| | | | | |  | | By Bernie Becker | 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. A CHILDREN'S CRUSADE: Democrats will be taking the next steps in their effort to expand the Child Tax Credit this week, as they look to quickly clinch more coronavirus relief for businesses and families. As part of that push, top Democrats will today introduce a one-year measure that would allow for monthly payments to families with children, worth $300 per child for kids under 6, and $250 per child for dependents between 6 and 17. (The Washington Post got a sneak peak at that proposal over the weekend.) In a related move, Democrats will also introduce a permanent expansion of the child credit along those same lines. There's no doubt that it's an ambitious effort to expand the social safety net, but there are also plenty of questions about how the Democrats' proposal would work. First up: The Democrats' one-year proposal pushes any payments until July, to give the IRS more time to get into position to deliver monthly payments. That is far from a small undertaking, but proponents of monthly payments are more optimistic about the IRS's ability to pull it off because the agency did a relatively efficient job delivering millions of stimulus checks. (Twice, even, with a third time quite possibly on the way.) The first problem: Figuring out who's eligible for the child credit is far more difficult than the direct payments. "It is not as simple as just taking the prior year's return and saying, 'Okay we will pay out based on that.' Kids move around, families change," said Nina Olson, the former national taxpayer advocate, an in-house IRS watchdog. And it's not just changing income that can affect eligibility for the child credit. People have more kids, or get divorced. Their children grow up, which changes the amount of their monthly payment. The Democratic proposal has a safe harbor that would excuse some people who wrongly received payments from owing it back to the government, and a web portal that would allow people to update their income to keep their eligibility up to date. And yet: Olson maintains this is far too extensive a task to think the IRS would be able to do it well by July, noting that it took years for the agency to get a framework in place for Obamacare's premium tax credit. "It is fine to authorize the payments, but there needs to be at least 18 months lead time, and even that is a stretch," said Olson, who added the IRS would have to build a totally separate system than the one governing tax filing. "Otherwise you just get something that is tacked on to mid-20th century technology that is completely inflexible." THE WEEKS KEEP COMING, and so will more on the Child Tax Credit. Yup, that's about all we got for that Super Bowl. Huh, didn't know this: Today marks 184 years since the first and so far only time the Senate has had to break a deadlock over who would be vice president — choosing former Sen. Richard Johnson of Kentucky. (Johnson's running mate, President Martin Van Buren, would be forgiven if he eventually wished the Senate picked differently.) Choose wisely. Send us your 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. | | | | TRACK THE FIRST 100 DAYS OF THE BIDEN ADMINISTRATION: President Biden's cabinet is getting confirmed, bringing change to agencies and departments across the Executive Branch. From the West Wing to Foggy Bottom, track the first 100 days of the Biden administration with Transition Playbook, our scoop-filled newsletter that chronicles the policies, people, and emerging power centers of the new administration. Subscribe today. | | | | | Perhaps an easier question: Could these child credit changes get enacted through budget reconciliation, given both the White House and Democrats want to move quickly on the next round of pandemic relief? It's not totally settled, but the budget experts that Weekly Tax talked to over the weekend said it should be doable. One thing to keep in mind: Republicans expanded the child credit as part of their 2017 tax law, H.R. 1 (115), which also employed budget reconciliation, though those changes didn't include features like monthly payments. The reconciliation process can be tough to predict, but a big question seems to be whether the child credit expansion would increase the deficit outside the 10-year budget window, which would run afoul of the Senate's Byrd Rule. Still, a one-year measure shouldn't have any budget impact that far down the line — or at the very least, there should be ways to sidestep any procedural hurdles. That would also explain the two-track process that Democrats are working with the CTC expansion. The permanent measure that House Appropriations Chair Rosa DeLauro (D-Conn.) and Reps. Suzan DelBene (D-Wash.) and Ritchie Torres (D-N.Y.) are introducing has most of the same baselines as the one-year proposal — being worth as much as $3,600 per year per