Social Spending and Climate Bill, Economic Initiatives, and Potential Changes to 179D

Tax Policy:

November 1: Millionaires urge Democrats to include billionaire tax in spending bill

A group of about 250 millionaires on Monday urged top Democrats to include a proposal to tax billionaires' investment gains annually in their social-spending package after the proposal was left out of a framework the White House released last week.

"Unless Congress acts now, billionaires will continue to be allowed by Congress to pay far less than their fair share of taxes," the millionaires wrote in a letter to congressional leaders and the chairs of Congress's tax committees.

Democrats are aiming to pass their social spending bill - which includes spending and tax cuts in areas such as child care, health care and climate - as soon as this week. The framework did not include a proposal from Senate Finance Committee Chairman to tax billionaires' investment gains annually, rather than when the investments are sold.

The group of millionaires said in their letter that they support the tax increases for high-income households that are included in the White House framework, but that even with these provisions many billionaires could pay little-to-no taxes. "Moving the Billionaire's Income Tax forward will ensure that, in addition to the major strides proposed in the current Build Back Better Framework, there would be even greater fiscal responsibility and historic movement towards a truly fair tax code," the millionaires wrote. The millionaires also said that the billionaire tax proposal would raise hundreds of billions of dollars and is popular with the public.

October 28: Tech billionaires in the crosshairs of new tax proposals

While the new billionaires' tax and corporate tax minimum proposals are not specifically targeted toward tech, the industry would be among the hardest hit. Big Tech celebrities like Amazon's, Facebook's, and Tesla's - as well as the companies they own - would see their tax bills skyrocket if the new tax comes to fruition.

The aforementioned tech CEOs - some of the most visible faces of the astronomical growth some companies enjoyed during a pandemic that threw millions into economic instability - would be some of the primary targets of the new tax.

Musk, for example, made close to $36 billion Monday on the back of Tesla’s stock spiking. Under the billionaires' tax proposal, the world’s richest man would pay close to $8.5 billion on those gains, according to Niko Lusiani, director of corporate power at the liberal Roosevelt Institute. 

"That's in one day of earnings and itself would pay for the child tax credit for the entire year," he told The Hill, referring to the White House's proposal to give families thousands of dollars in tax credits for each child they have. The corporate tax rate is currently set at 21 percent, but companies have been able to utilize a combination of loopholes and deductions to limit their tax liability.

Google famously avoided paying the American corporate tax rate by moving profits through a network of affiliates in Ireland, the Netherlands, and Bermuda. The company said it would stop using the process last year, but international profit-shifting still allows companies to dodge payments whether they be in the U.S. or abroad.A report released by Fair Tax Mark estimates Amazon, Apple, Facebook, Google, Microsoft, and Netflix together avoided $155.3 billion in taxes between 2010 and 2019 by, among other things, shifting profits abroad. The fact that the corporate tax minimum proposal is "Quite closely aligned" with the global tax minimum proposed by the Organisation for Economic Co-operation and Development could help address that loophole, according to Josh Bivens, research director at the Economic Policy Institute.

Musk has expressed opposition to the billionaires' tax, but the other CEOs have yet to comment on either tax proposal.

October 27: Biden proposes new tax surcharges of 5%-8% on millionaires

Update: Pres. Joe Biden and Democrats in the House of Representatives on Thursday changed their tax plan yet again, proposing a new surcharge of 5% on individuals earning more than $10 million a year.

That's more than the 3% that Senate Democrats floated barely one day earlier and comes after House Democrats proposed on Tuesday to tax the paper profits of billionaires. The billionaires' proposal died a quick death amid a lack of needed support from lawmakers in both the Senate and the House. The latest plan would also levy an additional 3% surcharge on those making more than $25 million. Those wealthy taxpayers would thus pay an additional 8% on top of the top ordinary rate, now 37%.

Neither the House document nor a fact sheet from the White House made any mention of raising the top ordinary rate, now 37%, to 39.6%, as Biden and Democrats had previously called for. Nor did the documents mention the administration's and lawmakers' prior call to raise the top capital gains tax to 28.3% from the current 23.8%.

The new proposal would also close the “Medicare Self-Employment Tax Loophole” by “strengthening” the 3.8% net investment income tax for people making more than $400,000.

Bloomberg News reported Thursday that unspecified changes to the $10,000 cap on state and local tax deductions, including for property taxes, would likely be in the final package.

