| | | | |  | | By Bernie Becker | | | MOVE FORWARD ON THE LOOKBACK? A lot of weird stuff has happened in the year-plus that top tax writers have tried to clinch this bipartisan tax bill. And this is definitely on the list of strange things: The main obstacle to passing the legislation might be a provision that doesn’t even add up to $1 billion a year. Of course, Senate Republicans’ objections to the lookback provision in the tax bill’s Child Tax Credit expansion isn’t really about its cost, as Pro Tax’s Brian Faler reports this morning. Instead, Sen. Mike Crapo of Idaho, the top Republican on the Senate Finance Committee, and other GOP skeptics are concerned that the lookback could be a first step in permanently softening the link between the CTC and work. What the provision does is allow a child credit recipient to use their prior year’s income to claim a larger incentive, something proponents argue will help families right after having a baby, among other situations. MORE ON THAT IN A BIT, but first thanks for coming back for another edition of Weekly Tax — where we're still seeking out the tax angle for the Florida Man Games. (It's got to be there.) A position with staying power: Today marks 349 years since John Flamsteed — who made the earliest definitive sighting of Uranus, though he thought it was a star — became England’s first Astronomer Royal, a position that’s been held by 14 others in the subsequent three and a half centuries. Help us see what's moving. 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 The American Investment Council: Thousands of American manufacturers rely on private equity investment to support jobs, develop new products, and grow. Read our new report to learn how private equity invests over $100 billion in manufacturers each year in states across our country. For example, TaylorMade is an inspiring private equity turnaround story. Discover how private equity powers manufacturers in Alabama, Florida, Wisconsin, Oklahoma, and Massachusetts. Private equity is investing in America – and boosting manufacturing across our nation. | | | DONE IT ALL BEFORE: Lookbacks have been used in other situations, as Senate Finance Chair Ron Wyden (D-Ore.) has noted, without any real complaints. It also seems that most outside conservative analysts have brushed aside the suggestion that the lookback could cause a substantial amount of people to drop out of the workforce, because they could still claim the CTC. (Nonpartisan and left-leaning groups agree, too — including JCT.) For his part, Crapo argues those previous uses of the lookback were under special circumstances, like during the pandemic, and GOP skeptics of the idea have pointed to one particular study from the American Enterprise Institute that did find a potentially large loss of workers. Still, the fervor in which Senate Republicans have objected to the lookback has led Wyden to suggest, not so subtly, that the GOP might be seeking to block the tax bill from becoming law this year because they believe they’ll take back the Senate in November and can then deal with these issues as the majority next year. What’s it all add up to? Gridlock, for now. Crapo and other Senate Republicans say they won’t support moving forward with the bill as long as the lookback remains in it. Meanwhile, at least some supporters of the bill are wary of opening the bill at all to changes, given the amount of negotiating between Wyden and House Ways and Means Chair Jason Smith (R-Mo.) that went into reaching a final deal. This much is clear, though: For a variety of reasons, those supporters likely don’t have a ton of time to get the bipartisan tax bill passed — probably a matter of weeks. So a lot of eyes will be on Senate Majority Leader Chuck Schumer to see how he might handle the situation, and whether he might take his chances and bring the tax bill to the floor without offering any opportunity for Republicans to change it. Another option: Key lawmakers rolled out a package of six spending bills on Sunday that congressional leaders hope to pass in the coming week. (The spending bill covering the IRS is not among this group and is expected later this month, for whatever it’s worth.) There has been some talk about the Senate attaching the tax bill to a broader spending vehicle. But it might be a lot to ask to get the tax bill on to what’s a bipartisan appropriations package, as long as it remains so divisive in the Senate.
| | | | DON’T MISS POLITICO’S HEALTH CARE SUMMIT: The stakes are high as America's health care community strives to meet the evolving needs of patients and practitioners, adopt new technologies and navigate skeptical public attitudes toward science. Join POLITICO’s annual Health Care Summit on March 13 where we will discuss the future of medicine, including the latest in health tech, new drugs and brain treatments, diagnostics, health equity, workforce strains and more. REGISTER HERE. | | | | | 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. MORE ON THE PREVAILING MOOD: It’s fair to say that Sen. Thom Tillis (R-N.C.) ruffled some feathers with his opinion piece last week in The Wall Street Journal, in which he argued that Wyden and the White House took advantage of Smith in the talks over the tax bill. Tillis argued that the “fundamental problem” with the bill is that it would expand the CTC, a Democratic priority, in exchange for once again allowing immediate write-offs for research expenses, which he called a bipartisan proposal. Proponents of the tax bill noted to Weekly Tax that both Smith and outside groups, like the Committee for a Responsible Federal Budget, have estimated that the costs of its business provisions would far outweigh the CTC changes if everything was made permanent. (In addition to the research change, the legislation would also bring back more generous tax breaks for writing off interest and depreciating capital investments.) In all, Smith’s team has estimated that the business provisions would add up to $600 billion worth of tax relief over a decade if made permanent, more than five times as much as the $110 billion from the expanded child credit. (For its part, CRFB projected that the permanent business tax breaks would cost around $525 billion over a decade, compared to $180 billion for the CTC expansion.) Speaking of the weird stuff: In essence, Tillis is making the mirror argument to House Democrats, who cited those cost estimates to say that their priorities got the short end of the stick in the tax bill. (The legislation wasn’t even half a loaf, as Rep. Danny Davis of Illinois characterized it, before voting for it like most House Democrats.) It also speaks to the strange vibes around this tax bill that Tillis, who’s known as a bipartisan dealmaker in the Senate, is one of the legislation’s most fervent opponents — to the point that other observers have been surprised by the depth of his resistance.
| | | | A message from The American Investment Council:   | | | | | Financial Times: “Jeremy Hunt warns of ‘long path’ ahead to cut UK tax burden.” The Guardian: “Entrance fees, visitor zones and taxes: how Europe’s biggest cities are tackling overtourism.” CoinDesk: “Indonesia’s Crypto Watchdog Pushes for Friendlier Taxes as Regulatory Overhaul Looms.”
| | | | Don’t sleep on it. Get breaking New York policy from POLITICO Pro—the platform that never sleeps—and use our Legislative Tracker to see what’s on the Albany agenda. Learn more. | | | | | | | | | Associated Press: Gov. Tony Evers of Wisconsin “vetoes Republican-backed bills slashing the income tax, cutting taxes on retirees.” More from the AP: “Georgia is spending more than $1 billion subsidizing moviemaking. Lawmakers want some limits.” Pittsburgh Post-Gazette: “Pa. income tax plan raising $6.2 billion in revenue up for discussion.”
| | Bloomberg: “Biden will push higher taxes for the rich in State of the Union.” Wall Street Journal: “A Biden Subsidy Is Meant to Create Jobs. In This Nevada Town, It Didn’t.” More from Bloomberg: “Asset Managers Are Quietly Purging Their Portfolios of Tax Risk.” AFP: “US Lawmaker Flags Surge in Tax-Free Imports From China.”
| | A message from The American Investment Council: Over the past decade, private equity investments have strengthened thousands of manufacturers – including TaylorMade in California, a glass bottle company in Tampa, a truck bed liner company in Missouri, and an iron castings plant in Wisconsin. Read our new report to learn how private equity is investing in manufacturers in YOUR STATE and making our country stronger. | | | | | Edmond Halley was England’s second Astronomer Royal, from 1720 to 1742. | | | | Follow us on Twitter | | | | Follow us | | | | |
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