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    A Year After Ending Her Presidential Bid, Warren Wields Soft Power in Washington

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    The progressive Democrat’s proposals for taxing the rich will take center stage as talks on paying for an infrastructure bill ramp up.WASHINGTON — At Adewale Adeyemo’s confirmation hearing last month, Senator Elizabeth Warren pressed the deputy Treasury secretary nominee to commit to using the department’s regulatory powers to scrutinize the private equity industry, which she said posed a risk to low-income communities when buyout firms strip companies of assets, load them with debt and fire workers.Ms. Warren, a progressive Democrat from Massachusetts, has been a mentor to Mr. Adeyemo, who served as her chief of staff when she was establishing the Consumer Financial Protection Bureau a decade ago. But when he gave a noncommittal answer, she did not let him off the hook.“I don’t think you should waver about this,” Ms. Warren said emphatically. “Treasury should not be a bystander in this.”The exchange underscored Ms. Warren’s role in the new Washington, where the Biden administration and congressional Democrats control the levers of power. A year after ending her own presidential bid, and with her aspirations of becoming Treasury secretary unfulfilled, Ms. Warren now wields influence in her own way. She has shepherded a pipeline of progressive former staff members into powerful jobs across the government, and she releases a steady stream of legislative proposals that have kept her progressive ideas at the forefront of the policy conversation.Two months into the Biden presidency, it is not yet clear how much Ms. Warren’s sway will yield in terms of policy results. But many of her ideas for raising trillions of dollars of revenue by taxing the wealthy and big corporations will soon take center stage as the Biden administration and Congress consider ways to pay for the multitrillion-dollar infrastructure plan that they hope to pass this year.Marcus Stanley, the policy director of Americans for Financial Reform, an advocacy group, said the upcoming infrastructure and jobs legislation would be a real test of Ms. Warren’s influence.“We probably have a big bill coming up in the next couple of months, so when you talk about winning the policy fights, we’re going to see there,” Mr. Stanley said.If personnel is policy, as Ms. Warren likes to say, then she is winning so far. Many of the top officials and senior staff members at the nation’s most powerful economic policymaking and regulatory agencies are ideological allies who have been groomed by Ms. Warren.In addition to Mr. Adeyemo at the Treasury Department, Ms. Warren has worked closely in the past with Bharat Ramamurti, the deputy director of the National Economic Council, and Rohit Chopra, President Biden’s nominee to lead the Consumer Financial Protection Bureau.The impact of the hires can be seen in the progressive tilt of the $1.9 trillion economic relief law, which dismissed concerns about deficits and focused heavily on poverty reduction. Ms. Warren and her allies hope that having strong advocates for progressive views within the administration will help those ideas find purchase in a White House that thus far has been more open to tacking to the left than previous Democratic administrations.But it remains to be seen how far the Biden White House is willing to go, particularly with regard to tax increases, which is an area where the two former candidates disagreed.Although she has been off the campaign trail for more than a year, Ms. Warren has been reviving proposals that she promoted in Iowa and New Hampshire.This month, Ms. Warren and two House Democrats introduced legislation for an “ultra-millionaire tax” that is modeled after what she proposed as a candidate. The 2 percent annual wealth tax on the net worth of households and trusts valued at $50 million to $1 billion was unveiled with polling data to back up its popularity and letters supporting its constitutionality.This week, Ms. Warren plans to pitch new legislation to increase taxes on big companies. Her “real corporate income tax,” which was also part of her campaign platform, would require the most profitable companies to pay a 7 percent tax on their annual book value — the earnings that they report to their investors but not the Internal Revenue Service — above $100 million. The idea, which is similar to a proposal that Mr. Biden put forward during his campaign, is intended to stop companies from using accounting loopholes to lower their tax bills.When it appeared that Democrats were likely to lose the Senate after the 2020 election, some industry groups were relieved that Ms. Warren would not become the Treasury secretary. These days, however, they acknowledge that they are watching her moves closely.