News : Digging in on the bipartisan infrastructure bill — Revisiting reconciliation

Monday, August 2, 2021

Digging in on the bipartisan infrastructure bill — Revisiting reconciliation — DOJ says send Trump's tax returns

Aug 02, 2021

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THERE IT IS: The bipartisan infrastructure bill finally arrived late on Sunday, after days and days of being this close to being done.

And as expected, the most interesting part of the 2,700 page bill from a tax perspective was the late addition of new tax reporting rules for cryptocurrency — raising billions and billions of dollars to help pay for the infrastructure framework.

Industry advocates have been working for days to narrow language in the infrastructure bill that they saw as overly broad, as our Kellie Mejdrich and Brian Faler reported.

Sen. Rob Portman (R-Ohio), the top GOP negotiator for the infrastructure proposal, is among the lawmakers best steeped in virtual currency issues. But interestingly enough, it wasn't just industry sources who were worried that Portman's proposal missed the mark.

Senate Finance Chair Ron Wyden (D-Ore.) tweeted on Sunday that the use of digital currencies to dodge taxes is a real problem — something IRS Commissioner Chuck Rettig has stressed as well.

But the bipartisan group's attempted solution, Wyden added, is "an attempt to apply brick and mortar rules to the internet and fails to understand how the technology works."

In essence, the infrastructure bill would seek to treat cryptocurrencies trades similar to the sale of a stock, forcing brokers to report matters like sale prices. Portman's staff have said that industry fears are overblown — that at its core, the provision merely seeks to clarify that brokers facilitating trades need to follow standard reporting requirements.

But while they might not be able to do much about it, crypto advocates say they're worried the new proposal might choke off innovation within the industry.

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THE RECONCILIATION ANGLE: House Speaker Nancy Pelosi has been upfront that she won't allow the bipartisan measure to be considered until the Senate also passes that $3.5 trillion reconciliation measure that would advance other key Democratic priorities.

One potential issue there: Sen. Joe Manchin (D-W.Va.) is stopping well short of guaranteeing that's going to happen, as our Kelsey Tamborrino reported. "We're going to get the budget resolution. Let's start the process and then see where it goes," Manchin said on CNN's "State of the Union."

Senate Democrats still plan to pass a budget resolution before saying farewell to Washington for August. For his part, Manchin has also been upfront, repeatedly, about trying to ensure that any tax increases passed by Democrats aren't too much of a hindrance to businesses and the economy.

"You're going to make adjustments to the tax code. Are we still going to be competitive?" Manchin asked on CBS's "Face the Nation."

TURN IT AROUND: The Justice Department reversed fields on Friday, and said that the IRS should give former President Donald Trump's tax returns to Congress, Brian also reported.

That's, of course, quite the shift from the Justice Department's view under Trump, when it had insisted that House Democrats' stated reason for requesting Trump's returns — to check up on how presidents are audited — was a pretext masking their true intentions. (Republicans on the House Ways and Means Committee said just as much on Sunday evening.)

Now under President Joe Biden, the department's Office of Legal Counsel essentially countered that lawmakers' request for the returns shouldn't be overturned simply because some Democrats hope they contain embarrassing information

So that leaves the big question: How soon might the Ways and Means Committee get their hands on the Trump returns? The Biden administration has said that Trump's legal team can respond in court before it gives up the returns, and the federal judge overseeing the case, Trevor McFadden, has given the two sides until later this week to work something out.

But thinking long-term: Michael Stern, a former top lawyer for the House, told Brian that maybe there's less of a chance that this could still drag on — but there's most certainly still a chance, and Trump and his team still have plenty of tools left in the toolbox.

It's also fair to note that some folks on the left have knocked House Ways and Means Chair Richard Neal (D-Mass.) for not being aggressive enough on Trump's tax returns, for basically as long as Neal has held the gavel.

Around the World

BRING US YOUR TOURISTS: Indonesia is giving a big tax cut to yachts and cruise ships as it tries to lure more vacationers, Bloomberg reports. The country's tax office announced over the weekend that those boats would no longer have to pay a 75 percent luxury tax, with a spokesperson saying the government believes that it can spur a lot more water-based tourism. The government will also exempt certain boats used for public transport, according to the tax office, but some ships will still have to pay the luxury levy. Indonesia historically has lagged behind some of its neighbors in bringing in cruises and is seeking in general to boost a tourism sector that was hit hard by the pandemic — though it has seen that effort hindered by a new resurgence of the coronavirus in Bali.

Around the Nation

HOW DEAD IS IT? Gov. Jim Justice of West Virginia said that his efforts to scrap the state income tax is "dead as it can be ," WVNews reports. But wait, there's more: Justice added that his fellow Republicans in the state legislature will "absolutely regret forever" not going along with his plan. Interestingly, the governor also blamed the provision from the Democrats' coronavirus aid package this year — championed by Manchin, no less — that seeks to ban states from using relief funds to cut taxes for putting the final nail in the coffin of his plans to kill the income tax. At least for the time being: Roger Hanshaw, the West Virginia House speaker, said the state might take another look at tax relief in a couple years, when the restrictions on tax relief expire. (States are also challenging that provision in court.) Justice had proposed phasing out the income tax, while increasing the sales tax and other levies.

Quick Links

WSJ: "How a Landlord Making $75,000 a Year Could End Up in the Millionaire Tax Bracket."

Illinois says Trump should get a $1 million tax refund for one of his buildings, but Cook County doesn't want to give it.

BBC: "Beyond Meat boss backs tax on meat consumption."

Maybe not technically tax policy, but Elon Musk called the Apple app store a "de facto global tax on the Internet."

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