News : Taking stock of the lame-duck — Oyez, Oyez

Monday, November 30, 2020

Taking stock of the lame-duck — Oyez, Oyez — Biden's economic team

Nov 30, 2020

With help from Aaron Lorenzo

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IT'S CRUNCH TIME: December is oh-so-close, which means the traditional time when the year-end tax bill comes together is almost upon us.

All the various interests behind the expiring tax incentives known as extenders have been ramping up to keep those alive past 2020, plus there remains a lot of interest in a variety of tax measures that have for months been floated for a next package to offer help to businesses and people hurt by the coronavirus.

And here's one piece of optimism for those fighting to get tax measures passed next month — Democrats and Republicans on Capitol Hill appear to be barreling toward a broader omnibus spending package to avert a government shutdown on Dec. 11, the kind of measure that other provisions and policies often take a ride on.

Unfortunately for those advocates, there aren't many other reasons for optimism, according to lobbyists and congressional aides. The two parties haven't seemed to make any real progress on coronavirus relief since the election (or perhaps even before that), and the House is only scheduled to be in session this week and next.

In fact, top Democrats are still pushing for the House-passed HEROES Act to be the basis for negotiations, even as some in the party are pushing to accept a smaller deal than they'd like for the moment given the conditions in the country.

As for tax extenders, the lobbyists and aides don't see much momentum for those preferences, either. Congress has made a habit of restoring those incentives after the fact, so lawmakers might think that December 2021 is the appropriate time to focus on those provisions anyway.

One potential wrinkle: Lower excise taxes for beer, wine and spirits are among the expiring tax policies getting the most attention right now, and excise taxes — which companies frequently have to pay quarterly or even more quickly — can't be revived after the fact quite like other extenders.

So could there be a push to deal with alcohol taxes separate from the rest of the extenders? Sen. Rob Portman of Ohio, a key Republican on the tax-writing Finance Committee, wrote an op-ed in The Hill last week pushing to extend the lower alcohol rates before the end of the year.

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WELCOME TO YOUR POST-FOOD COMA edition of Weekly Tax, where we love a good, weird monolith.

No word on whether this is what gave Sting the idea: Today marks 114 years since a British scientist named George Parker Bidder, the president of the U.K.'s Marine Biological Association, tossed a bottle with a message in it into the North Sea. (Who cares? Well, Bidder actually threw about 1,000 bottles into the North Sea, to learn more about its currents. This particular one only washed up in 2015 in Germany — making it, in fact, the world's oldest message in a bottle.)

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OYEZ, OYEZ: The Supreme Court will finally hear a rather interesting tax case on Tuesday, after months of build-up.

Here's the basic gist of CIC Services v. IRS — the plaintiff advised companies making so-called "micro-captive" insurance transactions, which the tax collector imposed new reporting requirements on in 2016.

CIC Services has argued that the IRS should have followed the procedures for regulations laid out under the Administrative Procedures Act. But from a tax perspective, this case offers a bigger question: Should taxpayers be able to challenge the legality of a tax before the levy is collected, a protection the IRS claims under a Reconstruction-era law called the Anti-Injunction Act?

Some issues to watch out for: The newest justice, Amy Coney Barrett. Her history on the appellate court suggests she might be more sympathetic to the IRS on the AIA front than with APA, as Weekly Tax noted back when Barrett had just been nominated, but who knows if that will translate now that she's on the Supreme Court?

Also of note: A group of law professors filed an amicus brief with the court arguing that ruling against the government would imperil a longstanding IRS battle against abusive tax shelters. (Interesting to note: That brief was filed on behalf of several former government officials — including Lily Batchelder, the NYU law professor currently leading President-elect Joe Biden's IRS transition efforts.)

Not surprisingly, business groups are pushing the court to allow pre-enforcement challenges of tax regulations, and experts who want to put an end to tax exceptionalism — the preferential treatment long given to tax rules — are hoping the court will give them a hand.

Officials who don't mind tax exceptionalism argue that the agency charged with funding so much of the government's operations should be treated differently. But while the CIC case deals with big money transactions, the AIA can also affect taxpayers further down the income scale.

BIDEN TIME: The president-elect has chosen a diverse trio for top economic positions, our Megan Cassella, Ben White and Tyler Pager report. Cecilia Rouse, a Princeton economist, is on tap to lead the White House Council of Economic Advisers, Adewale "Wally" Adeyemo will be the nominee for deputy Treasury secretary and Neera Tanden is the choice to head the White House budget office.

The early returns are that Republicans might at least make it difficult for Tanden to be confirmed, as this tweet from the spokesperson for Sen. John Cornyn (R-Texas) suggests.

Biden has also chosen Jared Bernstein, a longtime economic adviser to the former vice president, and Heather Boushey, the president of he Washington Center for Equitable Growth, for the Council of Economic Advisers. Brian Deese, a senior official in the Obama-Biden administration, looks set to lead the National Economic Council.

PRO TAX, ICYMI: France confirms that it's started billing companies for its digital services tax, via Elisa Braun; Sen. Ron Wyden (D-Ore.) calls that an escalation, from Aaron Lorenzo; Intuit agrees to unload Credit Karma's tax division in merger, via Brian Faler; Lawmakers reach a deal on fighting shell companies, from Zach Warmbrodt; Millions of workers are about to be out of luck on paid leave, via Eleanor Mueller.

Around the World

EVERY DIRECTION WE CAN FIND: Mexico is looking to extend tax breaks it offers to residents at its northern border with the U.S. to those at its southern border as well, Reuters reports. The government cut both a value-added tax (from 16 percent to 8 percent) and an income tax (from a maximum of 30 percent to 20 percent) at the northern border last year. (There's also a gas tax adjustment, because gas prices in Mexico are frequently higher than in the U.S.) President Andres Manuel Lopez Obrador announced the plan to take those tax cuts south on Friday, to states bordering both Belize and Guatemala. The new tax cuts on the southern border will go into effect on Jan. 1, according to the Associated Press, while Obrador is also extending the breaks in the north until at least 2024.

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Around the Nation

GET DOWN TO THE NITTY-GRITTY: Top state lawmakers in Indiana are open to raising the state's cigarette tax, but also want more details on how the tax hike would affect revenues and help public health, The Associated Press reports. More than one in five adults in Indiana are smokers, one of the highest rates in the country, and the state's Chamber of Commerce has proposed raising the cigarette tax all the way from $1 per pack to $3. Todd Huston, the state House speaker, noted that raising the cigarette tax will almost surely bring down the smoking rate — which in turn will make the tax a less reliable revenue stream. Top Democrats have said that they would want the funds from any hike in the cigarette tax to go toward health programs, but also have suggested that Indiana follow the lead of some neighbors and legalize recreational marijuana — a step that Gov. Eric Holcomb, a Republican, doesn't want to take.

Quick Links

WSJ: "Trump's Payroll-Tax Deferral Creates Predicament for Congress."

A Treasury Secretary Janet Yellen would have a "lengthy to-do list on taxes."

Navajo Nation considers whether to keep junk food sales tax.

Did You Know?

Ben Stiller and Owen Wilson have been in more than a dozen movies together, including "Zoolander" and "Zoolander 2."

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