October Tax News

 

In this article, we take aim at a moving target: the current status of the $1.2 trillion American Jobs Plan and The American Families Plan ($3.5 trillion). As we were writing this newsletter, Senate Majority Leader Chuck Schumer and Senator Joe Manchin were meeting with President Biden, and House Speaker Nancy Pelosi told reporters that there was a plan to vote on the bipartisan infrastructure bill this week. We also share a few ideas about a problem that will be with us for the foreseeable future: widespread supply chain interruptions. And last, but certainly not least, we’ve added a new feature to this newsletter: Keeping Current with Culture. Check it out and let us know what you think!

 

The American Jobs Plan is now the Infrastructure and Jobs Act

Since we described this Plan in our April newsletter, this $1.2 trillion infrastructure package passed the Senate in early August. It has yet to pass the House and members of the House Progressive Caucus have said they will not vote on this bill unless the Senate passes the $3.5 trillion American Family Act. By enacting Senate Amendment 2137 to H.R. 3684, the Congressional Budget Office estimates that the Plan “would add $256 billion to projected deficits over” the next 10 years. 

 

The Build Back Better Act

As proposed, President Biden’s plan was a $3.5 trillion package (over 10 years) of tax cuts and spending programs. It has been the focus of negotiations among members of Congress and between Congress and the White House. As a result of objections raised by Democratic Senators Joe Manchin and Krysten Sinema, this bill will not likely include a tax increase on the wealthy (raising the top individual rate 39.6% from 37%) or corporations (raising the rate from 21% to 28%). Congressional Democrats countered with 1) a “billionaires income tax” that would affect individuals with more than $1 billion in assets or who report increases of $100 million or more for three years in a row; and 2) a minimum 15% tax on corporations with $1+ billion in profits. Senator Sinema opposes the billionaires tax and has indicated that she supports the corporate profits tax

 

Negotiations between Congress and the White House are ongoing, but here are a few of the compromises that insiders predict will cut $3.5 trillion in spending to around $2 trillion. 

 

Healthcare

The President’s plan did not add dental, vision, and hearing care to Medicare, but the White House agreed to support Sen. Bernie Sanders’ proposal to extend these coverages to Medicare beneficiaries. This provision was estimated to cost $380 billion. That number will be closer to $150 billion if Medicare instead includes an $800 voucher for dental care and replaces its hearing benefit with the FDA’s rule to make hearing aids available over the counter. As of October 22nd, there was no agreement on vision care.

 

Taxes

The President’s Plan called for extending the Child Tax Credit through 2025, ($2,000 per child to $3,000), making permanent the Child and Dependent Care Tax (credit for up to 1/2 of a family’s spending on childcare for children under age 13 up to set limits). It also proposed giving the IRS the power to regulate certain types of paid tax preparers. 

 

Prescription Drugs and Health Insurance

Also in the President’s Plan was lowering prescription drug costs “by letting Medicare negotiate prices, reducing health insurance premiums and deductibles for those who buy coverage on their own, creating a public option and the option for people to enroll in Medicare at age 60 and closing the Medicaid coverage gap.” In September, “The House Energy and Commerce Committee voted to drop the proposal from its piece of Biden’s plan”; while the House Ways and Means Committee approved nearly identical drug-pricing language. Some House Democrats are lobbying for greater subsidies for individuals purchasing insurance on the public exchanges, and discussions continue regarding the duration of any subsidies because duration directly influences the cost of this proposal. 

 

Tributum

Did you know that the tax individuals paid to the Roman state was called a “tributum?” This tax took two forms: a land tax (tributum soli) and a poll tax (tributum capitis). 

 

 

Tips For Managing Today’s Supply Chain Blocks

From computer chips to Halloween candy, manufacturers and consumers find many shelves empty. A Forbes article from early September provides a great summary of the causes and scope of the supply chain problem. In response, the White House says it has a plan to keep the Port of Los Angeles open 24/7, and the Transportation Department is working with states to issue more commercial vehicle licenses to resolve the trucker shortage, and yet, significant obstacles remain. So, what is a consumer to do?

 

Tip 1: Remember, this isn’t our first rodeo.

Remember the gas shortages in the 1970s? Maybe food rationing in the 1940s? We survived these events, and we’ll survive this one.

 

Tip 2: Order early.

That item that you had been able to have at your door in 24 hours or a week? The meal you could order and 30 minutes later it would arrive at your door? Consider ordering dinner 90 minutes before you plan to eat and order weeks, if not months, before needing an item.

 

Tip 3: Be flexible.

Rather than insist on the couch or teapot that has all the features you want, consider buying a couch off the showroom floor and a teapot in your second (or third!) favorite color. 

 

Tip 4: Lower Expectations.

We admit it: As consumers, we’re used to getting what we want, when we want it, and we like it that way! But we’re in a different world right now, and until we solve labor, warehouse, and trucker shortages, rein in soaring shipping costs and container prices and unclog the ports, our best suggestion is to lower our expectations. 

 

 

Keeping Current with Culture

We’re adding a new feature to our newsletter: Keeping Current with Culture. Look for cultural events, issues, or phenomena that have caught our attention without being left, right, red or blue. We hope you’ll enjoy reading this section as much as we enjoy writing it!

 

If you aren’t on TikTok, you may not have heard of Poodles. This 13-year-od pug is videoed nearly every morning by his owner and over 3 million followers watch to see whether Poodles stands up or not. If he stands, it’s “a bones day;” in other words, a good day to take a risk, maybe go out and live a little. If Poodles flops back into bed, that’s “a no-bones day.” How many viewers decide whether to engage in certain activities based on the type of day Poodles predicts, we can’t say. See for yourself.

 

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