“Senator Warren is certainly well positioned to have an outsized influence in the Senate and the administration,” said James Maloney, a managing partner of Tiger Hill Partners, a public affairs firm focused on financial services. “Every item that she’s focused on should be a focus area for the industries whose policies can potentially be impacted.”Mr. Maloney, whose firm represents some private equity companies, noted that allies of Ms. Warren were spread across the Biden administration. He said businesses were closely watching the letters that Ms. Warren sends to regulatory agencies and the responses she receives.Mr. Biden has so far not been persuaded by her argument for using executive authority to waive student debt. And the White House has given mixed signals on Ms. Warren’s wealth tax.Treasury Secretary Janet L. Yellen, whose nomination Ms. Warren supported, has expressed skepticism about the feasibility of putting a wealth tax in place. Ms. Yellen’s recent hiring of Natasha Sarin, a protégé of Lawrence H. Summers who has been skeptical about how much revenue a wealth tax would generate, to join her economic policy team raised eyebrows among some in Ms. Warren’s orbit.In an interview, Ms. Warren said she was heartened by the early returns of the Biden era after four years of President Donald J. Trump’s deregulation and tax cuts.“People like progressive ideas and want to see them enacted,” Ms. Warren said. “That’s going to happen. Washington is beginning to catch up.”She said she planned to have a private conversation with Ms. Yellen about how to establish the tax.During the 2020 primary campaign, Ms. Warren and President Biden appeared to be at opposite ends of the Democratic Party’s ideological spectrum.Chang W. Lee/The New York Times“If that’s her biggest problem then we’re good,” Ms. Warren said. “It’s easy to implement. We just need to sit down and talk about it.”Ms. Warren acknowledged that helping to seed federal agencies with progressives was part of her strategy of making her policies happen. She said she made her staffing recommendations to the White House privately and repeated her refrain that “personnel is policy.”During the 2020 primary campaign, Ms. Warren and Mr. Biden appeared to be at opposite ends of the Democratic Party’s ideological spectrum. But their shared interest in uplifting the middle class and reducing income inequality has helped forge a strong working relationship.Jeff Hauser, the director of the Revolving Door Project, suggested that Ms. Warren’s ties to former Senator Ted Kaufman, Mr. Biden’s longtime Senate chief of staff who led his presidential transition team, had helped her steer many of her acolytes to important jobs. In 2008, when Ms. Warren was a Harvard Law School professor, she was appointed to join a congressional panel that was overseeing the $700 billion Troubled Asset Relief Program. When she left that job to stand up the consumer protection bureau, Mr. Kaufman replaced her and continued her rigorous oversight work.Allies of Ms. Warren say she is playing the long game with policy proposals such as the wealth tax, nudging them from European fringe ideas to the political mainstream in hopes that Democrats will have the votes to pass such legislation sooner rather than later.“She’s doing what she always does, which is going person by person in the Senate, person by person in the administration, explaining policy advantages, explaining the political advantages, making the case,” said Mike Lux, a Democratic political strategist and a friend of Ms. Warren’s.In the meantime, Ms. Warren feels a sense of relief after four years of being on defense. On the day she voted to advance Mr. Chopra’s nomination to lead the consumer bureau, she reflected on how different his tenure would be from that of Mick Mulvaney, whom Mr. Trump appointed to neuter the agency in 2017.Mr. Chopra helped Ms. Warren establish the bureau and worked for five years as its assistant director and student loan ombudsman. Mr. Mulvaney tried to cut its funding and scrambled its acronym out of spite.“Mick Mulvaney was doing everything he could to try to undercut the consumer agency, and he made no secret about that,” Ms. Warren said. “Now there’s someone who will be in charge of the C.F.P.B. who sees the need for a level playing field and a fair set of rules and who has the backbone to get in there and make it happen.” More

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    A Last-Minute Add to Stimulus Bill Could Restrict State Tax Cuts

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    #masthead-section-label, #masthead-bar-one { display: none }Personal TaxesNew Pandemic ChangesHelp for Working FamiliesEstate Tax PlanningSmall-Business TipsWorking RemotelyAdvertisementContinue reading the main storySupported byContinue reading the main storyA Last-Minute Add to Stimulus Bill Could Restrict State Tax CutsRepublicans say Congress is infringing on state sovereignty by trying to limit the ability of local governments to control their finances.President Biden signing the $1.9 trillion economic relief plan into law on Thursday at the White House. The restriction is intended to ensure that states use federal funds to keep their local economies humming.Credit…Doug Mills/The New York TimesMarch 12, 2021Updated 7:02 p.m. ETWASHINGTON — A last-minute change in the $1.9 trillion economic relief package that President Biden signed into law this week includes a provision that could temporarily prevent states that receive government aid from turning around and cutting taxes.The restriction, which was added by Senate Democrats, is intended to ensure that states use federal funds to keep their local economies humming and avoid drastic budget cuts and not simply use