An increase in income tax rate means you'll pay a higher percentage of your income to the government. This directly reduces your disposable income, the money you have left after taxes for spending or saving. This can make it harder to afford basic necessities, save for retirement, or invest in your future.
Kamala Harris’ Rise to the Top of the Ticket Renews Attention to Her Tax Policy Proposals: On July 21, President Joe Biden announced his withdrawal from the 2024 presidential race and endorsed Vice President Kamala Harris as the Democratic nominee for president of the United States. With Harris now the front-runner for the nomination, the tax policy proposals from her career in the Senate and her 2020 presidential campaign have come under renewed scrutiny.
J.D. Vance’s Tax Policies Demonstrate Populist Bent: On July 15, former President and Republican presidential nominee Donald Trump selected Sen. J.D. Vance (R-OH) as his running mate for the 2024 presidential election, thrusting the 39-year-old first-term senator—and his policy proposals—into the national spotlight. Once a critic of the former president, particularly during his 2016 presidential campaign, Vance has become one of Trump’s fiercest allies during the former president’s first term. At the same time, many of Vance’s policy proposals, including those in the tax space, have undergone a similar evolution.
Tax-Writing Committees Continue Preparations for 2025: Over the last few weeks, members from the Senate Finance and House Ways and Means committees have been meeting to prepare for tax policy discussions in 2025 against the looming expiration of key tax provisions of the Tax Cuts and Jobs Act (TCJA). Ways and Means Republicans have been particularly active, holding several field events, roundtables and listening sessions to understand constituents’ concerns and priorities with respect to TCJA’s expiring policies. These events provide particular insight into the issue areas on which the committee’s 10 “Tax Teams” are focusing their efforts. For example, the “Rural America” Tax Team, led by Rep. Adrian Smith (R-NE), is examining the federal estate tax, rural development and tax deductions for heavy machinery. The “Supply Chains” tax team, led by Rep. Carol Miller (R-WV), is primarily concerned with energy production, while the “Working Families” tax team, led by Rep. Brian Fitzpatrick (R-PA), is tackling a wide swath of issues related to individual taxes, including the alternative minimum tax and the state and local tax (SALT) deduction. On the other side of the aisle, Ways and Means Committee Democrats met for a second time with Joint Committee on Taxation Chief of Staff Thomas Barthold on July 8 to discuss “distributional” effects of the expiration of TCJA’s provisions.
Senate Democrats Urge Treasury Department to Improve Section 45V Tax Credit: In a July 11 letter, 13 Senate Democrats urged Treasury Secretary Janet Yellen to reconsider proposed regulations on the Section 45V Clean Hydrogen Production Credit, enacted under the Inflation Reduction Act (Pub. L. 117-169). The lawmakers offered alternative compliance approaches for each of the so-called “three pillars” concerning clean electricity used in hydrogen production: incrementality, temporal matching and deliverability. To improve incrementality, the senators called on the Treasury Department not to impose clean energy generation requirements for facilities located in a state with clean energy mandates or in a grid region with significant rates of emissions mitigation. They added that all hydroelectric and nuclear facilities that receive license extensions after section 45V became effective should be exempt from the requirements. With regard to temporal matching, the lawmakers urged the Treasury Department to exempt any temporal matching requirements for projects that begin construction before Jan. 1, 2028, and establish monthly matching requirements for those that begin construction between 2028 and 2032. The letter also outlined how the Treasury Department can improve the tax credit’s deliverability requirements, urging that regions lacking sufficient clean energy sources should receive an allowance when they need to access clean power for hydrogen production beyond the proposed regionality boundaries. The senators also asked the Treasury Department to allow hydrogen production pathways that use renewable natural gas to qualify for the credit. The letter concluded with a call for final regulations on the clean hydrogen credit by Aug. 16.
Consensus Beginning to Be Reached on OECD’s Pillar One Framework Text: On July 17, Chris Miller, a transfer pricing analyst with the Organisation for Economic Co-operation and Development (OECD), indicated that negotiators have begun to reach agreements on several portions of the OECD’s Pillar One global tax agreement. Miller said that “consensus has been achieved on nearly all aspects of the [multilateral convention] and the expanded Amount B framework,” and that the only outstanding issues are minor and affect a small number of jurisdictions. This follows after the target enactment date for Pillar One was moved multiple times, as it was originally planned to take effect at the end of 2023.
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