On The Hill

 

On Saturday (Aug. 8), President Trump signed four COVID-19 related Executive Orders (EO) that address payroll taxes, unemployment insurance (UI), student loan deferments, and eviction moratoriums.

 

 

 

The payroll tax deferral EO applies to those who earn less than $104,000 a year. Trump said he may consider terminating the tax if reelected.

 

On Wednesday (Aug. 12), Treasury Secretary Steve Mnuchin said that the payroll tax deferral would be optional for employers.

 

“We’re going to create a level of certainty for employers that want to participate,” said Mnuchin. “We can’t force people to participate but I think many small businesses will do this and pass on the benefits,” he added.^[1]

 

On Thursday (Aug. 13), White House Economic Advisor Larry Kudlow said the payroll tax deferral will be amended to include self-employed people. Kudlow did not provide details but stated there would be a “technical change.”^[2]

 

There are a number of questions around the payroll tax EO. CPAs and other tax professionals are waiting to advise clients until the Treasury Department or Internal Revenue Service (IRS) offer more guidance. The EO could face legal challenges.^[3] 

 

 

 

The EO on UI benefits could provide as much as $400 a week if states cover a portion of the benefits. The federal government will cover 75 percent of the benefit with states providing the remaining amount. Trump diverted $44 billion from the Federal Emergency Management Agency (FEMA) to pay for the UI benefits.

 

On Friday (Aug. 14), House Ways and Means Republicans sent a press release with FEMA’s guidance on the EO. The guidance said that states must apply to the Lost Wages Assistance Program by Sep. 10. Additionally, the guidance outlined that the benefits are retroactive to Aug. 1 and states have the option to offer UI benefits of $300 without additional state funds or $400 with $100 coming from state funds.

 

To view the press release, click here.

 

 

 

On Thursday (Aug. 13), President Trump said he wanted to cut the top capital-gains rate to 15 percent. Kudlow and Mnuchin both echoed the president’s comments and added that the cut will not happen through an EO.

 

“I’ve never heard of a politician that got elected (saying) we are going to increase your taxes,” Trump said Thursday (Aug. 13) on Fox Business.

 

The White House has emphasized the difference between Trump and presumptive Democratic nominee Joe Biden capital-gains tax plans.

 

Biden’s plan would raise the top capital-gains rate to 39.6 percent. His proposal would fundamentally transform the capital-gains tax rules and suggests that investment income and ordinary income face the same top tax rates, which has not happened since 1990. The 39.6 percent rate would apply to individuals with incomes over one million.^[4]

 

 

 

On Tuesday (Aug. 11), former Vice President Joe Biden selected Sen. Kamala Harris (D-CA) as his running mate. Harris is the first Black woman and first Asian American woman on a major party’s presidential ticket.

 

In 2019, Harris introduced the Livable Incomes for Families Today (LIFT) Act. The bill would establish a refundable middle class tax credit of up to $3,000 for individuals and $6,000 for married couples for those earning less than $87,000 per year. Harris said the bill would be paid for by repealing the 2017 Tax Cuts and Jobs Act (TCJA).

 

Harris has proposed other changes to the tax code including:

Additionally, she has proposed raising the corporate income tax rate to 35 percent, however Biden’s tax plan would raise the corporate rate to 28 percent. Her proposals are expected to face criticism from Republicans on the campaign trail.^[6]

 

 

 

Negotiations for another COVID-19 stimulus bill have come to a halt as White House officials and top Democrats concede that a COVID-19 relief deal is nowhere in sight. 

 

As of Thursday (Aug. 13), House Speaker Nancy Pelosi (D-CA), Senate Minority Leader Chuck Schumer (D-NY), Treasury Secretary Steve Mnuchin, and White House Chief of Staff Mark Meadows have no set plans of meeting in the coming days.

 

The Senate is in recess until Labor Day, and the House has already left for the rest of August and first two weeks in September. Leadership told lawmakers in both chambers that they will be given 24 hours notice if they need to return to Washington, D.C. for a vote.

 

 

 

Last week, the Organization for Economic Cooperation and Development (OECD) sent a draft summary to country representatives that proposed a two-panel process to limit drawn-out disputes between tax authorities and multinationals. In the proposed plan under the section known as Amount A, which would reallocate some multinationals’ profits to more jurisdictions, the two-panel process is outlined.

 

The first “review” panel would be composed of officials from tax administrations affected by Amount A. The second “determination” panel would review the case if the company disagreed with the first panel’s decision and would include independent experts or officials from countries not involved in the dispute.^[7]

 

The draft said there is still disagreement on how dispute resolutions should apply beyond Amount A.

 

 

 

On Thursday (Aug. 13), the Senate Finance Committee favorably reported two U.S. Tax Court nominees. Alina Marshall and Christian Weiler were nominated by President Trump in November 2019. If confirmed, they would serve 15-year terms as judges. Currently, Marshall serves as counsel to the court’s chief judge and Weiler is a partner at Weiler & Rees in New Orleans, LA.^[8]

 

 

 

^[1] Faler, Brian. “Mnuchin: Payroll tax deferral plan would be optional for businesses.” Politico Pro, 12 Aug. 2020.

 

^[2] Faler, Brian. “Payroll EO gets an update.” Politico Pro, 14 Aug. 2020. https://link.edgepilot.com/s/5a28ca7e/ZVqP79FYTUahJV2oD0wNkA?u=https://subscriber.politicopro.com/newsletter/2020/08/payroll-eo-gets-an-update-789921

 

^[3] Becker, Bernie. “More payroll tax questions.” Politico Pro, 11 Aug. 2020. https://link.edgepilot.com/s/343a7308/tUuAsI9iuEqbTRtWY_hzoQ?u=https://subscriber.politicopro.com/newsletter/2020/08/more-payroll-tax-questions-789810

 

^[4] Rubin, Richard. “Capital-Gains Tax Rate Chasm Separates Trump, Biden” Wall Street Journal, 14 Aug. 2020.

 

^[5] LaJoie, Taylor. “Where Does Kamala Harris Stand on Tax Policy?” Tax Foundation, 12 Aug. 2020.

 

^[6] Stein, Jeff. “Harris wants U.S. to give Americans $2,000 a month during pandemic, a contrast with Biden’s measured approach.” Washington Post, 12 Aug. 2020. https://link.edgepilot.com/s/c434c6e5/wiKpwWfhs0_xlfHUYJz5kQ?u=https://www.washingtonpost.com/us-policy/2020/08/12/harris-biden-economic-policy/

 

^[7] Gottlieb, Isabel. “OECD Pitches Plan to Curb Tax Feuds Between Companies, Countries.” Bloomberg Tax, 13 Aug. 2020.

 

^[8] “Senate Finance clears 2 Tax Court nominees.” Politico Pro, 13 Aug. 2020. https://link.edgepilot.com/s/6cd52cd7/LiVCJvCg90K6uKhb6geatg?u=https://subscriber.politicopro.com/article/2020/08/senate-finance-clears-2-tax-court-nominees-3983354