Tax Revenue Changes, US Trade Exports, and Debt Collection Changes
Tax Policy:
December 7: Democrats’ Corporate Minimum Tax Plan Brings Late Lobbying Burst From Companies
Changes sought by manufacturers, renewable energy companies look unlikely to succeed as lawmakers wrap up Biden tax agenda
Congress is poised to create a new corporate minimum tax, and pension advocates, renewable-energy backers, and manufacturers are pushing for changes before the plan is finalized.
The tax is aimed at companies, such as Amazon.com Inc., that report large profits to shareholders but—legally—pay relatively little in taxes. It would impose a minimum 15% federal tax rate on many companies with at least $1 billion in profits, based on the income reported to investors.
Knowing the minimum tax probably can't be defeated, companies and trade groups are trying to score last-minute wins to soften it as Congress includes it in the broader Biden agenda. The minimum tax would take effect in 2023 and generate $319 billion over a decade toward Democrats’ social-spending and climate plan, according to the Joint Committee on Taxation. That is the equivalent of raising the corporate tax rate to about 24% from 21%, and Democrats don’t have many other agreed-upon options to replace that much money.
This 15% minimum tax is separate from a proposed 15% global minimum tax on U.S. companies' foreign profits that is in the same bill.
The large upfront tax deductions for accelerated depreciation are bigger than companies' expenses for book-income purposes, so those deductions would be harder to claim under the minimum tax.
In both cases, the proposed minimum tax could make companies pay 15% currently, denying or delaying the benefit of investments that companies made in response to the 2017 tax law.
The industry's tax credits and direct payments are largely protected from the minimum tax.
Senate Finance Chairman Ron Wyden (D., Ore.), defended his committee’s work in expanding and restructuring incentives to encourage sustainable energy. "I wouldn't be working around the clock to overhaul our energy tax code if I thought imposing a minimum tax on big companies would undo all that work," he said.
Tax News:
December 6: Tax Revenues Held Up Even as Economies Crashed During Pandemic
Government tax revenues in rich countries rose as a share of economic output in 2020, as job losses were concentrated in low-wage employment and high-income jobs were hit less hard.
In absolute terms, tax revenues fell, since economies contracted sharply.
In 2020, the U.S. government's tax revenues fell only slightly in dollar terms, to $5.336 trillion from $5.3365 trillion.
Other governments recorded larger falls, including Germany, which temporarily lowered its value-added tax rate to support the economy and saw revenues dip to $1.471 trillion from $1.501 trillion.
Since most tax systems in rich countries tax a larger share of higher incomes, total revenue from income taxes is held up better than employment and output.
As a result, U.S. income tax revenues as a percentage of economic output rose from 2019, although by less than in the U.K., France, Italy, and Spain.
Denmark's government had the highest revenues relative to the size of the country's economy at 46.5%, while other high-taxing governments included France at 45.4%, Belgium at 43.1%, and Italy at 42.9%. While tax revenues held up better than expected, governments around the world undertook an unprecedented increase in peacetime spending to counter the pandemic and associated economic damage.
December 6: San Francisco moves to delay its cannabis business tax to give legal dealers a boost
San Francisco moves to suspend its cannabis tax to give legal dealers a boost Supporters of the ordinance said the cannabis industry is experiencing a drop-off in business following a boom early in the COVID-19 pandemic and that a tax hike would result in higher prices.
City officials in San Francisco want to delay the imposition of a tax on lawful recreational cannabis businesses to help them compete with illegal marijuana dealers.
Last week the San Francisco Board of Supervisors passed an ordinance to suspend the Cannabis Business Tax for the 2021 and 2022 tax years. The ordinance requires a signature from San Francisco Mayor London Breed before it takes effect.
"Mayor Breed does intend to sign the ordinance once it passes the Board of Supervisors on a second reading tomorrow," the mayor's office told NPR. In 2018, San Francisco voters approved the 1%-5% tax on cannabis businesses, which is scheduled to take effect next year, according to the San Francisco Examiner.
The tax relief could come as cannabis businesses in the Bay Area struggle to defend against a recent rash of robberies, some of which have turned violent.
Supporters of the ordinance, including the San Francisco Cannabis Retailers Alliance, told the Board of Supervisors that the cannabis industry is experiencing a drop-off in business following a boom during the early months of the COVID-19 pandemic and that a tax hike would result in higher prices for consumers.