the money to subsidize tax cuts. But the provision is causing alarm among some local officials, primarily Republicans, who see the move as federal overreach and fear conditions attached to the money will impede upon their ability to manage their budgets as they see fit.Officials are scrambling to understand what strings are attached to the $220 billion that is expected to be parceled out among states, territories and tribes and are already pressing the Treasury Department for guidance about the restrictions they will face if they take federal money.Under the new law, $25 billion will be divided equally among states, while $169 billion will be allocated based on a state’s unemployment rate. States can use the money for pandemic-related costs, offsetting lost revenues to provide essential government services, and for water, sewer and broadband infrastructure projects.But they are prohibited from depositing the money into pension funds — a key worry of Republicans in Congress — and cannot use funds to cut taxes by “legislation, regulation or administration” through 2024.Democrats slipped the new language into the legislation last week after several senators from the party’s moderate wing expressed concern that some states would seize on the opportunity to use emergency relief money to subsidize tax cuts. They worked with Senator Chuck Schumer, the majority leader, on language for the amendment, according to a Democratic Senate aide.Senator Joe Manchin III, Democrat of West Virginia, explained why he pushed for the language in a briefing this week, arguing that states should not be cutting taxes at a time when they need more money to combat the virus. He urged states to postpone their plans to cut taxes.“How in the world would you cut your revenue during a pandemic and still need dollars?” Mr. Manchin said.Senator Ron Wyden, Democrat of Oregon, said the funds were meant “to keep teachers and firefighters on the job and prevent the gutting of state and local services that we saw during the Great Recession.”“It’s important that there are guardrails to prevent these funds from being used to cut taxes for those at the top,” he added.But some Republican-led states are pointing to the apparent prohibition as a violation of their sovereignty and calling for that part of the law to be repealed. They see the requirement that states refrain from cutting taxes as an unusual intervention by the federal government in state tax policy.“It is an intrusion into what would traditionally be a state prerogative of how we balance our budget,” said Ben Watkins, the director of the Florida Division of Bond Finance. “If they want to give us this money to deal with Covid, then they should just give it to us with no strings attached.”Funding for state and local governments was one of the most contentious issues during stimulus talks, with Republicans saying Democrat-led states were being rewarded for mismanaging their finances and labeling the aid as a “blue-state bailout.”Those concerns were amplified in the latest legislation, which allocates money to a state based on a formula that considers its unemployment rate rather than its population. Conservative-leaning states, many of which had less onerous coronavirus restrictions and did not shut down as much business activity, claim they are essentially being penalized for prioritizing their economies during the pandemic.But early analyses of the bill show that both conservative-leaning and liberal-leaning states will receive big chunks of cash. California, Florida, New York and Texas will each get more than $10 billion in aid, according to a Tax Foundation tally.Still, the tax language has angered Republicans — none of whom voted for the rescue package — and on Thursday, Senator Mike Braun, Republican of Indiana, introduced legislation to reverse it.“Democrats are trying to ban states from cutting taxes with a sneaky amendment to the $1.9 trillion so-called Covid relief package,” Mr. Braun said. “Not only did this blue-state bailout bill penalize states for reopening by calculating state funds based on unemployment, now they are trying to use it as a back door to ban states from cutting taxes.”The restrictions have created a conundrum for states because, while many cities are facing budget crunches, state finances have turned out to be relatively healthy.A New York Times analysis this month found that, on balance, state revenues were generally flat or down slightly last year compared with 2019 as expanded unemployment benefits allowed consumer spending and tax revenues to keep flowing.