Tax Policy/News:

August 14: Biden's 15% Corporate Tax Is Stuck In Limbo As It Faces Fierce Lobbying

President Biden's initiative to ensure major U.S. corporations pay a minimum of 15% tax on their income is facing challenges in its implementation. Despite being enacted nearly a year ago, the U.S. government has yet to fully implement the new corporate alternative minimum tax.

This policy, which was introduced to end instances where highly profitable companies paid little to no federal taxes, is now facing significant pushback due to legal uncertainties and aggressive lobbying from companies resistant to the change. 

Although the tax was enacted nearly a year ago as part of the Inflation Reduction Act, its full implementation remains pending. The Treasury Department is at the forefront of this issue, tasked with finalizing the rules that will determine the tax's scope and impact. 

The department's decisions will be pivotal in realizing Biden's goals of reducing the federal deficit and ensuring businesses pay their fair share. Additionally, the nonpartisan Joint Committee on Taxation had estimated that the new tax could generate over $222 billion in federal revenue over a decade.

However, the actual revenue will depend on the resolution of various legal issues stemming from the hastily written law. Lobbying groups representing major corporations are capitalizing on this uncertainty, advocating for changes that could potentially reduce their tax liabilities.

August 10: IRS Locked Accounts Of 'Deceased' Taxpayers Who May Have Been Alive

To prevent identity theft and filing of fraudulent tax returns, the Internal Revenue Service developed an indicator to lock the accounts of millions of taxpayers whom the agency assumed had died, but for tens of thousands of people, that indicator may have been wrong.

The IRS had locked 52.5 million taxpayer accounts with a deceased indicator as of Jan. 20, 2023, but TIGTA's analysis of tax account information through Jan. 1, 2022, found 77,868 taxpayers with potentially erroneous locks.

"Further analysis determined that the deceased account locks were input because of the filing of a return or other actions taken by the IRS. The IRS confirmed that 20,222 taxpayer accounts were locked in error due to both human and computer programming issues when identifying the appropriate taxpayer accounts to be locked."

The inspector general's office updated its analysis of deceased account locks for Jan. 2, 2022, through Oct. 29, 2022, and found that thousands of taxpayer accounts appear to still be erroneously locked.

The service then confirmed that 6,821 of 9,646 tax accounts for which it issued a CP01H notice, "Tax Return Submitted with Locked Social Security Number," were inappropriately locked.

TIGTA made seven recommendations in its report, suggesting the IRS should review the taxpayer accounts that the inspector general identified to find out if the deceased account lock was appropriate and, if not, remove any account locks done by mistake.

TIGTA also advised that the service should identify the reason behind the mistakes that led to improperly locking taxpayer accounts and update its CP01H notice to say that taxpayers can work with the IRS to resolve the erroneous deceased account locks.

Economic News/Policy:

August 15: US bank stocks fall on prospect of tougher oversight, more downgrades

Shares of U.S. banks witnessed a decline on Tuesday, driven by concerns of stricter regulations and the potential for several lenders to be downgraded by Fitch Ratings. 

This has heightened investor apprehension about the sector's robustness. Federal Deposit Insurance Corporation Chairman, Martin Gruenberg, in his speech, emphasized the imminent downgrades of several banking institutions. 

This move is part of a broader initiative as U.S. regulators are keen on introducing stringent oversight of the banking system, especially in the wake of the collapse of multiple lenders in March. 

The S&P 500 banking index, which includes major banks such as JPMorgan, Bank of America, and Goldman Sachs, was notably affected. 

Jack Janasiewicz, a portfolio manager and lead strategist at Natixis Investment Managers, commented that while some of these developments were anticipated, the downgrades reflect concerns that the market had already factored in.

August 10: White House asks Congress for $40B in additional funding

The Biden administration has approached Congress with a request for approximately $40 billion for the first quarter of fiscal 2024, aiming to secure short-term funds for vital priorities. This move comes as discussions are underway regarding larger spending bills. 

The White House's supplemental funding request, detailed on Thursday, seeks additional billions for aiding Ukraine in its conflict with Russia and for domestic needs such as disaster relief and border management. As stated by the Office of Management and Budget Director, Shalanda Young, in her letter to Speaker Kevin McCarthy (R-Calif.), “With the end of the fiscal year quickly approaching, today, the Administration is transmitting a supplemental funding request to the Congress to address three sets of critical needs for emergency funding as part of a potential short-term continuing resolution for the first quarter of FY 2024.”

Specifically, the administration is seeking $24 billion for Ukraine, encompassing military, financial, and humanitarian support. This includes $13 billion for defense, with $9.5 billion earmarked for equipment and Pentagon stock replenishment and $3.6 billion for ongoing military and intelligence support. Additionally, $8.5 billion is requested for the State Department and the U.S. Agency for International Development for economic, humanitarian, and security assistance. Another $2.3 billion is sought through the Treasury Department to prevent Ukraine from depending on financing from China or other "coercive" sources.

On the domestic front, the White House is asking for $12 billion for disaster relief, ensuring FEMA can address natural disasters and future challenges. This comes in light of FEMA's projected "significant deficit" and the looming hurricane season. Furthermore, the administration is requesting approximately $4 billion for border and migration efforts, with $2.65 billion proposed for the Department of Homeland Security. This would cover border management operations and services for migrants. Another $416 million is intended for measures against fentanyl trafficking. 

Young emphasized in her letter that while the administration's plan is on track, these additional funds are crucial. She highlighted the need for Congress to update immigration and asylum laws, expressing the administration's readiness to collaborate on solutions.

