TAX TAKE: What's Going On? Upcoming Greenbook Release Expected to Reveal New Revenue Raisers
Last week, as tensions reached a head and Russia invaded Ukraine, the Biden Administration focused its attention on imposing two rounds of economic sanctions against Russia (see here and here) and weighed the possibility of asking Congress to allocate funds to directly assist Ukraine. This week, the focus is back on domestic issues, as the president prepares to offer his State of the Union address. President Biden will likely address the legislative wins of his first year in office, including the passage of an additional COVID-19 relief package and the sweeping bipartisan infrastructure bill, while also previewing what lies ahead: the conference to reconcile differences in the United States Innovation and Competition Act (USICA)/America COMPETES Act bills and enhance U.S. competitiveness, as well as the need to pass additional social spending measures (and the attendant tax increases to pay for them) in a pared-down version of the Build Back Better Act (BBBA). The president will also likely use the opportunity to push for the swift Senate confirmation of Judge Ketanji Brown Jackson.
Shortly after the State of the Union address, President Biden will release his fiscal year 2023 budget, which will reflect his major policy priorities. Alongside the release of the budget, the Treasury Department will release its Greenbook, which will include tax revenue raisers that the Administration hopes will fund the initiatives outlined in the budget. Word on the street is that the Greenbook will not include many (if any) "old and cold" revenue raisers but will instead unveil new provisions that represent the next step in the Administration's broader tax policy vision. Of course, to do otherwise and include ideas that eventually surfaced in the tax title to the House-passed version of the BBBA might be interpreted as a sign of defeat – or at least tacit acknowledgment – that the bill (or perhaps even some of its components) has very little hope of passing this year. That being said, while the goal may be to utilize the Greenbook to unveil new proposals, revenue pressures may create the need to include prior proposals – whether they be proposals from last year's Greenbook that were not included in the BBBA or even proposals from the last Greenbook released by the Obama Administration.
In terms of revenue raisers one might expect in the Greenbook, the international provisions of the Internal Revenue Code are a perennial favorite for not only revenue, but radical reforms that might better reflect some Treasury Department officials' policy positions on the treatment of multinationals' cross-border activities. One might expect some further articulation of ways to more closely conform domestic provisions with the work that is ongoing at the OECD with respect to Pillars One and Two, especially considering we now have model rules for Pillar Two implementation and more information is being regularly released with regard to the mechanics of Pillar One. It is worth noting that the fate of any revenue raisers included in the Greenbook will change dramatically should the Republicans win control of the House after the mid-term elections, an outcome that many anticipate. #TaxTake
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On March 3, Jorge and Marc will moderate "Floyd's Panel: Legislative Update" at the Federal Bar Association's 46th Annual Tax Law Conference.
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