“Idaho would potentially subsidize poorly managed states simply because we are using our record budget surplus to pursue historic tax relief for our citizens,” Gov. Brad Little of Idaho said this week. “We achieved our record budget surplus after years of responsible, conservative governing and quick action during the pandemic, and our surplus should be returned to Idahoans as I proposed.”Gov. Jim Justice, a Republican of West Virginia, criticized Mr. Manchin in an interview this week with CNN..css-yoay6m{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}@media (min-width:740px){.css-yoay6m{font-size:1.25rem;line-height:1.4375rem;}}.css-1dg6kl4{margin-top:5px;margin-bottom:15px;}.css-k59gj9{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;width:100%;}.css-1e2usoh{font-family:inherit;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;border-top:1px solid #ccc;padding:10px 0px 10px 0px;background-color:#fff;}.css-1jz6h6z{font-family:inherit;font-weight:bold;font-size:1rem;line-height:1.5rem;text-align:left;}.css-1t412wb{box-sizing:border-box;margin:8px 15px 0px 15px;cursor:pointer;}.css-hhzar2{-webkit-transition:-webkit-transform ease 0.5s;-webkit-transition:transform ease 0.5s;transition:transform ease 0.5s;}.css-t54hv4{-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-1r2j9qz{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-e1ipqs{font-size:1rem;line-height:1.5rem;padding:0px 30px 0px 0px;}.css-e1ipqs a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;}.css-e1ipqs a:hover{-webkit-text-decoration:none;text-decoration:none;}.css-1o76pdf{visibility:show;height:100%;padding-bottom:20px;}.css-1sw9s96{visibility:hidden;height:0px;}#masthead-bar-one{display:none;}#masthead-bar-one{display:none;}.css-1cz6wm{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;font-family:’nyt-franklin’,arial,helvetica,sans-serif;text-align:left;}@media (min-width:740px){.css-1cz6wm{padding:20px;width:100%;}}.css-1cz6wm:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1cz6wm{border:none;padding:20px 0 0;border-top:1px solid #121212;}How Has the Pandemic Changed Your Taxes?Nope. The so-called economic impact payments are not treated as income. In fact, they’re technically an advance on a tax credit, known as the Recovery Rebate Credit. The payments could indirectly affect what you pay in state income taxes in a handful of states, where federal tax is deductible against state taxable income, as our colleague Ann Carrns wrote. Read more. Mostly.  Unemployment insurance is generally subject to federal as well as state income tax, though there are exceptions (Nine states don’t impose their own income taxes, and another six exempt unemployment payments from taxation, according to the Tax Foundation). But you won’t owe so-called payroll taxes, which pay for Social Security and Medicare. The new relief bill will make the first $10,200 of benefits tax-free if your income is less than $150,000. This applies to 2020 only. (If you’ve already filed your taxes, watch for I.R.S. guidance.) Unlike paychecks from an employer, taxes for unemployment aren’t automatically withheld. Recipients must opt in — and even when they do, federal taxes are withheld only at a flat rate of 10 percent of benefits. While the new tax break will provide a cushion, some people could still owe the I.R.S. or certain states money. Read more. Probably not, unless you’re self-employed, an independent contractor or a gig worker. The tax law overhaul of late 2019 eliminated the home office deduction for employees from 2018 through 2025. “Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,” the I.R.S. said. Read more. Self-employed people can take paid caregiving leave if their child’s school is closed or their usual child care provider is unavailable because of the outbreak. This works similarly to the smaller sick leave credit — 67 percent of average daily earnings (for either 2020 or 2019), up to $200 a day. But the caregiving leave can be taken for 50 days. Read more. Yes. This year, you can deduct up to $300 for charitable contributions, even if you use the standard deduction. Previously, only people who itemized could claim these deductions. Donations must be made in cash (for these purposes, this includes check, credit card or debit card), and can’t include securities, household items or other property. For 2021, the deduction limit will double to $600 for joint filers. Rules for itemizers became more generous as well. The limit on charitable donations has been suspended, so individuals can contribute up to 100 percent of their adjusted gross income, up from 60 percent. But these donations must be made to public charities in cash; the old rules apply to contributions made to donor-advised funds, for example. Both provisions are available through 2021. Read more. “He’s hurting his own people in the state of West Virginia,” Mr. Justice said. “I do not condone it.”The provision is also raising questions about what actually constitutes a tax cut and whether the law could prevent states from other types of tax relief. The language of the legislation appears to offer states little wiggle room.Jared Walczak, the vice president for state projects at the Tax Foundation’s Center for State Tax Policy, said that the fine print in the law raised many complicated questions for states that, in some cases, would be awarded money for things that they either do not need or that they already had plans to pay for out of their budgets. It is not clear, for example, if a state could use aid money for an expense related to the coronavirus that it was already planning to pay for and then offer tax credits with the additional surplus.