Tag: Joe Biden

Financial Institutions Form Global Alliance to Fight Climate Change

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2021/04/21/financial-institutions-form-global-alliance-to-fight-climate-change/

Excerpt:

On the eve of President Joe Biden’s virtual climate change summit with approximately 40 other world leaders and the fifty-first anniversary of Earth Day, a new alliance of 160 financial institutions was formed to achieve net zero by 2050 or sooner.

The Glasgow Financial Alliance for Net Zero (GFANZ) consists of three separate groups representing different sectors of the financial universe — the Net Zero Banking Alliance (NZBA), comprising 43 banks from 23 countries including Bank of America, Citi and Morgan Stanley in the U.S.; the Net Zero Asset Managers Alliance of 87 firms, including BlackRock, Vanguard, Allianz Global Advisors, Invesco and State Street Global Advisors and Trillium Asset Management, which joined Wednesday; and the 37-member UN-Convened Net Zero Owners Alliance, which includes the David Rockefeller Fund and the California Public Employees’ Retirement System (CalPERS).

Author(s): Bernice Napach

Publication Date: 21 April 2021

Publication Site: Think Advisor

Stick It to the Rich

Mary Pat Campbell

Link: https://www.city-journal.org/bidens-costly-capital-gains-tax-hike

Excerpt:

And applying the higher capital gains rate to top earners, who tend to be wealthy, creates bigger distortions because these taxpayers have many tools to avoid the tax. For example, when you inherit assets subject to estate taxes, the capital gains tax that you pay is based on when the asset was transferred to you, instead of when it was bought. This is known as a step-up in basis. Doubling the tax rate makes this provision much more attractive, and word is that the Biden plan nixes it. High earners can find other ways to get around this tax with the right advice. Certain asset classes, such as investment real estate, offer a chance to lower liability. We may also see more high-net-worth investors move further into the murky world of private equity, where values are easier to distort.

There are better ways to collect investment-income revenue. Getting rid of step-up in basis is a start; the administration could also take on the myriad loopholes that favor different asset classes. But these approaches don’t offer the stick-it-to-the rich satisfaction of doubling the rate on investment income—even if we all wind up paying for it.

Author(s): Allison Schrager

Publication Date: 23 April 2021

Publication Site: City Journal

Industrial Policy Is a Bad Bet

Mary Pat Campbell

Link: https://www.city-journal.org/bidens-infrastructure-bill-is-a-bad-bet

Excerpt:

We can see evidence of the market distortions that government subsidies cause in the market capitalization of electric-car maker Tesla—currently about $650 billion, or more than five times that of General Electric. Tesla benefits from many subsidies already, and the Biden infrastructure plan aims to divert even more to the electric-car industry. And by increasing the corporate tax rate to pay for part of these subsidies, the Biden plan will further distort the market by making the unsubsidized private sector even less attractive to investors.

The pandemic forced many businesses to adopt new technologies that could boost productivity for decades. Productivity gains don’t always come so fast. It took more than 100 years for the steam engine, a transformative technology, to show up in productivity estimates, for example. The pandemic’s acceleration of this process of technological adoption means that we could be poised for a big burst of follow-on growth and innovation. But government interventions on the scale of the Covid stimulus and infrastructure bill threaten to divert these energies into less productive investments.

True, the added government spending will provide short-term benefits to workers in the form of new jobs building roads, bridges, and airports or retrofitting buildings with green technology. But using industrial policy to create jobs can also generate long-term risks for those workers, by steering them away from gaining the skills and experience the market may need in the future. Research has shown that workers for the Depression-era Works Progress Administration were less likely to take higher-paying private-sector jobs when they became available because they preferred the security of a government guarantee. In the long term, that can lead to wage stagnation and a population less competitive in the global market.

Author(s): Allison Schrager

Publication Date: 19 April 2021

Publication Site: City Journal

No, ‘Infrastructure Of Care’ Is Not Infrastructure – And Three Reasons Why It Matters

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2021/04/18/no-infrastructure-of-care-is-not-infrastructureand-three-reasons-why-it-matters/?sh=25de6d53721c

Excerpt:

First, as I referenced in passing in my prior column, the long-lasting nature of infrastructure is what justifies paying for it over time. This proposal’s spending is meant to be accomplished over 8 years, with the tax increase funding it over 15 years. That could be justifiable for some types of infrastructure, when it is something new rather than ongoing maintenance, but is not at all appropriate for ongoing day-to-day spending.

