Tax Season, Build Back Better Act, and Covid-19 Economic Recovery
Tax Policy:
January 24: IRS kicks off challenging tax season
The Internal Revenue Service opened tax season Monday as it faces a backlog of millions of unprocessed tax returns, and warned taxpayers and tax preparers to be patient, file electronically and accurately, and request direct deposit of tax refunds.
"For too long, the IRS has suffered too few resources to get the American people the services that they deserve. We're the greatest country on the planet. Our people deserve the greatest services available anywhere. While continuing to face consequential resource challenges, I want you to know that our employees are committed to doing everything possible in an all-hands-on-deck approach to get people the help they need this filing season as quickly as possible." The IRS is urging taxpayers to file electronically and accurately so their tax returns don't get caught up in the automated filters that cross-check information on the 1040 against W-2 and 1099 forms, and to use direct deposit if possible.
Taxpayers who claim the refundable Earned Income Tax Credit or the Additional Child Tax Credit will have to wait a little longer to get their refunds because of the fraud checks that the IRS is required to do.
"By law, the IRS cannot issue a refund involving the Earned Income Tax Credit or the additional Child Tax Credit tax credit before mid-February, though eligible people may file their returns beginning today," said Ken Corbin, chief taxpayer experience officer at the IRS and commissioner of the IRS's Wage and Investment Division.
"Due to the holidays, weekends, and bank-processing times, people in this group should expect to see their refunds by early March. We know there's a lot of interest from this group, and we appreciate their patience as we are following the guidelines laid out in the PATH Act law." He had a special piece of advice for taxpayers who are still waiting for their 2020 tax returns to be processed and how they should fill in their 2021 tax returns.
On Monday, the IRS posted Revenue Procedure 2022-12, which provides three procedures for individuals who aren't otherwise required to file 2021 federal income tax returns.
The first two procedures allow people to file simplified returns in order to receive the Child Tax Credit, the 2021 Recovery Rebate Credit, and the Earned Income Tax Credit.
January 19: Millionaires group calls for wealth tax at Davos forum
A group of more than 100 high-net-worth individuals issued an open letter at the virtual World Economic Forum on Tuesday calling on countries to establish permanent wealth taxes in order to fund public services.
The group, known as Patriotic Millionaires, addressed their fellow millionaires and billionaires in their open letter, titled "In tax we trust," saying, "The bedrock of a strong democracy is a fair tax system. A fair tax system."
"As millionaires, we know that the current tax system is not fair. Most of us can say that, while the world has gone through an immense amount of suffering in the last two years, we have actually seen our wealth rise during the pandemic - yet few if any of us can honestly say that we pay our fair share in taxes," they wrote.
According to the group, the unfair tax system present in many countries has created " a colossal lack of trust between the people of the world and the elites who are the architects of this system.
"To put it simply, restoring trust requires taxing the rich. The world - every country in it - must demand the rich pay their fair share. Tax us, the rich, and tax us now," wrote the group.
Patriotic Millionaires was founded in 2010 as a nonpartisan U.S. lobbying group aimed at ending Bush-era tax cuts on the wealthy and has since begun lobbying globally for enhanced taxation on the rich.
British entrepreneur Gemma McGough, a founding member of the group, said in a statement, "A common value most people share is that if something's not fair then it's not right. But tax systems the world over have unfairness built in, so why should people trust them?".
Build Back Better Act/Spending Bill:
January 20: With Broad Safety Net Bill Stalled, Democrats Weigh What to Salvage
After spending much of last year thinking about how ambitious the measure they called Build Back Better could be, Democrats have pivoted hard in recent days, beginning to contemplate a far narrower bill tailored to meet the demands of Senator Joe Manchin III, Democrat of West Virginia, whose rejection of the broader, $2.2 trillion measure abruptly halted it in its tracks in December.
Some Democrats have discussed prioritizing expanded Affordable Care Act subsidies.
The comments underscored the laborious path forward for Democrats to craft a substantially smaller package.
Mr. Biden's remarks on Wednesday about breaking up the bill raised the question of how Democrats would push forward with that strategy and whether some liberals who have grown frustrated with the stalled process would support losing more priorities.
The $2.2 trillion plan that passed the House in late November had already been cut down substantially from a $3.5 trillion blueprint to appease Mr. Manchin and another centrist Democrat, Senator Kyrsten Sinema of Arizona.
A smaller package would force Democrats to make painful policy choices they have so far tried to avoid, and could alienate rank-and-file lawmakers whose votes they would need to pass the plan with slim majorities in both chambers.
Because of the strict rules governing reconciliation, Democrats essentially have one clear remaining chance to push a major bill through before the midterm elections.
January 20: Manchin says no-deal without new talks
Sen. Joe Manchin said Thursday that talks over President Biden's sweeping climate and social spending package would be "Starting from scratch," throwing cold water in hopes of a quick revival. "We're going to start with a clean sheet of paper and start over," Manchin told reporters, adding he doesn't have talks scheduled with the White House.
Pressed if his previous $1.8 trillion offer to the White House was still on the table, Manchin indicated it wasn't, saying Democrats will "Just be starting from scratch."
New applications for jobless benefits rose sharply last week amid surging cases of COVID-19, according to data released Thursday by the Labor Department.