“If the federal government intends to forbid any sort of revenue negative tax policy, no matter what its size, because a state received some funding, that would be a radical federal entanglement in state fiscal policy that may go beyond what was intended,” Mr. Walczak said.Such questions will largely hinge on how Treasury Secretary Janet L. Yellen interprets the legislation and what guidance the Treasury Department gives to states.A department official noted that the law says that states and territories that receive the aid cannot use the funds to offset a reduction in net tax revenue as a result of tax cuts because the money is intended to be used to support the public health response and avoid layoffs and cuts to public services. More guidance on the matter is coming, the official said.The lack of clarity also raises the risk that states use the money for projects or programs that do not actually qualify under the law and then are forced to repay the federal government. States are required to submit regular reports to the Treasury Department accounting for how the funds are being spent and to show any other changes that they have made to their tax codes. The department will also be setting up a system of monitoring how the funds are being used.Emily Swenson Brock, the director of the Federal Liaison Center at the Government Finance Officers Association, said that the eligible uses of the federal aid appeared to be relatively limited for the states and that some might actually find it challenging to deploy the money in a useful way.“It’s complicated here for the states,” Ms. Brock said, adding that her organization had asked the Treasury Department for an explanation. “Congress is reaching in and telling these states how they can and can’t use that money.”Before they receive federal funds, states will have to submit a certification promising to use the money according to the law. They could also decline funding or, if they are set on tax cuts, they could offset them with other sources of revenue that do not include the federal funds.For many states, the federal money is welcome even if they do not necessarily need it for public health purposes.Melissa Hortman, the speaker of the Minnesota House of Representatives, said that she was hopeful that the federal government gives states the flexibility to use the money to make up for lost revenue from the virus. She suggested that the state should look to make new investments in education and transportation. Minnesota is expected to have a budget surplus for the next two years and will receive more than $2 billion in aid.“It’s not too much money,” said Ms. Hortman, a Democrat. “Our country has just lived through a once-in-a-hundred-year pandemic.”AdvertisementContinue reading the main story More

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    Warren Revives Wealth Tax, Citing Pandemic Inequalities

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesRisk Near YouVaccine RolloutNew Variants TrackerAdvertisementContinue reading the main storySupported byContinue reading the main storyWarren Revives Wealth Tax, Citing Pandemic InequalitiesA tax on the net worth of America’s wealthiest individuals remains popular with voters, but has yet to be embraced by President Biden.Senator Elizabeth Warren plans to introduce legislation Monday that would apply a 2 percent tax to individual net worth above $50 million, and an additional 1 percent surcharge above $1 billion.Credit…Anna Moneymaker for The New York TimesMarch 1, 2021Updated 3:49 p.m. ETWASHINGTON — Senator Elizabeth Warren, Democrat of Massachusetts, introduced legislation on Monday that would tax the net worth of the wealthiest people in America, a proposal aimed at persuading President Biden and other Democrats to fund sweeping new federal spending programs by taxing the richest Americans.Ms. Warren’s wealth tax would apply a 2 percent tax to individual net worth — including the value of stocks, houses, boats and anything else a person owns, after subtracting out any debts — above $50 million. It would add an additional 1 percent surcharge for net worth above $1 billion. It is co-sponsored in the House by two Democratic representatives, Pramila Jayapal of Washington, who leads the Congressional Progressive Caucus, and Brendan F. Boyle of Pennsylvania, a moderate.The proposal, which mirrors the plan Ms. Warren unveiled while seeking the 2020 presidential nomination, is not among the top revenue-raisers that Democratic leaders are considering to help offset Mr. Biden’s campaign proposals to spend trillions of dollars on infrastructure, education, child care, clean energy deployment, health care and other domestic initiatives. Unlike Ms. Warren, Mr. Biden pointedly did not endorse a wealth tax in the 2020 Democratic presidential primaries.But Ms. Warren is pushing colleagues to pursue such a plan, which has gained popularity with the public as the richest Americans reap huge gains while 10 million Americans remain out of work as a result of the pandemic.Polls have consistently shown Ms. Warren’s proposal winning the support of more than three in five Americans, including a majority of Republican voters.“A wealth tax is popular among voters on both sides for good reason: because they understand the system is rigged to benefit the wealthy and large corporations,” Ms. Warren said. “As Congress develops additional plans to help our economy, the wealth tax should be at the top of the list to help pay for these plans because of the huge amounts of revenue it would generate.”She said she was confident that “lawmakers will catch up to the overwhelming majority of Americans who are demanding more fairness, more change, and who believe it’s time for a wealth tax.”The Coronavirus Outbreak More