Author(s): Elizabeth Bauer

Publication Date: 18 April 2021

Publication Site: Forbes

Why some of the most liberal Democrats in Congress want to bring back a tax break for the rich

Mary Pat Campbell

Link: https://www.vox.com/policy-and-politics/2021/4/14/22375306/salt-tax-deduction-repeal

Graphic:

Excerpt:

The debate over Democrats’ next move on infrastructure, which Biden has put forth as part of his American Jobs Plan, and whether and how to pay for it through taxes, is just getting started. Plenty of proposals are going to be on the table, including SALT. The White House has signaled some openness to it, but the matter is far from settled.

“If Democrats want to propose a way to eliminate SALT — which is not a revenue raiser, as you know; it would cost more money — and they want to propose a way to pay for it, and they want to put that forward, we’re happy to hear their ideas,” White House press secretary Jen Psaki said at a press briefing on April 1.

….

According to estimates from the Center on Budget and Policy Priorities, if the SALT cap — which is set to expire in 2025 — were to be repealed earlier, it would overwhelmingly benefit those at the higher end of the income scale — the ones who were hurt by the bill back in 2017. The CBPP estimates that more than half of the benefit would go to the top 1 percent, and over 80 percent would go to the top 5 percent, of earners.

Author(s): Emily Stewart

Publication Date: 14 April 2021

Publication Site: Vox

Sorry, the Economic Crisis Is Over

Mary Pat Campbell

Link: https://www.wsj.com/articles/sorry-the-economic-crisis-is-over-11617662226?mod=opinion_lead_pos2

Excerpt:

It’s getting harder for the Biden Administration to claim we’re in an economic crisis that demands more spending. It’s closer to the truth to say the economy is growing in a way that calls for spending and monetary restraint.

The latest evidence arrived Monday with the Institute for Supply Management’s news that its March survey for service businesses hit 63.7. That’s an all-time high, and it signifies rapid growth and optimism. The only problem is that many businesses say they can’t find enough workers or supplies to meet their order books.

That follows Friday’s blowout employment report for March, with a net total of 1.07 million new jobs including revisions from the previous two months. Wage gains were bigger than they looked at first glance, given that many returning workers were those in lower-wage services jobs hurt by the pandemic.

Author(s): Editorial Board

Publication Date: 6 April 2021

Publication Site: Wall Street Journal

The End of Joe Biden’s Student Debt Prison May Be in Sight

Mary Pat Campbell

Link: https://jacobinmag.com/2021/04/biden-student-debt-loan-forgiveness-bankruptcy

Excerpt:

Bankruptcy courts have not been friendly to student borrowers. That’s at least partly attributable to Biden. In 2005, “the senator from MBNA,” so named for his close relationship with the credit card company that was also his largest donor, was one of eighteen Senate Democrats who backed a successful Republican-led bankruptcy reform bill that stripped private student loans of bankruptcy protection amid an explosion of private loan debt.

“He is a zealous advocate on behalf of one of his biggest contributors — the financial services industry,” Senator Elizabeth Warren (D-MA) said of Biden at the time.

For his part, Biden argued the law was necessary to prevent abuse of the system by borrowers who could afford to repay some of their debt. He and other supporters of the bankruptcy bill claimed the legislation would enable private lenders to lower costs for people seeking credit. But both arguments were ultimately proven wrong — abuse was minimal, and interest rates in general did not go down. Instead, the law resulted in a system that leaves borrowers with few options for relief.

Author(s): Walker Bragman

Publication Date: 8 April 2021

Publication Site: Jacobin Magazine

Biden Said His Tax Hikes Would Only Affect the Rich. He Can’t Keep That Promise.

Mary Pat Campbell
Biden Said His Tax Hikes Would Only Affect the Rich. He Can’t Keep That Promise.

Excerpt:

It’s time for the Democrats who elect presidents that promise not to jack up taxes on anybody but the rich to come to terms with something: These politicians can’t continue to spend that much money without raising taxes on nearly everyone, and that includes some regressive taxes. I don’t like it, since I’d prefer the size and scope of government to be significantly smaller—but this reality is not optional.

Here’s another reason why Biden was never going to be able to keep his promise: He already announced his intention to increase the corporate income tax from the current 21 percent to 28 percent. The reality here is that the corporations that he says are going to send bigger checks to the Internal Revenue Service (IRS) after the tax hike aren’t the ones who actually shoulder this heavier tax burden.