Build Back Better Act/Spending Bill:
December 7: Dems weigh forcing Manchin's hand on their $1.7T mega bill
Democrats are tired of waiting for Joe Manchin.
After following the West Virginia Democrat’s every utterance of President Joe Biden’s sweeping climate and social spending plan, some Senate Democrats say their party should put the bill on the floor as soon as possible, regardless of whether Machin gives a public commitment to support it beforehand. That could risk sinking the bill on the floor.
Sen Mazie Hirono said she’d like to “Put it to a vote and let people know where people stand.” And Sen. Jeanne Shaheen also said it’s time to move forward, noting that all along Machin’s “Been negotiating.” Several Democrats noted that Manchin has already had substantial influence over the social spending bill’s total cost, as well as its policies.
Manchin said in an interview on Monday that it's up to party leaders when the vote occurs.
Manchin said he's heard threats of impending deadlines before.
Senate Democrats are fairly confident that they have support from the other 49 members of the caucus, including Sen. Kyrsten Sinema, who has privately reassured Democrats she's on board with the plan even as she's declined to make a public commitment.
Rolling the dice absent a firm commitment from Manchin could be too risky for some Democrats.
Sen. Tim Kaine said that while he still expects Democrats to pass the legislation by the end of the year, they don't necessarily need to.
So would Democrats take a chance if Manchin didn't give them a green light?
December 6: Schumer steps on the gas to move Biden agenda
Facing skepticism about the aggressive timeline, Schumer used a letter to his caucus on Monday to double down on his plan to get the social and climate spending bill, which is at the heart of Democrats' legislative agenda, through a 50-50 Senate in a matter of weeks.
Democrats are barreling toward a self-imposed deadline on the spending bill even as they face a packed year-end schedule that includes a sweeping defense bill, raising the nation's debt ceiling, and pressure to find a path forward on stalemated voting rights legislation.
"There's an awful lot of work that's being done. ... I'm not in control of the time," said Sen. Joe Manchin, who opposes a family leave provision in the House-passed bill and will have a major say in how quickly things move.
Schumer has privately told senators that he hoped to bring the spending bill to the floor as soon as the week of Dec. 13, but that timeline appears at risk of slipping closer to Christmas.
"The committees with the two largest pieces of the bill - Finance and HELP - are set to have their final Democratic-only briefings on Monday and Tuesday with the formal bipartisan Byrd bath meetings to follow. Our goal is to finalize the remaining committees over the course of this week and next," Schumer said.
Biden didn't set a hard deadline when asked Monday if he thought the bill could pass by Christmas.
One option under discussion as part of negotiations between Schumer and Senate Minority Leader would be to link the defense bill and the debt ceiling, though that's gotten pushback from members of House leadership in both parties and Senate Republicans.
Supply Chain:
December 5: How the Supply Chain Crisis Unfolded
Ships stuck at sea, warehouses overflowing, trucks without drivers: The highly intricate and interconnected global supply chain is in upheaval, with little end in sight.
The turmoil has revealed how the need to ship surgical masks to West Africa from China can have a cascading effect on Ford’s ability to put back-up cameras on its cars at factories in Ohio and delay the arrival of Amazon Prime orders in Florida in time for the holidays.
In one way or another, much of the crisis can be traced to the outbreak of COVID-19.
In early 2020, the entire planet suddenly needed surgical masks and gowns, and other protective gear.
Even once unloaded, containers piled up on docks unclaimed, because of a shortage of truck drivers needed to haul cargo to warehouses.
Even as employers resorted to lifting wages, labor shortages persisted, worsening the scarcity of goods.
Shortages of one thing have turned into shortages of others.
Under the model, called "Just in time" manufacturing, companies stockpile as few raw materials and parts as possible, instead of buying what they need as they need it.
For years, some experts have warned that the global economy is over-reliant on lean production and faraway factories, exposed to the inevitable shock.
Global Trade:
December 7: U.S. Boosted Oil, Food Exports as Prices Surged in October
The U.S. trade deficit narrowed sharply in October as an increase in exports of energy and agricultural commodities outpaced growth in imports, which were restrained by a growing backlog at U.S. ports that month.
Imports rose 0.9% to $290.7 billion, but exports grew much more quickly, rising 8.1% to $223.6 billion.
According to the Marine Exchange of Southern California, for much of October over 100 vessels were at anchor or loitering near the ports of Los Angeles and Long Beach, meaning billions of dollars worth of goods destined to be U.S. imports were unable to enter the country during the month.