The four-week moving average of new claims also rose to 231,000 after several weeks of rising applications.
The new figures are the highest since the Census began doing the survey around the start of the pandemic, topping last January's peak of 6.6 million workers out, according to The Washington Post. The Hill's Olafimihan Oshin has more here.
Democrats' takeover of Congress and the White House helped further propel the influence industry to new heights.
Environmental Incentives/Policy:
January 20: ‘Build Back Better’ Hit a Wall, but Climate Action Could Move Forward
A growing number of Democrats in Congress want to move ahead with the climate portion of President Biden's stalled spending bill, saying the urgency of a warming planet demands action and they believe they can muster enough votes to muscle it past Republican opposition.
Mr. Manchin has suggested that he might back various climate provisions in the legislation, leading some Democrats to say the party should regroup around a climate bill.
The New York Times asked each of the 50 Senate Republicans if they would support just the climate provisions in the Build Back Better Act if they were presented in a stand-alone bill.
Two of the 50 Senate Republicans did speak in general terms about how they might back some climate measures.
Voters across the political spectrum - including conservative Republicans - strongly support tax credits and rebates to consumers, businesses and landlords for energy-efficient heating and cooling, solar panels, electric vehicles, and other low-emissions or no-carbon technology, according to a September 2021 poll conducted by climate change communications programs at Yale and George Mason universities.
If Democrats were to try to bring a climate bill to the Senate floor for a vote, they would need to be joined by at least 10 Republicans to clear a 60-vote threshold to push past a Republican filibuster.
Asked why Republicans would block a procedural move to allow a vote on a climate bill, a spokesman for Mitch McConnell, the Senate Republican leader, pointed to remarks the senator made in November about the climate section of the Build Back Better package.
Covid-19 and Its Impact:
January 25: IMF downgrades global growth forecast
The International Monetary Fund cut its economic growth forecast for 2022 to 4.4 percent, according to its Economic Outlook forecast released on Tuesday. In the U.S., continued supply chain disruptions coupled with the low likelihood of the Build Back Better Act passing in Congress lowered the IMF's projection for the U.S. by 1.2 percentage points.
"The forecast is conditional on adverse health outcomes declining to low levels in most countries by end-2022, assuming vaccination rates improve worldwide and therapies become more effective," the IMF wrote in its report.
Along with this downgrade, the IMF forecasted that inflation will persist for longer than previously predicted, saying it will likely begin to go down as supply chain issues resolve and monetary policies respond in major economies. The IMF's newly-appointed First Deputy Managing Director, Gita Gopinath, told reporters on Tuesday that the bulk of the downgraded forecast had to do with uncertainty in the U.S. and China.
"Other challenges and policy pivots are expected to have a greater impact on the outlook. We project global growth this year at four-point four percent, which is 0.5 percentage point lower than previously forecast, mainly because of downgrades for the United States and China." Gopinath also cited ongoing tensions between NATO and Russia over the military buildup along the Ukrainian border as another factor affecting global growth.
January 23: Coronavirus case surge hindering economic recovery
The swift, record-shattering spike in coronavirus cases has dampened consumer activity, spurred layoffs, and forced millions of Americans out of work to take care of themselves or a sick family member.
While economists say the omicron variant will not derail the economy as a whole, millions of front-line workers, working parents, and service sector businesses are staring down another brutal pandemic winter.
"It's pretty clearly doing things that are bad to the economy,” said Claudia Sahm, macroeconomic research director at the nonprofit Jain Family Institute. "The underlying pace of the recovery is in a place where it can weather the storm. But there are clearly some workers and some families and some small businesses that are not going to weather the storm," she added.
Higher pressure on wages could be cold comfort for low-earning workers struggling with both the toll of front-line jobs during the pandemic and the strain of higher prices.
"There's a lot of focus on the fact that omicron often leads to mild symptoms. But for a worker, especially a parent, the implications are still extremely disruptive," said Molly Kinder, a fellow at Brookings Institution who studies the impact of COVID-19 on low-wage workers.
Workers without paid sick leave or the ability to work from home could lose significant income even from a mild case of COVID-19, Kinder said, without the safety net of federal protections or unemployment benefits that lapsed last year.
"It's a very shortsighted policy to not give workers enough leave to stay home until they're healthy because all that's going to do is encourage workers to come back to work while they're still contagious," Kinder said.
For Fun:
January 25: Shelter dog throws overnight party after escaping kennel
BEDFORD COUNTY, Pa- 'Who let the dogs out' took on a new meaning for one shelter dog who was able to get free from his kennel overnight.
Bedford County Humane Society employee, Joyce Ross, could not believe her eyes on what she walked into the next morning
Long time shelter dog, Gilligan, found his way out of his kennel after it was left unlocked and spent the night playing with all the squeaker toys he could find. Ross was not at the shelter the day before, so she was unsure what to think of Gilligan's adventure. From what Ross gathered, Gilligan had the time of his life playing with all the squeaking toys.
Ross took Gilligan's overnight fiesta to TikTok, where it so far racked over 2.3 million views.
Gilligan is claimed as the unofficial mascot for the shelter. Next time, the staff will make sure that Gilligan's kennel is locked in place so this doesn't happen again.