to adjourn early. 

A billionaire is competent to stand trial for tax evasion. Robert Brockton will be tried in the largest tax evasion case against an individual in US history. A US District judge rejected arguments that Brockman’s dementia prevented him from helping his defense against the 39-count indictment. Federal authorities accuse him of evading taxes on $2 billion. His attorneys say they’ll file a new incompetency claim.

UK braces for a windfall profits tax. The Financial Times reports (paywall) the United Kingdom’s plans to tax more than £10 billion in excess profits by electricity generators, including wind farm operators, in addition to North Sea oil and gas producers. The levy would raise billions of pounds to support households struggling with soaring energy bills, according to British officials. The tax could be announced this week or in early June.

IMF: Global economy may face biggest test since World War II. International Monetary Fund Managing Director Kristalina Georgieva said “Russia’s invasion of Ukraine has compounded the Covid-19 pandemic — a crisis upon a crisis — devastating lives, dragging down growth, and pushing up inflation… we face a potential confluence of calamities.” She said lowering trade barriers could alleviate shortages and reduce food prices.

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