With help from Ursula Perano
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GAME PLANNING FOR THE CHILD CREDIT: It’s a big question hanging out there: Why aren’t Democrats making a bigger push to make this year’s expansion of the Child Tax Credit permanent?
At its core, the answer is pretty simple — the money isn’t there. Democrats are essentially trying to fit as much of the $6 trillion agenda envisioned by Senate Budget Chair Bernie Sanders (I-Vt.) into the $3.5 trillion cap for a budget reconciliation measure allowed by their centrists.
A permanent extension of the new monthly child payments would cost at least $1 trillion over 10 years, according to outside projections. So for Democrats, the consensus just isn’t there for the child credit to take up basically a third of the package, not with lawmakers clamoring to spend some of that money on clean energy initiatives, a variety of potential education benefits and much more.
“I’m going to fight for as many years as we can now,” Sen. Michael Bennet (D-Colo.) acknowledged during a recent virtual event with The Washington Post. “And then we’ll come back and come back and come back until it’s permanent.”
MORE ON THAT IN A BIT, but thanks for coming to an Olympic-sized version of Weekly Tax — where may we all be attacking this week with the vigor of that Australian swimming coach.
Pretty good title, if you ask us: Today marks 70 years since the release of the 13th animated feature film from Disney — ”Alice in Wonderland.”
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SO NOW WHAT? With all that in mind, Democrats do face some interesting questions about the best legislative tactics for eventually making the new CTC permanent.
One thing to keep in mind: Decent numbers of Republicans have supported a child credit over recent decades, from Sens. Mike Lee (R-Utah) and Marco Rubio (R-Fla.) during the negotiations over the 2017 tax law to way back to Newt Gingrich and the Contract with America.
Most recently, Rep. Kevin Brady of Texas, the top Republican on the House ways and Means Committee, focused his criticism on the implementation of the monthly child allowance — which is likely missing millions of low-income families, something that has frustrated Democrats, too — more than on the policy behind it.
Republicans have reached out to Treasury, Brady said last week, “about the rollout of the tax credit and the frustration being broadly held about the rush here that’s leaving our constituents very frustrated.”
But Democrats who are pushing to make the new expansion permanent smell a trap — arguing it would be foolish to think it will be easier to work with Republicans a year, two or three down the line to extend the CTC , even if it is the least objectionable part of the Democrats’ current proposals.
“We’ve heard the argument. It’s a bad one,” said one aide to a Democratic lawmaker working for a permanent extension. “We don’t know who will be in Congress and the White House down the road and there’s no guarantee that Republicans would extend it if they’re in charge.”
Finally: President Joe Biden has proposed extending the monthly allowances through 2025, and its certainly conceivable that Democrats could fit four more years of the monthly payments into their budget reconciliation measure.
That year wasn’t picked out of thin air, either. Lots of individual tax cuts from the Tax Cuts and Jobs Act expire at the end of 2025, and Democrats will be under a lot of pressure to at least extend a lot of them at the middle-income level.
So there’s a logic in putting the child credit in the mix with all those expiring tax cuts — Republicans will be in the mood to deal as 2025 is coming to a close, the thinking goes, so maybe it’ll be easier to deal with the new child allowance.
But sort of like above, some Democrats think there’s a danger to that kind of thinking, especially since there could easily be another larger battle that year over tax cuts for the rich — not to mention the chance that Republicans might have full control following the 2024 elections.
“The Republicans can hold it hostage for all their top 1 percent goodies,” one Democratic aide said about the 2025 scenario. “If it’s 2023, you can hammer them day in and day out and try to get it extended on its own.”
BIPARTISAN TALKS, GRINDING ON: Another week is upon us, which means another week of the bipartisan negotiators being on the cusp of finalizing their infrastructure deal.
Sen. Rob Portman (R-Ohio), the lead GOP negotiator, said on ABC’s “This Week” that the group was about nine-tenths done with their work, as our Marianne LeVine noted. Sen. Mark Warner (D-Va.) was perhaps even more optimistic, saying on “Fox News Sunday” that legislative text could be ready by this afternoon.
Senate Majority Leader Chuck Schumer is still pushing to vote on both the bipartisan infrastructure deal and a budget resolution before the chamber heads back home for August.
Republican negotiators have suggested they can put up the necessary votes to get moving on the bipartisan framework if and when it’s ready, but other hurdles are looming on the horizon, too. For instance: Speaker Nancy Pelosi stressed in her own appearance on “This Week” that the House wouldn’t take up the bipartisan infrastructure measure without the broader budget reconciliation bill.
LET’S MAKE A DEAL: Tesla is lobbying India to reduce import duties on electric vehicles, Reuters reports. On a related note, the company sounds interested in setting up factories in India, should imported electric cars prove popular there. Elon Musk, the Tesla chief executive, recently bemoaned India’s high import duties on Twitter. But import taxes aren’t high on accident: Prime Minister Narendra Modi has pushed to keep duties elevated in a bid to boost domestic manufacturing, so Tesla’s pleas to lower them might not get very far — like other car makers before it.
Tesla is asking for India to reduce the import duties to 40 percent, instead of the current 60 percent to 100 percent, and for the Modi government to also get rid of a 10 percent surtax on electric vehicles, Bloomberg noted. At the moment, electric vehicles have a very small toehold in India, accounting for not even 1 percent of new sales.
GET IT TO THE BALLOT: Leslie Rutledge, a Republican running for governor of Arkansas, wants voters to also weigh in next year on whether to scrap the state income tax, The Associated Press reports. Rutledge, currently the Arkansas attorney general, is seeking a proposed constitutional amendment that would phase out the state income tax by the end of the decade. There’s perhaps good reason for Rutledge to roll out such a drastic idea — she’s running against Sarah Huckabee Sanders, who was White House press secretary under former President Donald Trump, and has had trouble keeping pace in the money race. Rutledge’s proposed referendum would need close to 90,000 signatures to get on the ballot for next year. The current Republican governor, Asa Hutchinson, has already said that he will call a special legislative session this fall to consider tax cuts, but has also called for more modest measures — like reducing the top rate for individual income from 5.9 percent to 5.5 percent.
What New Jersey Democrats want from a budget reconciliation measure doesn’t always mesh with the broader party’s interests.
Rep. Mike Kelly (R-Pa.), who helped shepherd through an IRS overhaul a couple years back, explains his opposition to using increased tax enforcement as an offset.
The Hill: “Republicans focus tax hike opposition on capital gains change.”
Let’s talk potential tax loopholes for cryptocurrency.
The author Lewis Carroll first told the story of “Alice in Wonderland” on July 4, 1862.