Biden is seeking ways to pay for his dialed-back social spending and climate bill, now costing $1.75 trillion instead of the original $3.5 trillion.

Reconciliation: 

November 2:  Top Democrat dismisses need for budget report before House votes on spending plan

Rep. John Yarmuth (D-Ky.), chairman of the House Budget Committee, threw cold water on calls from moderate Democrats to hold off on passing the party's sweeping social spending package until a cost estimate from the Congressional Budget Office is released.

Yarmuth's comments came shortly after sources told Punchbowl News that five House moderates are pushing for a CBO score on the legislation before the bill is brought to a floor vote. Rep. Carolyn Bourdeaux (D-Ga.) said on Monday that it would "Be optimal" if the CBO score could come out before the House takes up its spending bill.

Sen. Joe Manchin, a key centrist holdout, also appeared to warn against the bill being brought up in the House without a CBO score on Monday, calling instead for his party to "Allow time for complete transparency and analysis" of the measure.

The calls could spell trouble for Democrats who were hoping to pass the spending plan as early as this week.

Yarmuth said on Monday that it could take roughly two weeks until the CBO releases its cost estimate for the spending plan, which is expected to unlock funding for a number of party-backed priorities, including. Democrats, who hold razor-thin majorities in the House and Senate, plan to pass the bill using a process called budget reconciliation, which will allow them to advance the legislation in the upper chamber with a simple majority, bypassing the GOP filibuster.

November 2: Pelosi: Bill issues could be resolved by 'end of the day'

Speaker Pelosi said Tuesday after huddling with Democrats that the handful of outstanding issues holding up 's mammoth social and climate spending package "Could be resolved by the end of the day." The Speaker's prediction was sunnier than that of many of her rank-and-file members, who for weeks have seen deadlines come and go on two key pillars of Biden's domestic agenda: the Build Back Better package and the bipartisan infrastructure package.

Pelosi and her leadership team have been trying to project optimism on the $1.75 trillion packages, even as Biden and the party have struggled for weeks to strike a deal on the social spending plan to aid families, students, workers, and the elderly.

In the closed-door meeting, Pelosi informed members that she hopes the remaining unresolved issues will be ironed out Tuesday and that the Rules Committee will be able to mark up the legislative text of Build Back Better as early as Wednesday.

That would set up a floor vote on both the infrastructure and reconciliation packages by the end of the week. Most of the Build Back Better legislation is written, but moderates and progressives are racing to wrap up negotiations on several big issues.

Democratic negotiators are also trying to resolve some sticking points on the climate portion of the package, said Majority Leader, citing some reservations from centrist Sen. And House Democrats, pushed by the Congressional Hispanic Caucus, are writing legislative language for a number of immigration reform provisions totaling around $100 billion.

November 1: Manchin Criticizes Democrats’ Revised Social Spending and Climate Bill

Sen. Joe Manchin criticized Democrats' $1.85 trillion healthcare, education, and climate-change bill and withheld his support for a legislative framework that the White House had cast as a consensus acceptable to all members of the Senate Democratic caucus. Democrats had appeared poised to soon resolve a months-long impasse over the bill and a parallel, roughly $1 trillion infrastructure bill.

With his comments, Mr. Manchin, whose support Democrats will need to pass the legislation through the 50-50 Senate, threatened to plunge the fate of the bill back into uncertainty. While Mr. Manchin cast broad criticism on the legislation, other Democrats said they were confident Mr. Manchin would still ultimately support the legislation.

Progressive Democrats have long been wary of whether Mr. Manchin will come to support the bill, which Democrats are pursuing through a process called reconciliation to pass without GOP support in the Senate. Mr. Manchin said during his press conference Monday that holding up the infrastructure bill wouldn't push him to support the other bill.

Top progressive Democrats last week signaled that their hold on the infrastructure bill was ending, endorsing the $1.85 trillion frameworks even though Democrats had cut several prized party priorities from the legislation.

October 29: Yellen says spending bill would lower inflation, reduce household costs

The Treasury Secretary told CNBC during an interview on Friday that the spending bill that Democrats are proposing would lower inflation by reducing household costs including health care. "I don't think that these investments will drive up inflation at all. First of all, they're fully paid for and not by imposing higher taxes on anyone earning under $400,000. But by asking corporations, high-income individuals to pay their fair share, and by investing in the Internal Revenue Service so that they can boost compliance which has fallen to low levels," Yellen said during an interview in Rome, where she is attending the Group of 20 conference.

