Tax Policy/News:

February 28: Supreme Court decides two big tax cases

The Supreme Court has weighed in on two significant tax cases. One, the MoneyGram case, involves intangible property escheated to a state; the second, the Bittner case, determined that the $10,000 FBAR applies per return, not to each foreign account.

The MoneyGram case, which was taken by the Supreme Court by original jurisdiction, involves a dispute between Delaware and 30 other states over which state is entitled to escheat $300 million in uncashed checks issued by MoneyGram Payment Systems.

The ruling Tuesday is in favor of the challenging states. The court cited the rule that the proceeds of abandoned financial products should escheat to the state of the creditor's last known address. Because MoneyGram does not keep records of creditor addresses for the products at issue, it transmitted the proceeds to Delaware, the state of incorporation. The court decided that the proceeds should be governed by the Federal Disposition Act rather than the common law rule.

"Essentially, if the issuer of financial instruments does not have the last known address in its records, the property should go to the location of the purchaser," said Michael Lurie, counsel at Reed Smith.

In Bittner v. U.S., the court held that the Bank Secrecy Act's $10,000 penalty applies on a per report, not a per account, basis. 

The Bank Secrecy Act requires certain individuals to file annual reports with the federal government about their foreign bank accounts. The statute imposes a maximum $10,000 penalty for non-willful violations of the law.

Until the decision in Bittner, there was a split among the courts as to how the penalty should be applied. The court framed the question at issue in the following way: "Does someone who fails to file a timely or accurate annual report commit a single violation subject to a single $10,000 penalty? Or does that person commit separate violations and incur separate $10,000 penalties for each account not properly recorded within a single report? For Alexandru Bittner, the answer made a difference of several million dollars. Fortunately for him, the court answered in his favor - the penalties are to be applied on a per-report basis, not per account. The court was divided, according to Reuben Muller, a tax attorney at Cole Schotz.

"Justice Jackson joined four conservative justices regarding the meaning of the statute," he said. "But her questioning on oral argument shows a concern with the victim, so the liberal flank was not with Justice Jackson on this. The concern of the other four justices [Thomas, Alito, Gorsuch, and Barrett] was on government overreach — the government going over the line in penalizing more than the law intended."

March 2: Biden to trigger tax fight Senate Democrats don’t want

Talk of repealing any of the Trump tax cuts before the 2024 election had fallen off the table and Senate Democrats have recently steered clear of insisting that any deficit reduction plan that comes before Congress this year include big tax increases.

But putting tax increases front and center when Democrats have to defend 23 Senate seats in the next election is causing jitters because Republicans are sure to latch onto Biden's proposal to try to paint the Democratic Party at large as a bunch of tax-and-spend liberals. Democrats are worried that Sen. Kyrsten Sinema and some other incumbents key to keeping the majority in the Senate could be vulnerable if tax increases are proposed.

Manchin punched holes into Biden's tax plans in the last Congress by saying he would only support raising the corporate tax rate to 25 percent, instead of the 28 percent level favored by Biden. He also shot down the president’s plan to impose a 20 percent minimum tax on billionaires.

Instead of playing defense on tax policy, Senate Democrats want to go on offense by attacking Republicans for backing reforms that would effectively cut Social Security and Medicare benefits.

Senate Republican Whip John Thune, an author of Trump's 2017 tax bill, said he doesn't see much desire among Senate Democrats to revisit those tax cuts ahead of a pivotal presidential election.

Combining extensions of the bonus depreciation and research and development tax credits from the 2017 Trump tax law with a renewal of the expanded child tax credit would add substantially to the deficit if enacted into law.

Economic News/Policy: 

March 5: Economy Week Ahead: U.S. Job Market and Trade in Focus

Monday: The Commerce Department releases January figures on factory orders, shipments, and inventories. Orders for manufactured goods rose 1.8% in December from the prior month, after a sharp drop in November.

Tuesday: Federal Reserve Chairman Jerome Powell testifies before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on the central bank’s monetary policy.

Wednesday: The Commerce Department reports on U.S. exports and imports in January. The U.S. posted its largest trade deficit on record last year. For the full year, imports exceeded exports by $948.1 billion, a 12.2% wider trade deficit from 2021.

Mr. Powell testifies before the U.S. House Financial Services Committee.

The Labor Department releases January data on job openings, quits, and layoffs. Openings jumped to 11 million in December, but private-sector measures of job postings have shown a steep decline in recent months. 

China’s National Bureau of Statistics releases February figures on inflation. Consumer prices in China rose 2.1% in January from a year earlier, a faster pace than December’s 1.8% rise. The Bank of Canada announces its latest interest-rate decision.

Thursday: The Labor Department reports the number of worker filings for unemployment benefits in the week ended March 4. Initial jobless claims have remained at low levels for several months despite layoffs at large companies.

The Bank of Japan announces its latest monetary-policy decision. Kazuo Ueda, the Japanese government’s nominee to lead the central bank, said he believes the benefits of monetary easing are bigger than the costs.

Friday: The Labor Department reports on the state of the U.S. labor market in February, including the level of payrolls, the unemployment rate, and average weekly earnings. Employers added a robust 517,000 jobs in January, and the unemployment rate fell to a 53-year low of 3.4%.

ICYMI: 

March 7: Why a sweeping election law clash at the Supreme Court could disappear

The Supreme Court looks increasingly likely to sidestep a clash over an election law that has weighty stakes for gerrymandering and setting election rules. The justices were headed toward a decision by June in the closely watched appeal from North Carolina Republican lawmakers, who are advancing a sweeping legal theory that would hand near-total authority to state legislatures in regulating federal elections.

