Monday, February 22, 2021

Riding the IRS — Relief later this week —Taxing the plastics

Delivered every Monday by 10 a.m., Weekly Tax examines the latest news in tax politics and policy.
Feb 22, 2021 View in browser
 
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By Bernie Becker

With help from Aaron Lorenzo

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.

I MEAN, IT COULD BE BETTER: Chalk this up as one of those "both things can be true" kind of responses.

There's no doubt that Democrats blame many of the problems at the IRS on a concerted drop in funding over the last decade, something they mainly lay at the feet of Republicans. But at least some Democrats clearly also believe that the tax collector could be doing a more competent job with the resources already available to the agency.

Cases in point: House Ways and Means Chair Richard Neal (D-Mass.) and Rep. Bill Pascrell (D-N.J.), who heads the committee's oversight panel, sent a pair of shots across the bow on Friday — knocking the IRS for sending out erroneous notices to tens of thousands of people and what they termed a slow start to this year's filing season.

"These repeated errors constitute a massive failure of leadership at the highest level," the two lawmakers wrote about the incorrect notices, while calling the kickoff of the filing season "alarming."

MORE ON THAT IN A BIT, but first — welcome back to a five-day workweek. Also, apparently you can watch hockey from a boat now?

We're a day late on this, but it's too good to pass up: Yesterday marked 84 years since the first flying car — the Waterman Aerobile — actually flew. (Intrigued? Head to the Air and Space Museum hangar out in Chantilly to see the "two-place, high-wing, cabin monoplane with a transmission drive system that operated the propeller in the air and the rear wheels on the ground.")

Let's not leave anything up in the air. Send your best tips and feedback.

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LET'S BE CLEAR: Democrats are going to fight for funding increases at the IRS this year now that they've got full control on Washington, and they could very easily succeed.

Still, the new statements from Neal and Pascrell also just reinforce how easy it can be to criticize the IRS, and illustrate that Democrats in particular have to balance their support for the agency with trying to feel the pain of the frustrated taxpayers out there.

If we're being honest, Democrats have found ways to try and achieve that balance. "Americans do not have confidence in the tax system," Pascrell said in a previously unreleased statement provided to Morning Tax, in which he blames part of that mistrust on the Trump administration.

"The leadership of the IRS has also breached some trust," Pascrell added. "But the central cause is the deliberate vandalism bordering on sabotage by Republicans who have starved the IRS for years."

At the same time, it should also be noted that most of the heat coming to the IRS from Democrats, at least for now, is from the House side. "In Senator Wyden's view, a decade of Republican funding and staffing cuts are responsible for IRS challenges. One-time funding boosts, while necessary, can't compensate for 10 years of neglect," said Ashley Schapitl, a spokesperson for Senate Finance Chair Ron Wyden (D-Ore.)

For his part, IRS Commissioner Chuck Rettig has noticed the heat his agency is taking from the Hill. Rettig noted last week during an event with the New York City Bar Association that the IRS really only hears from lawmakers when they have a complaint, not when there are any congratulations to offer.

His case in point: Rettig argued that much of the public attention on the IRS's administration of the first round of stimulus checks centered on dead people getting payments, a situation where he noted the agency just followed the law as written by Congress.

DRIVING THE WEEK: House Democrats are set to pass their $1.9 trillion pandemic relief measure late in the week — and they fully expect to do so without the support of a single GOP lawmaker, our Caitlin Emma reported.

As it stands, the Democrats' de facto deadline for getting a package passed — the March 14 expiration of expanded unemployment benefits — is now less than three weeks away, and Senate Democrats say they're ready to run with the baton once it's passed on by the House.

GOP lawmakers are prepared to make their case against several elements of the coronavirus measure, including the further aid for state and local governments. But Democrats don't seem too afraid, noting that the measure is polling quite well these days.

ONE WORD FOR YOU — PLASTICS: Here's not something you hear every day — a collection of big-name companies are essentially saying, tax us. Please.

Recycling issues have caused this dilemma facing big food producers like Nestlé, Mars and Unilever, as our Catherine Boudreau noted. These days, a fair number of both consumers and investors want to see a commitment to sustainability from those companies.

The problem is that it's hard for those companies to get their hands on enough recycled products to meet their pledges to be more green. And here's the plan to fix that from The Recycling Partnership, a group that includes those three large food producers: A fee on packaging to augment the $4 billion in taxpayer funds that are already backing local recycling products.

If nothing else, that's a bit of a flip flop for the companies, who Catherine notes "have fought efforts that would force them to take responsibility for the empty bottles, used wrappers and other refuse their products leave behind."

Around the World

THEY'RE LEAVING…: South Africa is looking to raise taxes to close a budget gap, but there's at least one problem , Bloomberg reports — the country, which already has lots of wealth and income inequality, is losing skilled workers and top earners. One sign of that: A survey late last year found that people moving away was the reason cited for more than one in five pricier homes being put on the market. As it stands, just more than a third of South Africa's working-age population is a registered taxpayer, and about two out of every five dollars in personal income tax collections come from those making at least one million rand a year (about $68,000). South Africa has considered putting a wealth tax into place, but the government's budget a year ago also boosted a tax threshold on foreign income to try and keep higher earners from switching their residency. Finance Minister Tito Mboweni's latest budget, which is scheduled to be released on Wednesday, is expected to raise 40 billion new rand of revenue over four years.

Around the Nation

SIDES ARE DRAWN: Maryland officials are in a staredown over whether to include undocumented immigrants in the state's version of the Earned Income Tax Credit, The Washington Post reports. Republicans are deadset against that idea, and Gov. Larry Hogan ensured that noncitizens couldn't access the credit when it was expanded for the time being in a $1 billion-plus coronavirus relief measure approved this month. But the Democrats who run the legislature are pushing a bill that would offer cash payments from the program, now the nation's largest such credit for lower-income people, to those without a Social Security number. And with veto-proof majorities in both houses, Democratic leaders are also vowing to override any potential veto from Hogan. The stimulus package that Hogan just signed sent immediate payments of up to $500 for poorer families and $300 to individuals, with further payments scheduled over the next three years.

 

JOIN US TUESDAY TO MEET THE FRESHMEN: The freshman class of the 117th Congress took office just three days before an armed mob stormed Capitol Hill and in the middle of a once per century pandemic, making its first month in office just a bit different from any previous class. Join POLITICO for "Red, Fresh and Blue," featuring live interviews with newly elected members of Congress from both sides of the aisle. Huddle newsletter author Olivia Beavers will moderate back-to-back live interviews with Rep. Michelle Steel (R-Calif.) and Rep. Carolyn Bourdeaux (D-Ga.). REGISTER HERE.

 
 
Quick Links

Interesting, interesting: The White House says it will take a deeper look at a financial transactions tax following the GameStop trading frenzy.

A corporate tax increase, you say? Rishi Sunak, the British chancellor of the exchequer, will reportedly announce that the U.K. will increase the corporate tax rate from 19 percent to 23 percent.

The FT: "Corporate US urges Biden to avoid hiking taxes to fund infrastructure."

Reuters: The Manhattan district attorney has sent a subpoena to a New York City property tax agency, as part of an inquiry related to former President Donald Trump.

Did You Know?

"The Graduate" placed two quotes on the American Film Institute's 2005 list of the greatest movie quotes of all time.

 

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