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    Biden Wants to Raise Taxes, Yet Many Trump Tax Cuts Are Here to Stay

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    #masthead-section-label, #masthead-bar-one { display: none }The Biden AdministrationliveLatest UpdatesReview of Russian HackingBiden’s CabinetPandemic ResponseAdvertisementContinue reading the main storySupported byContinue reading the main storyBiden Wants to Raise Taxes, Yet Many Trump Tax Cuts Are Here to StayWhile Democrats have vowed to repeal the former president’s signature 2017 law, his successor is more likely to tinker with it, given constraints.President Biden could end up doing more to cement the Trump administration’s tax cuts than to roll them back.Credit…Kenny Holston for The New York TimesJan. 22, 2021Updated 10:55 a.m. ETWASHINGTON — Donald J. Trump has left the White House. But many of his signature tax cuts aren’t going anywhere.Democrats have spent years promising to repeal the 2017 Tax Cuts and Jobs Act, which Republicans passed without a single Democratic vote and was estimated to cost nearly $2 trillion over a decade. President Biden said during a presidential debate in September that he was “going to eliminate the Trump tax cuts.”Mr. Biden is now in the White House, and his party controls both chambers of Congress. Yet he and his aides are committing to only a partial rollback of the law, with their focus on provisions that help corporations and the very rich. It’s a position that Mr. Biden held throughout the campaign, and that he clarified in the September debate by promising to only partly repeal a corporate rate cut.In some cases, including tax cuts that help lower- and middle-class Americans, they are looking to make Mr. Trump’s temporary tax cuts permanent.Mr. Biden still wants to raise taxes on some businesses and wealthy individuals, and he remains intent on raising trillions of dollars in new tax revenue to offset the federal spending programs that he plans to propose, including for infrastructure, clean energy production and education. Much of the new revenue, however, could come from efforts to tax investment and labor income for people earning more than $400,000, in ways that are not related to the 2017 law.Mr. Biden did not include any tax increases in the $1.9 trillion stimulus plan he proposed last week, which was meant to curb the pandemic and help people and companies endure the economic pain it has caused.His nominee for Treasury secretary, Janet L. Yellen, told a Senate committee this week that the president would hold off on reversing any parts of the tax law until later in the recovery, which most likely means as part of a large infrastructure package that he is set to unveil next month. Republican lawmakers repeatedly questioned Ms. Yellen about Mr. Biden’s tax plans, warning that repeal of the 2017 cuts would hurt American workers and businesses and push companies to ship jobs overseas.Ms. Yellen said Mr. Biden had made clear that he “would want to repeal parts of the 2017 tax cuts that benefited the highest-income Americans and large companies.” But she added that “he’s been very clear that he does not support a complete repeal.”Mr. Biden could end up cementing as much of Mr. Trump’s tax cuts as he rolls back. To meet a budget constraint that was necessary to pass the 2017 law with no Democratic votes, Republicans set tax cuts for individuals to expire at the end of 2025. On Thursday, in follow-up answers to written questions from Senator Charles E. Grassley, an Iowa Republican, Ms. Yellen said she would work with Congress to make tax cuts permanent for families earning less than $400,000 a year.Such a move would most likely reduce the tax revenue that Mr. Biden could otherwise claim to raise from his proposed changes to the Trump tax by at least half and as much as two-thirds, according to calculations by The New York Times. The calculations used analyses from the congressional Joint Committee on Taxation, the Tax Policy Center, the Committee for a Responsible Federal Budget and the University of Pennsylvania’s Penn Wharton Budget Model.All told, over a decade, Mr. Biden’s proposed changes to the law could net just $500 billion in additional revenue. In contrast, he has proposed roughly $2 trillion in tax increases unrelated to the law, by the Budget Model’s calculations.Not all of Mr. Biden’s intentions for the law’s provisions are clear. In the campaign, he said he would remove a limitation that Mr. Trump placed on the deduction of state and local taxes from federal income taxes, known as S.A.L.T., a move that primarily hurt higher-income residents of high-tax states like New York and California.Ms. Yellen did not commit to such a repeal this week, telling lawmakers she would “study and evaluate what the impact of the S.A.L.T. cap has had on state on local governments, and those who rely upon their services.” Repealing the cap would further reduce federal tax revenues.The Biden AdministrationLive UpdatesUpdated Jan. 22, 2021, 3:53 p.m. ETBiden’s top economic adviser warns the economy will be in ‘a much worse place’ without more aid.White House orders intelligence agencies to look at violent extremism in the U.S.Texas threatens to sue the Biden administration