Members of President Joe Biden’s economic team generally support nominating Federal Reserve Chairman Jerome Powell to a second term, but growing resistance from prominent Democrats including Sen. Elizabeth Warren (D-MA) could lead to his replacement, according to people familiar with the matter. Mr. Powell, who was appointed to his first term by former President Donald Trump, has received high marks from some Democrats for steering the central bank toward a paradigm shift that has placed greater attention on reducing unemployment. However, the progressive wing of the party is less enamoured with his inclinations towards easing financial regulations that were put in place after the 2008 crisis. Some inside the administration see reappointing Mr. Powell as the safest option given a host of vexing economic issues right now, including coming votes on an infrastructure spending bill, higher-than-expected inflation and rising Covid-19 cases from the Delta variant, according to people familiar with deliberations. If Mr. Powell isn’t given a new four-year term next February, when his current term expires, the leading contender for the job is Fed governor Lael Brainard, an economist appointed to the board in 2014 by former President Barack Obama.
Forty percent of recent college graduates and students want fully in-person work environments, compared with just 12% of office workers overall, surveys have found. Young people say they want office community and amenities, in-person feedback, and mentoring.
U.S. consumers’ expectations for inflation over the medium term rose to an eight-year high in July, according to a Federal Reserve Bank of New York survey. Median expectations for inflation over the next year stayed at a series high of 4.8% in July, following a substantial jump in June, according to the monthly survey. Expectations for what inflation will be over the next three years increased slightly to a median of 3.7% from 3.6% in June, reaching the highest level since August 2013. The mean perceived probability of becoming unemployed over the next year rose to 12.2%, but was still the second lowest reading for the survey launched in 2013.
The IRS has issued its annual inflation-adjusted update of depreciation limitations for passenger automobiles (including passenger vans and trucks) placed in service in 2021. For passenger automobiles to which bonus first-year depreciation deduction applies and that are acquired after Sept. 27, 2017, and placed in service during calendar year 2021, the depreciation limit under Sec. 280F(d)(7) is $18,200 for the first tax year (an increase of $100 from 2020); $16,400 for the second tax year (an increase of $300); $9,800 for the third tax year (an increase of $100); and $5,860 for each succeeding year (an increase of $100). For passenger automobiles to which no bonus first-year depreciation applies, the depreciation limit under Sec. 280F(d)(7) is $10,200 for the first tax year; $16,400 for the second tax year; $9,800 for the third tax year; and $5,860 for each succeeding year.
Imagine spending years training to be the best at a sport. You sacrifice time with family and friends to be the greatest in the world. Then the Olympics come around and you win a gold medal. Finally, after devoting years of time and effort to be the best, you have a medal that represents all your hard work. That medal is likely invaluable to you. But what about the IRS? Are they going to force you to pay tax on the medal?
The Senate has approved a $1 trillion infrastructure plan with a coalition of Democrats and Republicans joining to deliver a cornerstone of President Joe Biden’s agenda.
Large employers are starting to require that at least some employees get vaccinated against the coronavirus. The Equal Employment Opportunity Commission has indicated companies can implement a vaccine mandate if it complies with the Americans with Disabilities Act and the Civil Rights Act of 1964.
A group of 33 congressmen is campaigning to remove or raise a $10,000 cap on the state and local tax deduction, saying adjustment is needed to bolster the economy of high-tax areas and to keep high earners from moving away.
The Biden administration is extending the pause on federal student-loan payments and interest through Jan. 31, 2022. President Biden said this will give the Education Department and borrowers additional time to prepare to restart payments and will also "ensure a smoother transition that minimizes loan defaults and delinquencies."
Sen. Elizabeth Warren (D-MA) is planning to put forward a minimum tax on the profits of the nation’s richest companies, as part of Democrats’ $3.5T economic and social policy package. The Real Corporate Profits Tax Act would require the most profitable companies to pay a 7% tax on the earnings they report to investors, known as their annual book value, above $100M. An economic analysis from Gabriel Zucman and Emmanuel Saez, economic professors at the University of California, Berkeley, estimate that about 1,300 public corporations would be impacted by the policy, generating close to $700B between 2023 and 2032.
The FASB has endorsed a recommendation from its Private Company Council (PCC) to allow a practical expedient for a private company to determine the current price input of equity-classified share-based awards issued to both employees and nonemployees. Aligning the accounting treatment with the way private companies are required under the tax regulations from the Treasury and the IRS to account for stock options and other types of equity compensation would make it easier for them to deal with the complexities of accounting and tax rules. The PCC also decided that if a private company opts to elect the practical expedient, the business would be required to apply it on a measurement-date-by-measurement-date basis; use a prospective transition method; and disclose that it has applied the practical expedient.
