| | | | |  | | By Bernie Becker | | | READING THE TEA LEAVES: The mere introduction of a tax bill — particularly one that has been introduced in years before — usually isn’t that noteworthy. But it’s worth taking a deeper look at the measure, S. 866 (118), that would once more allow companies to immediately deduct their research costs, which was introduced late last week by Sens. Maggie Hassan (D-N.H.) and Todd Young (R-Ind.). Certainly, business groups and lobbyists were keeping a close eye on the original co-sponsor list for that bill, which includes another half-dozen Republicans and six senators who caucus with Democrats. That’s because businesses and their lobbyists continue to say that reversing the current situation, in which companies have to write off those expenses over at least five years, is a top priority. “Congress should advance this legislation to create the right business environment to encourage the world’s leading companies to invest, create jobs, and grow the economy here in the U.S.,” said Jason Oxman, the chief executive of the Information Technology Industry Council. But those efforts have become much more complicated because the push to reverse the research amortization requirement has become wrapped up with the debate over whether to expand the Child Tax Credit. MORE ON THIS IN A BIT, but first — thanks for joining us again here at Weekly Tax. Now, a question about this new listing for “professional bear huggers”: How much hugging should be attempted with Cocaine Bears? Modern is getting old: Today marks an even century since the Arts Club of Chicago opened the first showing of works by Pablo Picasso in the U.S. Help us paint the scene. Send your best tips and feedback. Email: bbecker@politico.com, bfaler@politico.com, bguggenheim@politico.com and teckert@politico.com. You can also reach us on Twitter at @berniebecker3, @tobyeckert, @brian_faler, @ben_guggenheim, @POLITICOPro and @Morning_Tax.
| | A message from Intuit, serving more than 100 million customers worldwide with TurboTax, Credit Karma, QuickBooks, and Mailchimp: Many Americans don't fully understand the 6,000+ pages of tax code. Intuit's TurboTax Live Expert team is here to help make tax season less taxing—and help every taxpayer maximize their refund with a confident tax return. We interviewed members of our TurboTax Live Tax Expert team to find out why they love what they do—and how they help taxpayers navigate tax season. Here's what they had to say. | | | BACK TO OUR RESEARCH: Having seven Democrats backing this bill underscores that full research expensing continues to have bipartisan support. The Democrats on the bill include several centrists, like Sen. Kyrsten Sinema of Arizona (who actually left the party but still caucuses with it in the Senate). But Senate Appropriations Chair Patty Murray (D-Wash.), a longtime member of Democratic leadership whose state has lots of research-driven jobs, is also on the bill. (For comparison's sake, the Senate version of this bill introduced in the last Congress ended up with three dozen sponsors, half of them from the Democratic caucus.) Still, it’d be easy to overstate how much a list of co-sponsors might matter in the long run, because the obstacles to bringing back immediate deductions for research expenses that helped scuttle a deal last year haven’t gone anywhere. Plenty of key Democrats acknowledged during the last debate that they wanted to end the longer deductions for research costs, while also pushing for a CTC expansion. (They also like to note that the current R&D policy was put into place by Republicans as part of their 2017 tax law, though.) Republicans also didn’t want to bring back full research expensing badly enough to trade it for a broader child credit — and definitely haven’t pulled back at all on their criticism of the Democrats’ 2021 version of the CTC, which gave monthly payments of up to $360 per qualifying child. On the bright side for business advocates, it doesn’t appear that the more complicated relationship between Republicans and big corporations is causing an erosion of support for full research expensing, at least as of yet. It’s not just defense and pharmaceutical titans complaining about the change anymore, either. Some rather small companies are also having more difficulties because of the increased taxes on their research costs, as The Wall Street Journal’s Richard Rubin noted. Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories.
| | | | We’re spilling the tea (and drinking tons of it in our newsroom) in U.K. politics with our latest newsletter, London Playbook PM. Get to know all the movers and shakers in Westminster and never miss a beat of British politics with a free subscription. Don’t miss out, we’ve got some exciting moves coming. Sign up today. | | | | | JUST HAVING A LITTLE FUN ON TWITTER: President Joe Biden continued to make the case for his budget over the weekend, tweeting about his proposal for a 25 percent minimum tax on the very rich. Nothing too interesting about that, but the tweet also included a graphic with a quote from Biden, which maintained that billionaires only pay an average tax rate of around 3 percent. And what’s interesting about that is that the White House’s Council of Economic Advisers has produced a report that found that the average tax rate for billionaires is around 8 percent, — a figure, it should be noted, that is far from universally accepted. But in public remarks, Biden has dropped that rate even further — down to 3 percent, a statement that has drawn objections from multiple fact-checkers. The White House has also corrected when Biden mentioned a 3 percent rate for billionaires in transcripts on its website, before the president embraced it further on Twitter over the weekend. But maybe even more interesting: Elon Musk, one of the richest people in the world and the owner of Twitter, was among those who questioned Biden’s 3 percent figure. But Musk also sounded open to getting rid of some of the tax-reducing maneuvers available to the very rich — like GRATs, or grantor retained annuity trusts, the sort of vehicle that Democrats like Sen. Elizabeth Warren (D-Mass.) would love to take out of circulation. A GRAT essentially is a trust that allows the very wealthy to distribute assets or financial gifts to family members while tamping down any tax liabilities. It’s legal, as Musk notes, but also a fairly aggressive tax avoidance maneuver — one that has been used by, among others, the Trump family. Given all that, it’s no surprise that Democrats have long sought to rein in those trusts. Biden just included a proposal to modify the tax rules for those trusts, something the Obama administration also targeted. Liberal groups like Americans for Tax Fairness have also pushed for Washington to take action on GRATs.
| | | Bloomberg: “Sunak Thinks Timing UK Tax Cuts Just Right Can Save the Tories.” Reuters: “UK drops plan to tax sovereign wealth funds.” Financial Times: “World’s biggest container groups defend bumper dividends.”
| | | |   | | | | | | Associated Press: “New Mexico Legislature passes sweeping tax-relief plan.” Cleveland.com: “Drilling in state parks: Republicans hope it can fuel a tax cut, but environmentalists fear the worst.” Milwaukee Journal Sentinel: “Illinois collected $36 million taxes from Wisconsinites for marijuana, new report says.”
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| | | The black bear is the state mammal of Alabama, Louisiana, New Mexico and West Virginia, while the grizzly bear is the state mammal of California and Montana.
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