U.S. exports, however, had a strong month. Crude oil exports increased by $1.2 billion, while food, feed, and beverage exports climbed by $2.1 billion. Automobile exports, which had been restrained in recent months owing in part to supply shortages at U.S. factories, rose $1.5 billion.
The U.S. economy was boosted early in the year by massive stimulus payments, leading to surging demand for consumer goods.
Many countries, especially in Asia, entered renewed lockdowns this fall because of Covid-19, meaning that while their economies supplied U.S. imports they didn't need U.S. exports in return.
Covid-19 and Its Impact:
December 6: 'What's going to happen next?': Businesses brace for omicron
The omicron variant poses a new threat to businesses that were already struggling to recover from the economic damage done by previous strains of the virus. Several states have detected cases of the omicron variant, which health experts say could be more contagious than the delta variant.
Several states have detected cases of the omicron variant, which health experts say could be more contagious than the delta variant. Shortly after scientists in South Africa discovered the omicron variant, the country's COVID-19 cases.
Experts still worry that many businesses that barely overcame the delta variant might not survive another outbreak.
If omicron spreads rapidly, the wave would likely run into January and February, when gyms typically get a substantial revenue bump from short-lived New Year's resolutions. "This is going to be a critical time and if there is a new variant spreading around and there are new restrictions, that's going to affect any chance that a small gym owner might have to try to stay viable," Ewer said.
“The recovery from COVID will never be a straight line,” United Airlines CEO Scott Kirby said in an interview with CNBC this week. “Omicron is almost certainly — it's too early to really tell, but it's going to certainly have a near-term impact on bookings. Bookings are going to be lower than they otherwise would have been.”
December 2: Yellen: Omicron 'could cause significant problems' for global economy
The Treasury Secretary said the omicron coronavirus variant "Could cause significant problems" for the global economy. "Hopefully it's not something that's going to slow economic growth significantly," Yellen said at the Reuters Next conference on Thursday, Reuters reported.
Global markets tanked after detection of the omicron variant was announced last week, with the Dow Jones Industrial Average falling by. The new variant, which has already led some countries to impose international travel bans, could make supply chain issues and inflation worse, according to Yellen.
Yellen said the rise in inflation stems largely from the coronavirus pandemic and "Somewhat" from 's American Rescue Plan, according to Reuters.
Omicron cases have been detected in multiple U.S. states on Wednesday and Thursday, spurring conversation about new coronavirus restrictions.
President Biden has signaled that he does not plan to call for any closures or restrictions on businesses, schools, or other in-person gatherings in response to the new variant.
Debt-Ceiling:
December 3: Senate dodges initial December crisis with a last-minute deal
The Senate averted a government shutdown that would have thrown President Biden's agenda into limbo when the Senate Majority Leader struck a deal late Thursday with conservative Senate Republicans to fund the government until February.
Schumer finally relented Thursday evening and gave in to demands from a small group of Senate conservatives that a vote be held on an amendment to defund Biden's vaccine mandate for large employers, an executive action that federal courts had already delayed.
The Senate voted on a very similar amendment to the stopgap funding measure Congress passed in September and it was defeated on a 50-50 party-line vote.
Senator Mike Lee told colleagues that he thought he could pick up at least one Democratic vote, which would have been a major victory and have made the Democratic-controlled House deal with the amended funding measure.
The Senate Democratic Whip said that Democrats knew they had the votes to win before Schumer announced that he would give Lee, Marshall, and Cruz a vote on their amendment at a simple-majority threshold.
The Senate Republican Whip missed the vote because he was out of town Wednesday and Thursday to attend the funeral of a family member, and Sen. was in Tennessee to watch his son play in a state football championship.
"I'm grateful my colleagues were able to avert [a] crisis and vote to keep the government-funded. But it's tiring to keep playing this political football - the benefits of the elderly, vets and federal employees shouldn't be used as a bargaining chip," said Sen. Some senators expressed hope that the agreement was a good sign for the debt-limit negotiations between Schumer and Senate Minority Leader, which need to get wrapped up by a Dec. 15 deadline.
December 3: The window to lift the debt limit is narrowing, an influential think tank warns
After approaching the first default in American history, Congress in October raised the statutory debt limit by $480 billion, an amount the Treasury Department estimated would allow the government to continue borrowing through early December.