The Treasury Department and the Internal Revenue Service have issued further guidance on the employee retention credit, including guidance for employers who pay qualified wages after June 30, 2021, and before January 1, 2022, and additional guidance on miscellaneous issues that apply to the employee retention credit in both 2020 and 2021.
Nebraska, which had the lowest construction unemployment rate among the states, had its lowest June rate on record. This is the fourth month in a row the state has set an all-time low for the month. Idaho, with the second lowest rate, also had its lowest June rate since June 2017. Georgia, with the fourth lowest rate, posted its lowest June rate on record. States with the highest rates were California, West Virginia, New Mexico, New York, and New Jersey.
Spending on Nebraska legislative races was up 30% in 2020 to an average of $144,468 per candidate, according to Nebraska Accountability and Disclosure records. Legislators cite rising costs and the importance of door-to-door campaigning in Nebraska as factors. They also say the complexity of reaching voters in a polarized political world and the impassioned donations it inspires play a role, in addition to the need to safeguard against outside attacks. The pay may be low, but the opportunity to make a difference drives political interest, say senators interviewed.
A new survey shows that as many as 75% of senior finance and accounting professionals are not yet compliant with the new ASC 842 lease accounting standards. Lease optimization software provider Visual Lease's report was informed by a proprietary survey of 500 senior finance and accounting professionals at private organizations with more than 1,000 employees. It excludes public sector organizations and governmental entities, which have to comply with a similar lease accounting standard. Despite the significant business opportunity that comes with lease accounting compliance, of the 75% of surveyed companies who are not yet fully compliant, nearly half (46%) are less than halfway through or have not yet begun the process, while one in five admit that achieving full compliance has been a low business priority. With the December 2021 deadline for private companies less than five months away, two in five respondents (40%) are only somewhat, not very, or not at all confident about their organization being ready to reach full compliance with ASC 842.
A bipartisan infrastructure bill to come under consideration in Congress this week would end a tax break crafted to help businesses struggling during the pandemic. The employee retention tax credit, worth up to $28,000 per employee kept on the payroll in 2021, would end September 30th under the legislation that the Senate is expected to pass this week. The House, however, is on recess until September 20th and wouldn’t take up the bill until the fall. Ending it early would save $8.2bn that lawmakers can use to offset some of the $550bn in new spending for transportation and energy infrastructure in the bill, according to an estimate from the Joint Committee on Taxation. The employee retention tax credit was initially created in the March 2020 Cares Act as an alternative relief program for businesses that didn’t qualify for PPP loans, but not many companies signed up for the credit. Congress subsequently amended and expanded the tax credit twice - once in December 2020 and again March 2021 - to widen the universe of companies that could qualify for the tax cut, including business that already claimed PPP money.
U.S. manufacturing continued to grow in July, though the pace slowed for the second straight month as spending rotates back to services from goods and shortages of raw materials persist. The Institute for Supply Management (ISM) said on Monday its index of national factory activity fell to 59.5 last month, from 60.6 in June. Although it was the lowest reading since January, it was still above the 50-mark separating expansion from contraction. The ISM survey’s forward-looking new orders sub-index fell to a reading of 64.9 last month from 66.0 in June. Businesses depleted inventories at a rapid clip in the second quarter. Stocks at retailers are well below normal levels. Economists at Goldman Sachs expect retail and auto inventories will return back to normal levels in mid-2022.
The real possibility of higher capital gains rates has fueled interest by investors in opportunity zone funds. “There have been several rounds of proposed regulations, final regulations and changes from COVID,” noted Paul Gevertzman, partner and leader of Anchin’s economic opportunity zones group. The initial incentive was the deferral of capital gains placed into an opportunity zone fund, with 15% forgiveness if the investment was held for seven years, until 2026. “That’s no longer possible, but an investor can still get a 10% ‘haircut’ on the taxable amount of their investment if they hold it for at least five years by the end of 2026,” he said. “That’s a secondary benefit that goes away after 2021.” The real benefit is the 100% exclusion of tax on the appreciation of assets placed into the fund, Mr. Gevertzman said, noting that the 10% forgiveness after five years applies to the gain on the sale of assets put into the fund.
The IRS is sending another 1.5m refunds to people who were taxed on unemployment income last year before a portion of the benefits were made tax-free, the agency said in a statement. Refunds being sent by direct deposit are already being distributed, while paper checks will be sent from Friday. The average refund is $1,686.
The Nebraska Department of Revenue explains that through July 29, it will not require employers to change the state previously established in their payroll systems for income tax withholding purposes for employees telecommuting due to the COVID-19 pandemic; similarly, Nebraska’s special treatment for purposes of calculating employment levels under the Nebraska Advantage Act expires July 30.