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Debt Limits, Trust, and Optimism

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Get ready for the debt limit crisis. Treasury warned that it may have to take its usual “extraordinary measures” to keep the federal government funded after July 31. It added, however, “In light of the substantial Covid-related uncertainty about receipts and outlays in the coming months, it is very difficult to predict how long extraordinary measures might last… Treasury is evaluating a range of potential scenarios, including some in which extraordinary measures could be exhausted much more quickly than in prior debt limit episodes.”

Ways & Means Moves to delay RMDs yet again. In what is becoming an annual event, Congress is yet again looking to delay the age at which retirees must take required minimum distributions (RMDs) from retirement account. In 2019, they raised the age from 70.5 to 72. Last year they suspended the distributions entirely. This year the House tax panel wants to raise the age to 75. TPC’s Howard Gleckman says the idea is highly regressive and very expensive.  

How do Americans feel about new federal spending and tax increases? Confused. A Harvard CAPS-Harris poll of Americans finds that 65 percent support new spending on health care, child care and other social welfare programs. But 68 percent say that spending should rely on current available funding. Sixty percent say no to raising federal taxes, and only 29 percent believe the federal budget should have annual deficits. 

PWBM study: President Biden’s American Families Plan would slow  the economy. The Penn Wharton Budget Model concludes that Biden’s American Families Plan would cost about $700 billion more than the $1.8 billion the White House estimates and decrease gross domestic product by 0.4 percent in 2050 compared to current law. 

Should there be a federal tax incentive for individuals to get the COVID-19 vaccine? The Tax Hound takes a look at vaccine hesitancy and methods businesses, states, and local governments are using to overcome it. Would a federal tax credit encourage vaccination? It depends on who you ask… and who you trust.

Global minimum tax talks continue, optimism grows. United Kingdom finance minister Rishi Sunak said the British government is open to the US proposal for a minimum corporate tax rate, as long as there’s a fairer split of tax revenues from US tech giants. Will there be a global agreement on cross-border tax reform by this summer? Sort of. Maybe. “Pascal Saint-Amans, the head of tax for the Organization for Economic Cooperation and Development, predicted key issues may be resolved by July with a deal by October. Meanwhile, Amazon, with European revenues of €44 billion in 2020, ended up paying no corporate tax to Luxembourg, home to Amazon’s European headquarters.

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. Email Renu Zaretsky at dailydeduction@taxpolicycenter.org.

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