"For many American families experiencing inflation, seeing the prices of gas and other things that they buy rise, what this package will do is lower some of the most important costs - what they pay for health care, for child care, and it's anti-inflationary in that sense as well," she added.

The Commerce Department released data Friday indicating that inflation largely stayed stagnant in September. The inflation comes in part due to a supply chain crisis and labor shortage as industries struggle to keep up with a resurgence in demand among Americans prompted both by the effectiveness of COVID-19 vaccines and by federal aid.

Earlier this week Yellen estimated that by the second half of 2022, inflation rates would normalize again. Yellen's remarks come as Democrats are determining how to pay for a spending bill filled with their party's priorities.

October 28: Here’s what’s in Biden’s $1.85 trillion plan

President Biden met with lawmakers on Thursday morning to lay out a framework on a $1.85 trillion effort to spend heavily on climate change, child care, and a wide range of other economic programs, paid for by an estimated $2 trillion in tax increases on corporations and high earners, though it was not immediately clear if it has the votes to pass.

555 billion to fight climate change, largely through tax incentives for low-emission sources of energy.

200 billion to extend an expanded tax credit for parents through 2022, and to permanently allow parents to benefit from the child tax credit even if they do not earn enough money to have an income tax liability.

A 15 percent minimum tax on the reported profits of large corporations.

Efforts to reduce profit-shifting by multinational companies, including a separate 15 percent minimum tax on profits earned by U.S. companies abroad - and tax penalties for companies that have their headquarters in global tax-havens.

An additional 5 percent tax on incomes exceeding $10 million a year and another 3 percent tax on incomes above $25 million.

Efforts to limit business losses for the very wealthy and to impose a 3.8 percent Medicare tax on certain people earning more than $400,000 a year who did not previously pay that tax.

October 26: Democrats Race To Reach Deal On Economic Initiatives As Biden Prepares To Depart On Foreign Tour

Congressional Democrats on Tuesday continued to clash over a slew of policy disagreements that have stalled roughly $3 trillion in new economic spending initiatives, raising the prospect that President Biden could depart for a foreign tour this week without a long-sought deal in hand.

The late-stage scramble over the details added to the steep task Democrats already faced in financing their new proposal, which could be valued at $1.75 trillion over 10 years.

Some Democrats hoped they could seize on the compromise to build more momentum, potentially opening the door for Biden to achieve a legislative victory before he arrives in Rome for the G-20 meeting of world leaders Saturday followed by a trip to Glasgow, Scotland, for a climate summit a day later.

He met with some Democrats at his private residence in Delaware this weekend and huddled with others at the White House on Tuesday, and Biden administration officials then met late into the evening with two moderate holdouts, Sens.

In recent days, Democrats have signaled the package could total between $1.75 trillion and $1.9 trillion, with many party lawmakers anticipating it is likely to fall lower on the range.

Democrats resumed sparring privately over the potential cuts they may have to make to bring their package down to size.

With so much unresolved, liberal Democrats opted to hold firm in their earlier political threats: They refused to budge and allow the House to advance a bipartisan infrastructure proposal that contains new investments to fight climate change.

Debt Ceiling:

November 2: Infrastructure bill could upset debt limit timeline

The passage of President Biden's sweeping economic plan could shorten the time frame in which Congress must act to avert a debt default even as Democrats remain divided over how to raise the borrowing limit. While both parties have voted against debt ceiling hikes before or held them up to extract concessions, the GOP's refusal to even consider raising the borrowing limit was unprecedented.

GOP leaders insisted that Democrats must raise the debt ceiling through the budget reconciliation resolution - the vehicle for Biden's $1.75 trillion social services and climate bill - which only requires a simple majority to pass in each chamber.

Budget experts say raising the debt ceiling through reconciliation would likely take two weeks from start to finish, which gives them more than enough time to act before Dec. 3. While Democrats have already used the process to pass the March stimulus bill and are on track to pass the Build Back Better plan using reconciliation as well, they can still introduce a separate resolution to raise the debt ceiling to a specific amount.

House Budget Committee Chairman also told reporters at the Capitol last week the Democrats have the time and authority to pull off a debt limit hike through reconciliation. Some of Yarmuth's fellow House Democrats are resigned to having to raise the debt limit through reconciliation with Republicans unlikely to relent. Most Senate Democrats remain opposed to raising the debt ceiling through budget reconciliation.

