Previewing the Next Biden Initiative

The White House floats an early outline of American Families Plan. President Biden’s next initiative would support child care, paid family leave, and other domestic priorities. It could include $1 trillion in new spending and $500 billion in tax credits, including an extension of the just-expanded Child Tax Credit through 2025. The plan would be largely paid for with tax increases on upper-income Americans and wealthy investors, though details remain fluid. Biden will officially release the plan before he speaks to Congress on April 28.

And some Senate Republicans are floating their infrastructure alternative. Politico reports a group of Senate moderates will propose an eight-year plan to spend between $550 billion and $800 billion on traditional infrastructure. Its payfors reportedly would include user fees on electric and hydrogen-powered cars and leftover COVID-19 relief funds. The plan will be a non-starter for Democrats, but is it just a first offer?

Should the IRS collect data on the race of tax filers? The agency does not do so now, President Biden created a working group to think about it, and now Senate Finance Committee Chair Ron Wyden appears to be backing the idea. At a hearing yesterday, Wyden said, “It is long past time to make it easier to obtain the key tax data that will illuminate the injustices in our tax law. I believe this can be done in a manner that protects the confidentiality and privacy of all taxpayers.”

Next week on the Hill. The Finance Subcommittee on Fiscal Responsibility and Economic Growth will hold a hearing on creating opportunity through a fairer tax system on Tuesday. Chair Elizabeth Warren has invited billionaire investor Leon Cooperman to testify on her Ultra-Millionaire Tax Act. 

Offset SALT cap repeal with audit revenue? Democratic Rep. Josh Gottheimer of New Jersey will urge Treasury Secretary Janet Yellen to pay for a repeal of the federal $10,000 cap on state and local tax (SALT) deductions with more IRS audits. He told reporters, “we can pay for both by closing loopholes and going after all those tax cheats who don’t pay what they should.” Gottheimer is among the New York and New Jersey lawmakers who threatened to withhold support for any infrastructure plan that does not repeal the SALT cap. 

Will tension between the GOP and big business really result in higher corporate taxes? The GOP might not like corporations’ opposition to new voting rules in Georgia and other states, but will Republican lawmakers retaliate by supporting corporate rate hikes? Or by going along with Biden’s proposals to raise taxes on business owners? TPC’s Howard Gleckman says “probably not… [but it] does make tax politics a bit more interesting than it was, say, a month ago… More likely,” Howard concludes, “they’ll use the threat of doing so to convince the CEOs who have opposed GOP voting restrictions to quietly return to the fold.”

Tax expenditures remain a significant share of the US economy. TPC’s Eric Toder describes a new TPC study that finds tax expenditures have remained stable and likely will continue to do so. After the Tax Reform Act of 1986, tax expenditures fell from 9 percent to 6 percent of Gross Domestic Product (GDP). But they climbed over the next 20 years, reaching 7.4 percent by 2010. The Tax Cuts and Jobs Act temporarily reduced the tax preferences but if individual income tax cuts expire in 2025 as scheduled, they are likely to increase again.  

Florida Gov. DeSantis signs an online sales tax bill. Republican Governor Ron DeSantis signed a bill to require collection of online sales tax from all online vendors, making Florida among the last states to act following the Supreme Court’s 2018 Wayfair decision. Florida could collect as much as $1 billion a year from the measure, which the state says it will use to replenish its unemployment trust fund and offset a reduction in the state’s commercial rent tax from 5.5 percent to 2 percent. 

Coming in May: The 5th International Conference on Taxpayer Rights. The conference, led by former National Taxpayer Advocate Nina Olson, connects experts from government, law, economics, psychology, anthropology, and sociology. They’ll explore how taxpayer rights serve as a foundation for effective tax administration and promote voluntary compliance with tax laws. This year, the National and Kapodistrian University of Athens School of Law will host the online conference on May 27 and 28. The theme: Quality Tax Audits and the Protection of Taxpayer Rights. Learn more and register here

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].

https://www.taxpolicycenter.org/daily-deduction/previewing-next-biden-initiative