Democrats, in turn, have balked at a Republican demand to use a fast-track process known as budget reconciliation to raise the debt limit without Republican votes.
What would happen if the debt limit was hit? Treasury Secretary Janet Yellen told Congress that inaction on raising the debt limit could lead to a self-inflicted economic recession and a financial crisis.
What are the alternatives to the debt ceiling? The lack of a replacement is one of the main reasons the debt ceiling has persisted.
Ms. Yellen said that she would support legislation to abolish the debt limit, which she described as "Destructive." It would take an act of Congress to do away with the debt limit.
The proposal, which is being introduced by Representatives Jodey C. Arrington, Republican of Texas, and Scott Peters, Democrat of California, would establish a process giving the president authority to suspend the debt limit through the following fiscal year as long as Congress does not pass a resolution blocking the move within 30 days.
December 2: Shutdown Averted After Congress Passes Spending Bill
House and Senate lawmakers on Thursday approved a bill to fund the federal government into early next year, narrowly averting a shutdown after some Republicans sought to seize on the imminent fiscal deadline to fight President Biden over his vaccine policies.
For days, conservative Republicans had threatened to hold up the funding bill as part of a long-running protest of Biden's vaccine directives, including those ordering large employers to require inoculations or implement comprehensive testing programs.
It underscored the extent to which conservatives in Congress see the president's stance on vaccines as a vector to mount prominent political attacks, a campaign that Republicans have pledged to continue in the days ahead."We have seen in the course of this pandemic Democrats being very comfortable with being petty tyrants and decreeing that you must obey their medical mandates," said Cruz, who has played a lead role in prompting at least one shut down in the past.
National parks often close, though the Trump administration tried to keep them open during a lengthy shut down two years ago in a manner that some budget experts said violated federal law.
House Republican leaders, in contrast, encouraged their members to oppose the spending stopgap.
"The only thing I want to shut down is Congress funding enforcement of an immoral, unconstitutional vaccine mandate."
Some Republicans pointed out that the gambit seemed particularly ill-fated since the spending stopgap had the necessary votes to prevail anyway.
Business:
December 2: Debt collectors can now text, email, and DM you on social media
Debt collectors can now text you, email you, and DM you on social media. Officials say the new rules are a necessary update to an outdated law, but consumer advocates worry that borrowers risk missing key information or falling prey to scammers.
New rules approved by the Consumer Financial Protection Bureau that took effect on Tuesday dictate how collection agencies can email and text people as well as message them on social media to seek repayment for unpaid debts.
Under the new rules, debt collectors who contact you on social media have to identify themselves as debt collectors but an attempt to join your network by sending you a friend request.
"Consumers in the collections process deserve to be on a level playing field with others in the financial services marketplace with recognition of their preference to use email and text messaging over other outdated methods, such as faxes as outlined in the current law," Mark Neeb, CEO of ACA International, a trade association for debt collectors, said in a statement.
She suggested that consumers who don't check social media regularly or miss an email may fail to see critical information about a debt.
Allowing debt collectors to email, text, and use social media to contact consumers also gives criminals a new avenue to try to swindle people out of their money, a practice Kuehnhoff expects to increase in the future.
The new rules also set a limit for the first time on how often debt collectors can call you.
For Fun:
December 6: 10 new astronaut candidates inaugurated at NASA
NASA inaugurated a new astronaut candidate class on Monday, it announced.
The 10 candidates were selected from 12,000 applicants and will begin two years of training in January as they prepare to possibly walk on the moon or conduct research on the International Space Station, according to NASA. "Today we welcome 10 new explorers, 10 members of the Artemis generation," NASA Administrator, a former Florida senator, said on Monday at a ceremony in Houston near NASA's astronaut headquarters.
"Alone, each of these candidates certainly has the right stuff, but together, they represent exactly the creed of our country - e pluribus unum - out of many, one," NASA Administrator Bill Nelson added.
Most of the 10 candidates have experience in the U.S. Armed Forces, including in the Air Force and as Navy pilots. The group, which is NASA's 23rd class of astronauts, comes to the agency during its focus on Artemis, the effort to return astronauts to the moon in 2025, according to The New York Times.
Two people from the United Arab Emirates, Nora Al Matrooshi and Mohammad Al Mulla, will also train alongside NASA's candidates, the Times reported.
NASA's last class of candidates was inducted in 2017, and members of that class could also be eligible to travel to the moon.