For the high court to move forward, legal experts suggest the justices would rely on an exception that, despite having thorny requirements, seeks to preserve Supreme Court review of federal questions even when additional state court proceedings remain.

"Jurisdiction is something the court takes very seriously," said Derek Muller, an election law expert and professor at the University of Iowa College of Law.

The ruling split the case into two tracks: state courts began overseeing the drawing of new maps, and meanwhile, the U.S. Supreme Court justices agreed to consider if the state court had authority for its ruling.

The parties had battled in court filings over whether the North Carolina Supreme Court's decision could be considered as such for purposes of the second track, although court proceedings to design new maps still remained ahead. The parties had battled in court filings over whether the U.S. Supreme Court could take up the second track as state court proceedings to design the new maps still remained ahead. "Ongoing proceedings in the North Carolina Supreme Court could complicate this Court's review," the North Carolina Department of Justice, which opposes the lawmakers' argument, wrote in court filings.

"The agreement of the North Carolina Supreme Court to rehear the case doesn't change the Supreme Court's jurisdiction," said Erwin Chemerinsky, dean of the UC Berkeley School of Law.

"But if the North Carolina Supreme Court were to overrule the earlier decision, and so that the earlier decision no longer stands, then the Supreme Court could say this controversy is moot and wouldn't have jurisdiction," continued Chemerinsky, who suggested the justices will likely hold the case until the rehearing in North Carolina concludes.

March 7: Biden’s FCC nominee withdraws name

"We appreciate Gigi Sohn's candidacy for this important role. She would have brought tremendous talent, intellect, and experience, which is why the president nominated her in the first place," White House press secretary Karine Jean-Pierre said during a briefing.

The Washington Post first reported that Sohn withdrew her name.

In a statement, Sohn said she asked Biden to withdraw her nomination after discussions with her family and "Careful consideration." She said the "Unrelenting, dishonest and cruel attacks" on her character and career from cable and media lobbyists "Have taken an enormous toll on me and my family."

Earlier Tuesday, Sen. Joe Manchin said he would not support Sohn's confirmation, further complicating chances of Democrats confirming Sohn given their slim majority and the fierce GOP pushback to Sohn.

Sohn is a lawyer with more than three decades of experience in technology privacy law, and previously served as a top aide to former FCC Chairman Tom Wheeler.

Sohn said the "Real losers" are the American people, due to the ongoing 2-2 FCC deadlock that leaves the agency unable to push forward certain policies.

"As someone who has advocated for my entire career for affordable, accessible broadband for every American, it is ironic that the 2-2 FCC will remain sidelined at the most consequential opportunity for broadband in our lifetimes," Sohn said.

March 6: Bipartisan rail safety bill runs into Republican roadblock

A bipartisan push to bolster railroad safety is turning into a slog as top Senate Republicans indicate they are not yet on board with the main legislative response to the East Palestine, Ohio, train derailment. Ohio Sens. J.D. Vance and Sherrod Brown unveiled a rail safety proposal last week that has already won over the White House and top Democrats.

Vance and Brown's Railway Safety Act would boost safety requirements for trains carrying hazardous materials, call for more frequent inspections of rail cars, increase fines for safety violations, and greenlight $27 million to examine possible other safety improvements.

Norfolk Southern, the company whose train derailed in East Palestine, was among several major rail operators to help defeat federal and state measures meant to boost rail safety.

The American Association of Railroads, which lobbies on behalf of Norfolk Southern and the other top U.S. railroads, told The Hill that the Railway Safety Act would not have prevented a similar crash.

Norfolk Southern on Monday rolled out its own safety plan to install around 200 additional hot wheel bearing detectors to its trains and develop more effective technology and industry standards for the early warning systems.

The Railway Safety Act already has the support of the largest rail worker union in the U.S. SMART-TD President Jimmy Ferguson last week urged Congress to swiftly pass the bill "Without being watered down by negotiations or the special interests that will seek to stop it and claim that it is too 'burdensome' for a highly profitable industry to implement."

For Fun: 

March 7: Can insects have culture? Puzzle-solving bumblebees show it's possible

Next time you're having trouble solving a tricky puzzle, consider asking a nearby bumblebee.

A new study in the journal PLOS Biology finds that these humble insects can actually learn to solve puzzles from one another, suggesting that even some invertebrates like these social insects have a capacity for what we humans call "culture."

"These creatures are really quite incredible. They're really, really good at learning despite having these tiny, tiny brains," says Alice Bridges, a behavioral ecologist at Anglia Ruskin University in England.

Since culture can be incredibly useful to a species and it seems to be increasingly common across the animal kingdom, Bridges wondered whether bumblebees might have a capacity for it.

To study culture in bumblebees in the lab, she first had to train a few industrious bees to perform a novel behavior. The bees were always "Hacking" the puzzle by, for example, squeezing through unintended gaps in the device to reach the tasty prize inside.

Bridges placed these tutor bees inside different colonies, along with the puzzle boxes. Of course, insect culture might look rather different from the culture seen among other animals, particularly humans. Still, Bridges argues that her work with bumblebees shows that perhaps culture isn't that unusual.

That truth, summarizes Whiten, is that "All we have discovered about animal culture means that human culture, once thought unique," he says, "Did not emerge 'out of the blue' but has obviously built on deep evolutionary foundations."