Speaker McCarthy: Progress On GOP Spending Cuts Plan
House Speaker Kevin McCarthy told reporters that the House GOP is nearing an agreement on a spending cuts plan. McCarthy’s comments follow a recent letter exchange with President Biden on the debt ceiling. Biden has insisted that he won’t negotiate over the debt limit and that Republicans need to present their own budget plan. Meanwhile, some Republicans have downplayed the role of budget proposals, with Rep. Dusty Johnson (R-SD) stating that the “president’s budget did nothing to ripen this negotiation.”
Manchin is keeping a close eye on new Treasury guidance for electric vehicle (EV) subsidies. Sen. Joe Manchin (D-WV) has been concerned for months about Treasury’s implementation plans for the Inflation Reduction Act’s EV tax credit. Manchin has argued that Treasury’s interpretation of the new law runs counter to congressional intent on ensuring the credits incentivize the use of domestic supply chains. Now the senator has told reporters he’d be willing to take Treasury to court if the administration strays too far. “If it goes off the rails … I will do whatever I can – if that means going to court and I can do it, I’d do it,” Manchin said, per Reuters. Manchin also took to the pages of The Wall Street Journal to air his concerns.
The IRS is clamping down on tax avoidance involving assets from grantor trusts. A couple weeks ago, Democratic Senators sent a letter to Treasury Secretary Janet Yellen expressing concern that ultra-wealthy taxpayers are getting aggressive in the use of trusts to minimize their tax bills. Now the IRS is out with a ruling (Tax Notes paywall) that if an asset from a trust isn’t included in the gross income of the estate, there is no step-up in basis. In other words, the inheritor would owe capital gains taxes on the full growth in value, not just the increase after they take ownership.
The UK may start imposing carbon taxes on imports to complement its domestic carbon tax. Via Bloomberg, UK Prime Minister Rishi Sunak said the government is “making progress on a carbon border adjustment mechanism.” The EU is also devising its own carbon border adjustment plan. Some US policymakers have signaled an interest in a similar tax, but without a domestic version, it would more resemble a tariff and come with additional implementation challenges.
Arizona Gov. Katie Hobbs (D) vetoes legislation that would prevent localities from taxing groceries. Earlier this week, Hobbs vetoed legislation that would have prevented local governments from imposing sales taxes on groceries. In a letter explaining her decision, Hobbs said the move could prompt higher property taxes or service cuts. “The bill, originally unveiled as a way to mitigate inflation, does not take effect for more than two years,” the governor said. “What’s more, it does nothing for the more than 800,000 Arizonans who use SNAP and WIC benefits for their groceries, as these constituents are already exempt from the tax.”
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. While Renu Zaretsky is on vacation this week, you can email John Buhl at [email protected].
