U.S Payroll Growth, Spending Bill Updates, and Crypto Loans
Tax Policy:
September 7: Opinion: ERC Needs Clearer Guidelines; Not Elimination for Q4
The ERC is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and through December 31, 2020. As of January 1, 2021 the credit amount was increased to 70% of qualified wages paid from January 1, 2021 to December 31, 2021. Eligible employers can get immediate access to the credit by reducing employment tax deposits they must otherwise make. The credit can provide up to $5,000 for each full-time employee retained from March 13, 2020 to December 31, 2020 and up to $28,000 for each retained employee for January 1, 2021 to December 31, 2021.
September 4: Five tax issues to watch as Democrats craft $3.5T bill
Many key aspects of the package pertain to taxes. Democrats want to extend expansions of tax credits benefiting low- and middle-income households that were enacted under President Biden’s coronavirus relief law earlier this year. They also want to pay for their proposed spending and tax cuts — which focus on areas such as health care, child care, and climate — through tax increases on corporations and high-income individuals.
September 2: Key Dates To Watch: Congress And The Threat Of Small Business Tax Increases
The bipartisan infrastructure deal addresses physical infrastructure (roads, bridges, and rural broadband) – without direct tax increases on small business. While it does call for reclaiming unused COVID assistance funding and curtailing the Employee Retention Tax Credit one calendar quarter early, it does not increase business or income taxes. The Senate passed this bill Aug. 10. Its path forward in the House is hotly contested – and depending on who you talk to – its future is linked to the passage of partisan “human infrastructure” budget reconciliation legislation in the House that does contain significant business tax increases.
Congressional Democrats would like to use budget resolution and reconciliation legislation to pass “human infrastructure” policies central to the Biden Administration’s “Build Back Better” agenda. We have not seen the text of the reconciliation bill but we expect it will include enhanced childcare subsidies, a new paid family leave program, clean energy incentives, affordable housing funds, and other Biden Administration priorities. The budget reconciliation bill’s new spending would be paid for through various proposed tax increases, including several that impact small businesses.
Crypto:
September 6: Crypto’s Rapid Move Into Banking Elicits Alarm in Washington
The boom in companies offering cryptocurrency loans and high-yield deposit accounts is disrupting the banking industry and leaving regulators scrambling to catch up.
Spending Bill:
September 3: Democrats Weigh $3.5 Trillion Agenda—and How Much Should Be Paid For
Democrats seeking to pass their $3.5 trillion healthcare, education and climate legislation are wrestling over the amount they should pay with tax increases and other policy changes—and what should be funded with deficit spending.
September 2: CBO Expects $200 Billion From IRS Boost, Below Biden Targets
Democrats are planning to expand the IRS as part of the $3.5 trillion legislation they aim to push through Congress this month. They seek to rebuild the tax agency’s ability to enforce the tax code and police tax cheating. That capacity has shrunk dramatically after a decade of flat or declining budgets. The administration’s plan would double the IRS’s staffing and encourage the agency to audit more high-income taxpayers.
The IRS expansion was also supposed to provide money to help Democrats pay for some of the rest of their agenda, including extending the expanded child tax credit and creating a paid-leave program.
COVID and the Economy:
September 3: U.S. Payroll Growth Slowed in August
U.S. hiring slowed sharply in August as the surging Delta variant dented the pace of the economic recovery.
The U.S. economy added 235,000 jobs last month, the Labor Department said Friday, falling far short of economists’ estimates for 720,000 new jobs. Job growth last month was also down from upwardly revised monthly payroll gains of 1.1 million in July and 962,000 in June.
September 1: On The Money — Job gains fall below estimates