over pause in deportations.The 2017 law cut taxes for individuals and lowered the corporate rate to 21 percent from 35 percent. It created a new deduction for owners of certain businesses, like limited liability companies, whose owners pay taxes on their profits through the individual tax code. It also overhauled how the United States taxes the income that companies earn overseas, which Republicans said would encourage them to invest and create jobs in America.Most American workers received at least a small tax cut under the law. Its benefits flowed heavily to high earners: The Joint Committee on Taxation’s initial estimates suggested that more than one-fifth of the tax savings from the law in 2021 would go to people earning $500,000 a year or more. That share is set to rise sharply by 2026 if the individual tax cuts expire as scheduled.Democrats denounced the law as a giveaway to the rich, and it has struggled to attain widespread popularity. An online poll for The Times by the research firm SurveyMonkey found last month that Americans remained evenly split on whether they support or oppose the law. Only one in five respondents was certain of having received a tax cut from it.During the presidential campaign, Mr. Biden proposed trillions of dollars in tax increases on corporations and the rich, but his plans stopped short of a full repeal of Mr. Trump’s tax law. He said he would raise income taxes to pre-Trump levels only at the top bracket, an increase to 39.6 percent from 37 percent. He called for raising the corporate tax rate to 28 percent from 21 percent, where Mr. Trump set it — still short of the top rate of 35 percent that preceded the law.Even Mr. Biden’s international tax plan, which is meant to encourage domestic investment and job creation while raising revenue from large corporations, would work within the boundaries of what Mr. Trump and Republicans did in 2017. Instead of scrapping the overhaul, Mr. Biden would double the rate of the tax — while eliminating a new exemption that Democrats say encourages corporate investment abroad.The upshot is that Mr. Trump’s 2017 cuts will govern tax policy for years to come, said George Callas, a managing director at Steptoe, a law firm in Washington, who helped write the Tax Cuts and Jobs Act as an aide to Speaker Paul D. Ryan of Wisconsin. Mr. Callas said the Biden plan “does in a way concede that the new architecture of the international tax system that the T.C.J.A. created is being accepted as the architecture going forward.”Democrats say the changes that Mr. Biden is proposing for the law would rebalance its incentives for investment and hiring toward the United States, while ensuring that corporations and the rich paid their “fair share” of taxes.Senator Ron Wyden of Oregon, incoming chairman of the Finance Committee, which will be the starting point in the Senate for any tax changes Mr. Biden wants to make, said in an interview that his top tax priorities in many ways matched Mr. Biden’s.They include limiting a deduction for high earners who run companies that are not organized as corporations and overhauling the exemption for qualified business asset investment overseas — the provision that Democrats say encourages offshoring, though Republicans like Mr. Callas disagree. Mr. Wyden also wants to raise taxes on heirs of large fortunes and on investment income for high earners, through a variety of avenues.“There is a broad swath of Senate Democrats who are in agreement that the 2017 bill was a giveaway” to the rich and multinational corporations, Mr. Wyden said. “Certainly there is support for rolling back the corporate rate provision, the individual rate being pushed up again.”Republicans have already begun to mount a defense of those portions of the law, both inside and outside Congress, warning that the changes that Mr. Biden proposes would drive more companies to move overseas.“Raising the U.S. rate or making the international regime more burdensome would have an adverse effect on U.S. global competitiveness,” said Rohit Kumar, co-leader of PwC’s National Tax Office and a former deputy chief of staff to Senator Mitch McConnell of Kentucky, who was the Republican leader during the tax cut debate.“Doing both would be a double whammy that would ultimately harm U.S. workers and anyone who has a pension or 401(k) invested in U.S. companies,” Mr. Kumar said.Congressional Republicans have also pushed through, as part of economic stimulus efforts over the last year, several changes to the law they wrote and passed. For example, they relaxed restrictions that the law placed on companies’ ability to deduct operating losses from previous years’ taxes, in order to reduce their tax bills.Those provisions alone amount to a $160 billion change in the law — which is more money than Mr. Biden could expect to raise in a decade by reversing Mr. Trump’s cut in the top income tax rate for the rich.AdvertisementContinue reading the main story More

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    A Top House Democrat Prods Biden to Reopen E.U. Trade Talks