Author(s): Veronique de Rugy

Publication Date: 1 April 2021

Publication Site: Reason

Visualizing Biden’s $1.52 Trillion Budget Proposal for 2022

Mary Pat Campbell
Visualizing Biden’s $1.52 Trillion Budget Proposal for 2022

Graphic:

Excerpt:

One of the biggest boosts in spending is for education. The proposed $29.8 billion would be a 41% increase from 2021. The extra funds would support students in high-poverty schools, as well as children with disabilities.

Health and human services is also a top priority in Biden’s budget, perhaps unsurprisingly given the global pandemic. But the boost in funds extends beyond disease control. Biden’s budget allocates $1.6 billion towards mental health grants and $10.7 billion to help stop the opioid crisis.

There are increases across all major budget categories, but defense will see the smallest increase from 2021 spending, at 2%. It’s worth noting that defense is also the biggest budget category by far, and with a total of $715 billion allocated, the budget lists deterring threats from China and Russia as a major goal.

Author(s): Carmen Ang

Publication Date: 9 April 2021

Publication Site: Visual Capitalist

Biden Softens Tax Plan Aimed at Profitable Companies That Pay Little

Mary Pat Campbell

Link: https://www.wsj.com/articles/biden-softens-tax-proposal-aimed-at-profitable-companies-that-pay-little-11617809422?mod=djemwhatsnews

Excerpt:

A 15% minimum tax on large, profitable corporations that is part of President Biden’s infrastructure proposal would affect far fewer companies than the version he campaigned on, according to details the Treasury Department released Wednesday.

The tax — aimed at companies that report large profits to investors but low tax payments — would apply only to companies with income exceeding $2 billion, up from the $100 million threshold that Mr. Biden pushed during the campaign.

The Biden plan would now also let companies subject to the tax get the benefit of tax credits for research, renewable energy and low-income housing, a recognition that the campaign-trail version could have undercut the president’s preference to encourage companies to invest in those areas.

The result is that just 180 companies would meet the income threshold and just 45 would pay the tax, according to administration estimates that assume the rest of the administration’s plan gets implemented. Nearly 1,100 U.S.-listed companies would meet the $100 million threshold, according to S&P Global Market Intelligence. Many of them would still face sharply higher tax bills from the rest of the Biden proposals, which raise rates on domestic and foreign income.

Author(s): Richard Rubin, Kate Davidson

Publication Date: 7 April 2021

Publication Site: Wall Street Journal

Leave the Cap on the SALT

Mary Pat Campbell

Link: https://www.nationalreview.com/2021/04/leave-cap-salt/?utm_source=Sailthru&utm_medium=email&utm_campaign=TUE_20210406&utm_term=Tuesday-Smart

Excerpt:

Since the Republican tax reform of 2017, the federal government has allowed taxpayers to deduct $10,000 of their state and local tax payments from their federal taxes. What the Democrats now seek is a restoration of the unlimited tax deduction that had previously been in place. Only the highest earners hit that cap, so getting rid of it would directly benefit only them. The Tax Foundation estimates that lifting the cap would raise the after-tax incomes of the bottom-earning 40 percent of households by nothing. People in the middle of the income distribution would see an average increase of 0.01 percent. People in the top 1 percent, on the other hand, would receive a 2.8 percent increase. Another analysis, from the Tax Policy Center, found that the top 20 percent of taxpayers would receive 96 percent of the benefit of repealing the cap.

Publication Date: 6 April 2021

Publication Site: National Review

Pension and Executive Compensation Provisions in the American Rescue Plan Act

Mary Pat Campbell

Link: https://www.seyfarth.com/news-insights/pension-and-executive-compensation-provisions-in-the-american-rescue-plan-act.html

Excerpt:

Seyfarth Synopsis: On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (“ARPA”), the $1.9 trillion COVID-19 relief bill.  ARPA includes various forms of multiemployer and single employer pension plan relief, as well as certain executive compensation changes under Section 162(m) of the Internal Revenue Code (“Code”), which are discussed further below. Please see our companion Client Alert on the other employee benefit items of interest in ARPA here.

Author(s): Seong Kim, Christina M. Cerasale, Kaley M. Ventura, Alan B. Cabral

Publication Date: 11 March 2021

Publication Site: Seyfarth