| | | | | |  | | By Bernie Becker | Presented by the Global Business Alliance | Editor's Note: Weekly Tax is a weekly version of POLITICO Pro's daily Tax policy newsletter, Morning Tax. POLITICO Pro is a policy intelligence platform that combines the news you need with tools you can use to take action on the day's biggest stories. Act on the news with POLITICO Pro. WHAT'S MIDDLE CLASS THESE DAYS ANYWAY? President Joe Biden and his team have been pretty clear on that front, vowing not to raise taxes on anyone making $400,000 a year or less. Most recently, Janet Yellen, Biden's choice for Treasury secretary, pounded that point home by vowing to work with Republicans to lock in benefits from the GOP's 2017 tax cut for those earning under that threshold. But what this newsletter presupposes is: What if that isn't the de facto cut-off for the middle class? As Pro Tax's Aaron Lorenzo notes, a narrowly divided Congress might have its own ideas on where to start hiking taxes, whenever Democrats broaden their focus from offering more relief to those hurt by the coronavirus. Keep in mind: Republicans set the current top individual rate of 37 percent to go into effect on a single filer's income of a half-million dollars annually, and at $600,000 a year for married couples. And even a former aide to soon-to-be Senate Finance Chairman Ron Wyden (D-Ore.), Todd Metcalf of PwC, says that Democrats could end up just accepting that threshold, and then perhaps seeking to expand it to capital gains income. MORE ON THAT SOON ENOUGH, but apparently there are three chances for snow in D.C. this week and you might soon be able to hunt Bigfoot in Oklahoma. Just terrific. That sounds fun. Sure hope we get a warmer version this year: Today marks 97 years since the first Winter Olympics kicked off, in the French Alps city of Chamonix (which, for whatever it's worth, is right on the border with both Italy and Switzerland). What's better than watching curling? Sending us your best tips and feedback. Email: bbecker@politico.com, alorenzo@politico.com, bfaler@politico.com and teckert@politico.com. You can also reach us on Twitter at @berniebecker3, @aaronelorenzo, @tobyeckert, @Brian_Faler, @POLITICOPro and @Morning_Tax. | | A message from the Global Business Alliance: Members of the Global Business Alliance utilize their expertise, resources and dedicated employees to combat the COVID-19 pandemic and strengthen the U.S. communities in which they sustainably operate. Discover what global connections mean for your neighborhood by visiting GlobalBusiness.org/Invested.
| | | BACK TO THE RICH: It's hard to ignore the politics of where to divide who might get tax hikes and who's generally safe during the Biden administration. After all, Democrats have made big strides in the suburbs since former President Donald Trump became a major political figure, and party leaders like about-to-be Senate Majority Leader Chuck Schumer have vowed to roll back the $10,000 cap on state and local tax deductions — a move that would overwhelmingly help top earners. (Though also worth noting: Biden won voters making five figures a year, and Trump won the six-figure cohort, according to exit polls.) And for Democrats, of course, tax increases are generally a means to an end — paying for an infrastructure package, for instance, or forgiving student loan debt — and there are still questions about how much of progressives' long-term ambitions can be offset by focusing tax increases solely at the tippy top. (In Northern Europe, the top tax rate on income frequently goes into effect starting at under $100,000.) Semi-related note: The Senate is expected to confirm Yellen's nomination at 5:30 this afternoon, after the Finance Committee cleared her unanimously on Friday. RED FLAGS: A group of more moderate senators in both parties told senior Biden administration officials on Sunday that they had issues with key parts of the White House's $1.9 trillion pandemic response — most notably, giving direct payments to better off families, as our Laura Barron-Lopez and Burgess Everett reported. The Biden team keeps saying that it wants coronavirus relief to be a bipartisan undertaking, but they're already running into deep GOP skepticism about central planks in their plan. Could some relief measures be broken off and passed with broad support, leaving Democrats to focus on the others with a budget reconciliation process that would allow them to enact something with a simple majority? It's possible, which would leave the question of where Biden's proposed expansion of the Child Tax Credit and Earned Income Tax Credit would land in that scenario. Democrats are working up a plan that would deliver monthly checks to recipients of the child credit, for a maximum of $3,600 per year for younger children, The Washington Post's Jeff Stein reported on Friday. Expanding the child credit in particular has support among Republicans, like Sens. Mike Lee of Utah and Marco Rubio of Florida — but it's easy to imagine lots of GOP lawmakers recoiling at the cost of the measure. (The Committee for a Responsible Federal Budget has projected that kind of proposal could cost around $120 