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyA Top House Democrat Prods Biden to Reopen E.U. Trade TalksThe chairman of the powerful Ways and Means Committee countered the president-elect’s pledge to focus first on domestic priorities.Representative Richard E. Neal, who leads the Ways and Means Committee, said a trade deal with the European Union would help restrain China.Credit…Anna Moneymaker for The New York TimesAna Swanson and Dec. 11, 2020Updated 4:56 p.m. ETWASHINGTON — The chairman of the powerful House Ways and Means Committee urged the incoming administration to renew trade negotiations with the European Union, countering a pledge by President-elect Joseph R. Biden Jr. to postpone any new trade talks until after the United States has made significant domestic investments.The statement on Friday, from Representative Richard E. Neal, Democrat of Massachusetts, raises the question of whether congressional pressure could persuade the Biden administration to take a more aggressive approach to trade negotiations with close allies.Mr. Biden has downplayed expectations for new trade negotiations early in his term, saying he wants to first wrest control of the pandemic and make substantial investments in American industries like energy, biotech and artificial intelligence.“I’m not going to enter any new trade agreement with anybody until we have made major investments here at home and in our workers,” Mr. Biden said in a New York Times interview last week.But since congressional opposition would be one of the main obstacles to any new trade agreement, the support of key Democrats could be strong motivation for initiating talks.In an interview, Mr. Neal suggested that reaching a trade agreement with the European Union would help deal with the rising economic threat from China, which has used hefty subsidies, state-owned companies and other practices to dominate industries and challenge the trade rules long embraced in the West.Mr. Neal called Mr. Biden’s approach “fine and fair,” but argued that pursuing E.U. trade negotiations “is part of a foreign policy challenge as it relates to China’s expansionist activities.”“I think that we should, right now, be preparing to match the aggressive nature of what China’s doing in the world,” he added.Mr. Biden would need the support of Mr. Neal and others to cement such a deal. So-called trade promotion authority, a statute that sets out guidelines for the executive branch as it negotiates trade deals and streamlines the approval process, is set to expire in July; any deals submitted to Congress after that could face a more difficult path to ratification. It’s not yet clear whether the Biden administration will petition Congress to renew the authority.Despite deep historic ties, the United States and Europe have not always had an easy trading relationship. The governments have argued for decades over tariffs, farm subsidies and food safety standards, and efforts to reach a comprehensive trade pact under both the Obama and Trump administrations were ultimately scrapped.But Mr. Biden has often spoken of the importance of strengthening American alliances, and he and his advisers have been eager to remedy ties with Europe that have been strained by President Trump’s confrontational trade approach. They also see much common ground with the European Union on issues like climate change, labor standards and consumer protections, as well as countering China’s growing geopolitical power and trade practices.Business & EconomyLatest UpdatesUpdated Dec. 11, 2020, 6:16 p.m. ETSilicon Valley giant Oracle will move its headquarters to Texas.A surprise savior for Britain’s pubs: Scotch eggs.Stocks dip as Brexit and U.S. stimulus talks remain stuck with time running out.Both governments appear eager to make progress on trade issues that have festered under the Trump administration, including spats over subsidies to the aircraft industry and plans by European countries to tax American technology giants.Those discussions would be led by Mr. Biden’s trade representative, Katherine Tai, whom the president-elect introduced on Friday as his nominee for the post. Ms. Tai is on Mr. Neal’s staff as the Ways and Means Committee’s chief trade lawyer.Mr. Neal declined to elaborate on conversations he’d had with Ms. Tai about pursuing trade deals with the European Union, but said, “I think we’re in broad agreement on the nature of the challenge.”Mr. Neal pointed to the United States-Mexico-Canada Agreement as a “blueprint” for new trade pacts. The accord, the successor to the North American Free Trade Agreement, was negotiated by Mr. Trump and revised by congressional Democrats, including Mr. Neal and Ms. Tai, before going into force this year.“What we were able to do with U.S.M.C.A. in terms of environment, labor standards, enforcement — I think we have some momentum,” Mr. Neal said. He said he was continuing to work to drum up support for using a European trade deal to counter China’s influence around the globe.In his statement on Friday, Mr. Neal said pursuing a trade deal with the Europe Union would be a “strategically sound choice” as the United States tried to compete economically with China and rebuild its economy from the pandemic recession.He urged the Biden administration to engage with allies in Europe and elsewhere to “formulate a strategic, far-reaching, forward-looking, robust package of programs and investments to defend against anti-competitive, anti-democratic influences of China’s policies.”AdvertisementContinue reading the main story More