child, among other things. The bet then would be that, once a one-year expansion of the child credit was put into place, it would never snap back to previous levels — honestly, a pretty solid bet given how Congress has historically handled temporary tax relief. "The goal was not to include this in the relief bill. That is the more pressing concern," one Democratic aide said about the permanent proposal. "Permanent is something we will push separately." MORE ON THOSE RELIEF TALKS: Democrats just voted en masse during last week's budget vote-a-rama against giving another round of direct payments to "upper-income taxpayers." The rub is that the vote isn't binding, and didn't actually define what made someone upper-income. So as it stands, Democrats are still trying to figure out whether to start phasing out stimulus checks at $50,000 of yearly income for individuals or $75,000. And then on Sunday, Treasury Secretary Janet Yellen threw out a potential middle ground — $60,000 a year. "If you think about an elementary school teacher or a policeman" making that much, Yellen said on CNN's "State of the Union," then "I would certainly agree, that it's appropriate for people there to get support." Democrats are also relying on reconciliation after pounding Republicans for using those same rules to pass the 2017 tax law, while GOP lawmakers are now bemoaning the use of reconciliation. Sen. Pat Toomey (R-Pa.), a key architect of the Tax Cuts and Jobs Act, said the following when asked about the switcheroo on "State of the Union": "I was talking about tax reform in the context of all but three Democrat senators sending us a letter basically refusing to participate in the tax reform that we wanted to do," he said. In contrast, Toomey noted, Republicans have said they're willing to work with President Joe Biden on more coronavirus assistance. (Democrats have countered by saying they don't want to be strung along, as many believe they were in talks over what would become Obamacare more than a decade ago.) | | | SO NICE, LET'S DO IT TWICE: The British government is exploring new taxes on the retailers and tech companies that have been especially profitable during the pandemic, The Sunday Times reports. In fact, government officials held a meeting with business representatives last week to discuss how both an online sales tax and a one-time tax on "excessive profits" would work. Rishi Sunak, the chancellor of the exchequer, isn't expected to include either of those ideas when he rolls out the budget early next month, but the proposals could get more of an airing the last half of the year. A one-off excessive profits tax would likely hit companies like Amazon, larger supermarkets and food delivery outfits. Amazon's sales in the U.K. jumped by more than 50 percent in 2020, to 19.5 billion pounds. | | | | THE UNOFFICIAL GUIDE TO OFFICIAL WASHINGTON: February is short month, but there is a lot in store. From the impeachment trial to the Covid relief package to intraparty squabbles, our new Playbook team is on the case. Rachael Bade, Eugene Daniels, Ryan Lizza and Tara Palmeri are canvassing every corner of Washington, bringing you the big stories and scoops you need to know – and the insider nuggets that you want to know – about the new power centers and players. "This town" has changed. And no one covers this town like Playbook. Subscribe to the unofficial guide to official Washington today . | | | | | | | | BIG SKY, LOWER TAXES: Gov. Greg Gianforte of Montana is pressing to cut taxes for both individuals and businesses in his early weeks in office, the Helena Independent Record reports. Business advocates are especially excited that Gianforte, Montana's first Republican governor in 16 years, is proposing to double the exemption for the state's business equipment tax, from $100,000 to $200,000. Montana has cut that tax six times over the last 20 years, most recently back in 2013 — when a bipartisan agreement eliminated the business equipment tax for about two-thirds of businesses in the state. Local governments have been worried about those proposals to whittle away the business equipment tax for years — because it helps pay for local schools and other initiatives. But at least for now, they're taking solace in Gianforte's proposal to cover any revenues lost from another cut in the tax with money from the state's general fund. | | | WaPo op-ed: "A tax break for paying your taxes? Please." Seattle's newest billionaire tells Washington state officials to cool it with the talk of higher taxes. Maya Wiley, a candidate for mayor of New York, backs financial transactions tax and higher income taxes on the rich. | | | The poinsettia, a plant frequently used in Christmas displays, is named for Joel Roberts Poinsett, who was Secretary of War under Van Buren. | | | | Follow us on Twitter | | | | Follow us | | | | |
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