billion for a single year, and chances are the credit wouldn't snap back to its previous levels once it gets expanded). SOMETHING ELSE TO WATCH OUT FOR: Biden's White House budget office is staffing up quickly, as you might have noticed on Twitter. And they're going to an Office of Management and Budget that's going to need some rebuilding after the Trump era demoralized workers at the agency. "Biden will need to restore trust, reset norms and bolster the ranks at the budget office after Trump stripped civil servants of authority and worker protections while pushing a legally dubious agenda that many at the agency do not support, according to interviews with half a dozen current and former OMB officials," our Caitlin Emma wrote. | | | | A message from the Global Business Alliance:   | | | | | | DEFICIT CONCERNS, FOR SURE: The British press and policymakers are increasingly interested in when the government will shift from coronavirus relief to taking care of the debt, Bloomberg reports. And when that happens, the speculation is that Rishi Sunak, the chancellor of the exchequer, will have to lean more on tax increases than spending cuts to bridge any budget gap. (For comparison's sake, the U.K.'s deficit is projected to hit 400 billion pounds, or close to $550 billion this year.) One problem for Sunak, when that time comes: The Conservative government in which he serves vowed not to raise any of the U.K.'s three biggest taxes during the 2019 election — the income tax, the value-added tax and the National Insurance contributions. (Interesting fact: It's been more than 40 years since a British government increased the basic income tax, which has fallen from 35 percent in the mid-1970s to 20 percent now.) | | | | THE UNOFFICIAL GUIDE TO OFFICIAL WASHINGTON: The new Playbook team got off to fast start last week with a series of big scoops. The reporting foursome of Rachael Bade, Eugene Daniels, Ryan Lizza and Tara Palmeri will roam every corner of Washington, bringing you the big stories you need to know–and the insider nuggets that you want to know–about the new power centers and power players in Washington. "This town" has changed. And no one covers this town like Playbook. Subscribe today. | | | | | | | | IF AT FIRST YOU DON'T SUCCEED…: Gov. Henry McMaster of South Carolina has had an idea since he took office in 2017 — to scrap income taxes for military veterans. But as we roll into 2021, there are plenty of reasons to think that the legislature will continue to prioritize other issues , the Charleston Post and Courier reports. More than 30 states have already waived income taxes for military retirees, though a couple of South Carolina's neighbors (Georgia and North Carolina) aren't among them. It's easy to see why McMaster (and others) believe the proposal is good politics and military advocates think there is still a decent shot the legislature acts on it this year. But skeptics wonder if that's worth the lost revenue for the state. For instance, some 60,000 military retirees in South Carolina are earning around $1.6 billion in federally-funded retirement income. | | A message from the Global Business Alliance: From the onset of the pandemic in the United States, members of the Global Business Alliance have utilized their expertise, resources and dedicated employees to combat COVID-19 . From ensuring students from underserved communities have access to hands-on STEM learning opportunities to mobilizing AI experts to help doctors accurately synthesize the ever-growing set of COVID-19 medical research, international companies are strengthening the U.S. communities in which they sustainably operate.
Discover what global connections mean for your neighborhood by visiting GlobalBusiness.org/Invested. | | | | | | Federal judge tells Treasury it must give Trump's lawyers three days' notice before giving his tax returns to Democratic lawmakers. Gov. Andrew Cuomo and his fellow Democrats in the New York state legislature appear headed for a showdown over tax hikes. Here's a new one: An Argentinian city wants to tax the wind. The Greens in Germany want the U.S. and the EU to jointly enact a carbon tax. | | | | HAPPENING TUESDAY - DRAWING THE ETHICAL LINE ON ARTIFICIAL INTELLIGENCE: As AI becomes increasingly ingrained in our everyday lives, there are concerns about biases in these systems and ethical standards to guide their fair use. Without an international framework or set of principles governing AI, the ethical guidelines for its use vary across countries and cities and sometimes even come down to individual policymakers, elected leaders, the private sector, and grassroots advocates' work. Join POLITICO for a conversation to explore the pace of global AI innovation and development and what it means for the future of ethical standards in this space. The virtual program features an executive conversation between POLITICO CEO Patrick Steel and Workday EVP of corporate affairs Jim Shaughnessy. REGISTER HERE. | | | | | | | | The 2001 film "The Royal Tenenbaums" was narrated by Alec Baldwin. | | | | Follow us on Twitter | | | | Follow us | | | | |
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