A scaled-down China competition bill that would provide $52 billion to encourage domestic semiconductor manufacturing appears to be gaining support in the Senate.
Senate Republican Leader
But Republicans appear more willing to support the chips bill after last week’s revelation that Sen.
“There is a closing window of opportunity for us to act,” Cornyn said.
Several Republicans, including Senate Republican whip
Draft legislation circulated by Senate leadership included the $52 billion in funding, plus a 25% investment tax credit for semiconductor manufacturing and funding for worker training.
Senate Majority Leader
The semiconductor incentives have been a priority for the Biden administration. White House economic adviser Jared Bernstein said during a Monday press conference that domestic chip manufacturing could help fight inflation.
Stalled Tax Plan
Manchin said he may be willing to revisit tax and climate proposals in September, depending on inflation trends. But the calendar is working against the Biden administration: The Senate’s procedural rules create a very small window to pass legislation that month.
If Congress acts on a health care-focused reconciliation bill—which President
Ashley Schapitl, a spokeswoman for Senate Finance Committee Democrats, said that since the health care bill would affect the tax code, Congress wouldn’t be able to use the same budget to make other tax changes later. That would mean that the Senate would likely need to use a fiscal 2023 budget resolution for the tax and climate policies, which would involve another round of unlimited amendment votes.
“There’s two bites at the apple,” he said.
Climate Emergency: Unconvinced that Manchin will have a change of heart by September on legislation he’s been stalling for months, several Senate Democrats want Biden to declare a “climate emergency.”
This would enable the President to use executive authority to redirect funding to clean energy projects, including through tax credits; put restrictions on offshore drilling; or even curtail the movement of fossil fuels on pipelines, trains, and ships.
“The potential to enact the legislation is dead,” Sen. Jeff Merkley (D-Ore.) told reporters Monday evening. “This then frees up the president to use the full powers of the executive branch. And those full powers certainly include a climate emergency.”
Former President Donald Trump invoked emergency authority to begin construction of a border wall.
Wyden: Congress needs to renew clean energy tax credits, most of which have expired, in order to draw long term investment in clean energy, Senate Finance Chairman
Such investments, he said, are needed to reduce energy prices, lower carbon emissions, and gain energy independence from Russia and Saudi Arabia.
Wyden said he welcomes executive action on climate from Biden, but said that can’t be relied on since executive actions would face litigation.
Net Investment Income Tax: Despite the likely demise of the broader tax and energy deal within the budget bill formerly known as Build Back Better, Senate Finance Committee Republicans are reiterating their opposition to extending the 3.8% net investment income tax to pass-through businesses.
In a “Dear Colleague” letter to be circulated today to other Senate offices, Republicans of the tax policy committee argue that if broadened to pass-throughs, the tax would hurt “businesses already recovering from the pandemic, massive inflation and worker shortages.”
Big Banks Worry About Economy
The four largest US banks upped the funds they set aside to cover future losses for the first time since the third quarter of 2020.
JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp., and Wells Fargo & Co. boosted their provisions for loan losses by a total of $3.5 billion, an accounting move that signals they are wary about a souring economy.
What to Watch Today
Crypto: Bloomberg News will interview Sens.
Transfer Pricing: The National Association for Business Economics kicks off its annual transfer pricing symposium. The three-day event concludes with a keynote from Itai Grinberg, Treasury’s deputy assistant secretary for multilateral tax.
Infrastructure Law: The House Transportation and Infrastructure Committee scheduled a hearing on implementation of last year’s bipartisan infrastructure law.
Russian Oligarchs: The Senate Judiciary Committee convenes for a hearing on supporting Ukraine by seizing the illicit assets of Russian oligarchs.
SEC Enforcement: The House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets set a oversight hearing on enforcement activities at the Securities and Exchange Commission.
International Tax: The Practising Law Institute kicks off a two-day event starting on international tax rules.
Beyond the Beltway
Germany: The German Finance Ministry is requesting lawmakers eliminate a tax on intellectual property income.
Last month the government granted companies a one-year deadline extension to apply for an exemption from the levy. That delay offered more time to companies who may still not have been aware of the need to comply with the tax.
“It was a lot of moving parts and a lot of work that was involved, and companies tried to scramble and get the data together until June 30,” said Anke Krueger, managing director of international tax services at BDO LLP in New York.
UK: Prime Minister Boris Johnson’s successor will have the ability to enact up to $72 billion in tax cuts thanks to a revenue windfall for the nation’s Treasury, according to a prolific economics consultancy. Read more from Philip Aldrick.
—With assistance from Laura Litvan, Zach C. Cohen, Joe Stanley-Smith, Erik Wasson, and Colin Wilhelm.