Energy and Environmental Policy/News: 

August 11: Biden administration announces $1.2B in funding for projects to pull carbon from the air

The Biden administration announced an investment of up to $1.2 billion in two groundbreaking projects in Texas and Louisiana, focusing on the extraction of carbon dioxide from the atmosphere. 

U.S. Secretary of Energy, Jennifer Granholm, unveiled the funding during a press call, emphasizing the significance of these projects in demonstrating the potential of carbon-pulling technology. She likened the direct air capture technology to "giant vacuums" that can efficiently remove decades-old carbon pollution from the air. 

Once captured, this carbon can be stored underground or repurposed into building materials, agricultural products, or even fuel. 

Named the South Texas DAC Hub and Project Cyprus, these initiatives are projected to eliminate over 2 million metric tons of carbon dioxide each year, which is comparable to removing nearly 500,000 gas-powered vehicles from our roads. 

Furthermore, they are expected to create 4,800 new jobs. This substantial funding is a segment of a broader $3.5 billion program dedicated to regional hubs for carbon capture, which was established under the Bipartisan Infrastructure Law.

August 10: IRS And Treasury Issue Guidance For Owners Of Solar And Wind Powered Energy Facilities In Low-Income Communities For Increased Energy Credit Under The Inflation Reduction Act

The Department of the Treasury and the Internal Revenue Service issued final regulations and Revenue Procedure 2023-27PDF to provide guidance for owners of certain solar or wind facilities built in connection with low-income communities.

The guidance provides definitions, requirements and procedures applicable to the Section 48(e) low-income communities bonus energy investment credit program established under the Inflation Reduction Act.

The IRS estimates that applications from individuals, businesses and tax-exempt organizations that own certain energy credit qualifying solar or wind facilities could number in the thousands.

The Inflation Reduction Act provides for an increase in the energy investment credit for solar and wind facilities that apply for and receive an allocation of environmental justice solar and wind capacity limitation.

Taxpayers that receive an allocation and properly place the facility in service may then claim the increased energy investment credit in the year that the facility is placed in service.

Additionally, the DOE launched a Low-Income Communities Bonus Credit Program page, which will be updated in the coming weeks to provide additional information about the application opening date and application materials.

Notice 2023-17 provided initial guidance for potential applicants seeking allocations of calendar year 2023 environmental justice solar and wind capacity limitation.

Technology:

August 14: AI Will Radically Reshape Job Market, Global Economy, Employee Productivity

The rise of artificial intelligence (AI) is poised to significantly reshape the global job market and economy. The rapid advancements in AI technology have surpassed expectations, and its integration into various sectors is accelerating.

A report from Goldman Sachs suggests that over 300 million jobs worldwide could be affected by AI. McKinsey predicts that at least 12 million Americans will transition to different fields by 2030. However, it's not all negative; many of the jobs that will be lost are expected to be replaced by new ones.

AI's influence on the economy is projected to be substantial. Non-generative and generative AI could contribute between $17 trillion and $26 trillion to the global economy in the coming decades. This technological shift is likened to the transformative effects of the industrial revolution and the internet's rise.

While AI will lead to significant job disruptions, it's also expected to result in net job creation in the long run. The World Economic Forum estimates that 83 million jobs could be lost due to AI in the next five years, but 69 million new jobs will be created, resulting in a net loss of 14 million jobs. However, the nature of many jobs will evolve, requiring workers to adapt.

AI is anticipated to enhance productivity across various sectors. For instance, customer service agents using generative AI technology saw a 14% increase in productivity. Software developers completed tasks 56% faster with generative-code-completion tools, and professional document writing was 40% faster using generative AI.

The rapid pace of AI development and adoption necessitates proactive measures to prepare the workforce. Current workforce education systems, especially in the US, are not adequately equipped to address the challenges posed by AI. Adopting models like Denmark's "flexicurity" system, which combines job security with retraining opportunities, could be beneficial. Additionally, looking to countries like Singapore, which invests heavily in retraining its workforce for an AI-driven economy, could provide valuable insights. 

For Fun: 

August 15: Saturn's Mega-Storms Challenge Planetary Formation Models

Saturn's cyclical mega storms, which have been observed since 1876, are challenging scientists' understanding of gas giant formation. 

These storms, while not always visible, have left lasting impacts on the planet, with some so intense that they created visible surface disturbances when viewed through telescopes. 

Although evidence of most of these storms has faded, they can still be detected through radio emissions. Recent radio band images, taken in 2015 using the National Radio Astronomy Observatory's Very Large Array, showed lighter bands across Saturn's northern hemisphere. These bands indicate higher temperatures, believed to be caused by Saturnian storms that lead to the condensation of ammonia vapor in the atmosphere into "ammonia-rich mushballs" that rain into the planet's depths.

Due to the cold conditions in Saturn's deeper layers, it would take years for convection currents to push this ammonia back into the higher atmosphere. Every 20 to 30 years, when one of these mega storms occurs, the ammonia that rains and snows down from Saturn's upper atmosphere remains there for an extended period. 

The research team identified three distinct patches of ammonia anomalies in Saturn's atmosphere, and all six storms tracked since 1876 occurred within the latitude of these patches. They even found evidence of a seventh storm that likely took place before 1876. 

These storms, described as akin to giant hurricanes, form differently from their terrestrial counterparts. The findings also highlighted that Saturn's atmospheric dynamics differ significantly from Jupiter's. While Jupiter's bands are related to temperature differences, Saturn's bands, detected using radio imaging, showed that its ammonia concentration is generally less than Jupiter's. 

This discrepancy raises questions about our current planetary formation theories, especially since Saturn is believed to have more water than Jupiter based on these models. If Saturn indeed has less ammonia than Jupiter, it suggests that our understanding of planetary formation might need revision.