Border & Military Aid Bill, Renewable Energy, and ERC Voluntary Disclosure Program
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Tax Policy/News:
January 31: House passes bill expanding CTC and business breaks
The Tax Relief for American Families and Workers Act, a $78 billion bill, was passed by the House with a bipartisan vote of 357 to 70, supported by 188 Democrats and 169 Republicans.
The legislation includes measures like the enhanced Child Tax Credit, the ability to fully deduct research and development expenses in the first year, 100% bonus depreciation, disaster tax relief, and improvements in the Low Income Housing Tax Credit.
The bill also addresses concerns related to inflation by incrementally increasing the refundable portion of the Child Tax Credit for 2023, 2024, and 2025, with flexibility for taxpayers to use current- or prior-year income for calculations.
Business groups, including the National Retail Federation and the National Association of Manufacturers, support the bill, emphasizing benefits such as immediate deduction of R&D investments and disaster tax relief.
The cost of the bill is offset by ending the Employee Retention Credit on Jan. 31, saving over $75 billion. The Senate's quick action is urged to restore critical provisions for businesses and manufacturing growth.
Economic News/Policy:
February 4: Senate negotiators release sweeping border and military aid bill
The Senate has released a $118 billion bipartisan border security deal aimed at discouraging migrants from crossing the U.S.-Mexico border.
The legislation includes funding for Ukraine, Israel, the Indo-Pacific, and humanitarian aid.
However, it faces criticism from both the right and left in Congress, with House Speaker Mike Johnson calling it "dead on arrival."
Former President Donald Trump, who prioritizes the border issue, opposes the deal.
The legislation, a top priority for President Biden, aims to address immigration by closing asylum process loopholes, limiting parole use, and granting the president authority to shut down the border during high crossings.
The bill includes provisions for Israel's air defenses, aid to Ukraine, and additional visas.
Senate Majority Leader Schumer plans a vote, but its future is uncertain amid political divisions.
February 4: Powell: ‘The US is on an unsustainable fiscal path’
In a "60 Minutes" interview, Federal Reserve Chair Jerome Powell expressed concern about the U.S. fiscal trajectory, stating that the country is on an unsustainable fiscal path as the national debt grows faster than the economy.
The U.S. national debt exceeded $34 trillion in early January, raising concerns about funding the government amid rising debt levels.
Congress has repeatedly postponed spending deadlines, with the latest stopgap measure set to expire for four federal agencies on March 1 and the rest of the government on March 8.
Despite long-term worries about the national debt, Powell highlighted the central bank's belief that the economy is currently in a good place, with robust growth and lower inflation.
Powell dismissed political influence on the Fed's decisions, emphasizing the importance of integrity. While some have called for rate cuts, Powell indicated that such measures are unlikely in the near term, citing the need for confidence in economic indicators.
Former President Trump accused Powell of being politically motivated, but Powell reiterated the Fed's commitment to non-partisan decision-making.
Technology:
February 4: How AI is quietly changing everyday life
The widespread adoption of generative artificial intelligence (AI) is silently impacting various aspects of American life, from job screening to education, real estate, healthcare, and insurance.
Despite the Biden administration's efforts to evaluate and regulate AI, lawmakers at different levels are struggling to address privacy concerns and prevent the perpetuation of biases ingrained in AI training data.
AI is influencing hiring processes, potentially making human interviewers obsolete, leading to concerns about invasive surveillance and biased decision-making in workplaces.
In education, AI is assisting K-12 students and teachers, raising issues of privacy and equity. In the real estate market, AI has the potential to reshape the industry but may also reinforce historical biases.
In healthcare, AI is becoming a crucial tool for doctors, aiding in diagnostics and surgical planning.
However, the lack of clear regulations and potential biases in AI systems pose challenges.
Furthermore, AI is making strides in processing medical bills, streamlining the billing process but raising concerns about transparency and accountability.
Despite the transformative potential of AI, finding the right balance and addressing risks require careful consideration and government intervention.
February 4: Finance worker pays out $25 million after video call with deep fake ‘chief financial officer’
In a sophisticated scam, a finance worker at a multinational firm in Hong Kong fell victim to fraudsters who utilized deepfake technology to imitate the company's chief financial officer in a video conference call, resulting in a fraudulent payout of $25 million.
The intricate scheme involved the worker participating in a video call with what he believed were fellow colleagues, all of whom were actually deep fake recreations.
The fraudster initially raised suspicion by sending a message from the UK-based CFO discussing the need for a secret transaction. Despite initial doubts, the worker was convinced during the video call, as the deepfake participants closely resembled and sounded like recognized colleagues.