Environmental:

October 28: Reconciliation bill likely to have a tax impact on energy-efficient buildings

As part of the hotly debated tax and spending legislation moving through Congress - referred to as the "Budget reconciliation" bill - the House proposed a laundry list of investments and incentives for upgrading homes and buildings alongside dozens of proposals promoting electric vehicles, energy storage, renewable power, and a more dynamic electric grid.

The Section 179D incentive for energy-efficient buildings would jump from $1.80 per square foot for efficiency improvements to a sliding scale between $2.50 and $5. It would also implement a new framework for making the deduction more accessible for retrofits to existing buildings.

The changes to the Section 179D Energy-Efficient Commercial Buildings deduction will complicate the qualification process, but the lowered energy savings requirements and the increased and now sliding scale for the deduction will make it much more attractive.

Often the energy-efficient building assets that reduce energy consumption can qualify for local utility rebates or federal energy grants.

Further, the act changes the relevant energy standard from two years before construction begins to two years before the building is placed in service.

Unless the Treasury provides relief by slowly rolling out the affirmation of energy standards, building owners may have difficulty meeting energy standards that were not yet promulgated when construction began.

Further, building owners committed to energy savings will greatly appreciate increasing the 179D deduction from $1.80 per square foot to a minimum of $2.50 up to a maximum of $5.00 per square foot depending on the energy savings.

Crypto News:

October 29: How Venture Capitalists Think Crypto Will Reshape Commerce

Venture capitalists are betting billions of dollars to create what in effect is an alternative world of finance, commerce, communications, and entertainment on the web that could radically transform major elements of the global economy — all built on the blockchain technology popularized by Bitcoin.

In the first three quarters of 2021, venture capitalists poured a record $21.4 billion into cryptocurrency and blockchain-related companies, in 1,196 deals, according to Pitchbook, a market data provider. That is more than five times as much money compared to last year.

No one is placing a bigger bet than Andreessen Horowitz, also known by the nickname A16Z, a Silicon Valley firm whose founders helped build and fund today’s internet. They say the “digital status quo is broken,” with giant tech gatekeepers profiting off everyone’s creativity and data.

What do some of these ventures do? And how do they really work? Say you want work to be more like play - let your virtual pets do the hard labor by earning crypto in an online game drawing millions of players.

Axie Infinity, a Pokemon-inspired game with collectible characters that breed monster offspring and battle online, relies on a model called "Play to earn," meaning potentially real profits.

For now, at least, players also have to pay to start playing by buying new characters, which can cost a few hundred dollars each.

Axie's Vietnamese game maker recently raised more than $150 million in a funding round led by A16Z and was valued at $3 billion, according to the firm. After a bug was introduced during a software upgrade, $160 million worth of cryptocurrency was put at risk of improper distribution, and about $90 million of that was actually wrongly paid out, the company said. 

On the DeFi protocol Compound, a recent programming snafu revealed vulnerabilities in systems deliberately designed to eliminate the middlemen regulators traditionally rely on to oversee financial transactions and guarantee consumer protection. After a bug was introduced during a software upgrade, $160 million worth of cryptocurrency was put at risk of improper distribution, and about $90 million of that was actually wrongly paid out, the company said. Starting in 2017, the company now claims to have $18 billion worth of cryptocurrency earning interest on its platform.

For Fun:

October 27: After 40 Years, Abba Takes a Chance With Its Legacy

The small, tranquil island of Skeppsholmen holds a handful of the Swedish capital’s artistic treasures: Moderna Museet, the theater group Teater Galeasen and the converted red brick warehouse just step from a waterfront promenade where Benny Andersson has his personal studio. He tucked a packet of the oral tobacco snus in his mouth as Bjorn Ulvaeus sipped coffee in one of its sunbathed rooms earlier this month, the two musicians surrounded by a grand piano, a small selection of synths, and an assortment of framed photographs that were perched behind a computer screen.

For the first time since the Reagan administration, the pair were discussing a new album by their band, Abba - an album one of the biggest international pop acts in history somehow made in secret, with all four of its original members congregating nearly four decades after giving their last public performance.

Now Abba is risking perhaps its most valuable asset — its legacy — by not only releasing a fresh addition to its catalog but creating a stage show that features none of its members in the flesh. Starting in a custom-built London venue next May, the group will perform as highly sophisticated avatars (or in this case, Abbatars) designed to replicate their 1979 look — the era of feathered hair and flamboyant stage wear.