The scam was uncovered when the employee checked with the corporation's head office. Hong Kong police, who made six arrests related to such scams, revealed that deepfake technology had been used in at least 20 instances to deceive facial recognition programs by imitating individuals pictured on stolen identity cards.
This incident highlights the growing concern globally about the sophistication and malicious potential of deepfake technology, which has been used in various scams and incidents, including the creation of AI-generated explicit images of public figures like Taylor Swift.
Energy and Environmental Policy/News:
February 4: US counties are blocking the future of renewable energy: These maps, graphics show how
Local governments are impeding the growth of wind and solar power faster than they are facilitating it and are subsequently complicating the U.S.’s goals in achieving 100% clean energy by 2035, according to a recent analysis from USA TODAY.
Approximately 15% of U.S. counties have imposed bans, moratoriums, or construction obstacles on utility-scale wind, solar, or both, hindering the transition to cleaner energy sources.
These restrictions affect installations large enough to replace power plants and power tens of thousands of homes.
The opposition to renewable energy is diverse, with various objections, but the collective impact is hindering progress toward clean energy goals.
While the U.S. is experiencing a surge in renewable energy construction, the mix of energy sources remains insufficient to meet the set targets.
Bans and impediments are rapidly increasing, with 2023 marking the first time counties curtailed solar installations almost equal to those adding them. Factors such as setback requirements, zoning restrictions, and noise limits contribute to the impediments, potentially making the goal of 100% carbon-free electricity by 2035 more challenging and expensive.
Despite the rise in bans, wind and solar energy are economically viable and crucial for achieving cleaner power. Some states, like Iowa, lead in embracing wind and solar, but the overall trend poses a significant challenge to the nation's clean energy ambitions.
February 1: Californians bought a record number of EVs in 2023, despite industry setbacks
In 2023, California drivers set a record by purchasing 446,961 new electric cars, marking a 29 percent increase from the previous year, according to a report from nonprofit Veloz and the California Energy Commission.
The data revealed that light-duty zero-emissions vehicles, including battery-electric, plug-in hybrid, and fuel cell-powered vehicles, held a 25 percent share of the state's light-duty automotive market.
This was a notable rise from 18.84 percent in 2022 and 12.41 percent in 2021. Despite concerns about a decline in public interest in such vehicles, 2023 saw a record-breaking year for sales, both in California and nationally, with the state accounting for 34 percent of the total.
The report acknowledged the need for reliable charging infrastructure to sustain the growing trend in electric vehicle adoption.
Although California achieved its goal of installing 10,000 fast chargers ahead of schedule, challenges remain, including non-functioning charging stations and concerns about the reliability of public charging experiences.
ICYMI:
The Internal Revenue Service (IRS) will host a free Employee Retention Credit (ERC) Voluntary Disclosure Program webinar on February 8 at 2 p.m. EST, aimed at educating tax professionals about the program.
The 75-minute session will cover the eligibility criteria, application process, advantages of the program, and post-application procedures. Although primarily designed for tax professionals, the webinar may be beneficial for employers seeking to rectify inaccurate ERC claims.
The ERC Voluntary Disclosure Program, initiated in December, assists employers who received funds in error by allowing them to repay only 80% of the ERC amount.
The IRS emphasizes protecting taxpayers from misinformation and marketing tactics surrounding ERC eligibility and introduced a moratorium on processing new ERC claims in September.
Additionally, the ERC withdrawal initiative remains available, offering the option to retract questionable claims without penalties or interest.
The IRS encourages interested parties to register for the webinar and provides additional resources on ERC eligibility and guidelines on its website.
For Fun:
February 5: AI helps scholars read scroll buried when Vesuvius erupted in AD79
Researchers, equipped with artificial intelligence (AI), have made a groundbreaking discovery in understanding ancient texts by reading the hidden content of a charred scroll from Herculaneum, buried during the eruption of Mount Vesuvius nearly 2,000 years ago.
Hundreds of papyrus scrolls from a Roman villa in Herculaneum were previously unreadable due to being burned and carbonized.
The breakthrough came from the Vesuvius Challenge, a $1 million contest launched by computer scientist Brent Seales, where a team of three students used high-resolution CT scans and AI to decipher more than 2,000 Greek letters from the scroll.
Papyrologists consider this a game-changer, opening the door to decoding hundreds of similar scrolls.
The challenge continues with the goal of reading 85% of the scroll and improving the process for damaged parts.