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A bipartisan group of 10 U.S. senators said on Thursday it had reached agreement on a framework for a proposed infrastructure spending bill that would not include any tax increases. While the group, which includes Sens. Kyrsten Sinema (D-AZ), Rob Portman (R-OH) and Joe Manchin (D-WV). didn’t reveal details of the plan in its statement, people familiar with the agreement said it called for $579bn above expected future federal spending on infrastructure. The overall proposal would spend $974bn over five years and $1.2tn if it continued over eight years. Republicans said the infrastructure investments wouldn’t be paid for by tax increases, but lawmakers have been tight-lipped about how they would fund the package, expected to be the most contentious part of the negotiations. Sen. Mitt Romney (R-UT), another member of the group, said earlier Thursday that the group was looking at indexing the gas tax to inflation for the first time since 1993. A White House spokesman said Mr. Biden appreciated the group’s plan.

 

New York Times

Reuters

Wall Street Journal

The Treasury Department estimates that the difference between how much Americans owe in taxes and how much they actually pay will balloon to $7tn over the next decade. Deputy Assistant Secretary Mark Mazur told Congress on Thursday that the estimate of the gross tax gap is around $580m for 2019 alone, and that it will worsen over the coming years with more funding for the IRS. He noted that the agency's budget has been reduced by 20% over the last 10 years, resulting in a raft of staff layoffs and a marked decline in audit rates. Mazur’s remarks came one day after five former Treasury secretaries ﹘ Lawrence Summers, Robert Rubin, Henry Paulson, Jacob Lew and Timothy Geithner ﹘ urged lawmakers in a New York Times op-ed to approve much of the Biden administration’s budget for the tax collector. “Reasonable people can disagree on the magnitude of particular tax rate increases,” the quintet added. “But on this issue, all should agree, including members of Congress of both parties: Giving the IRS the tools it needs to improve compliance will raise significant revenue and create a fairer, more efficient system of tax administration," they wrote.

 

CNBC	New York Times

The IRS has issued a reminder to taxpayers who pay estimated taxes that they have until June 15th to pay their estimated tax payment for the second quarter of tax year 2021 without incurring a penalty. Individuals, including sole proprietors, partners, and S corporation shareholders, can avoid an underpayment penalty by owing less than USD1,000 at tax time or by paying most of their taxes during the year. Special rules apply to some groups of taxpayers, such as farmers, fishermen, certain higher income taxpayers, casualty and disaster victims, those who recently became disabled, recent retirees, and those who receive income unevenly during the year. Generally, taxpayers should make estimated tax payments in four equal amounts to avoid a penalty. Third quarter payments are due September 15th and the final estimated tax payment for tax year 2021 is due on January 17th 2022.

 

Tax News

The number of Americans applying for unemployment benefits fell for the sixth straight week as the U.S. economy reopens rapidly after being held back for months by the coronavirus pandemic. Claims dropped to 376,000, from 385,000 a week earlier, the Labor Department said Thursday, down to the lowest level since the pandemic hit last spring.  Nearly 3.5m were receiving traditional state unemployment benefits the week of May 29th, down by 258,000 from 3.8m the week before. Last week’s drop in initial claims was led by Pennsylvania and California, which are keeping benefits in place until September.

 

Bloomberg

Chicago Tribune

Wall Street Journal

The U.S. economy’s rebound from the pandemic is driving the biggest surge in inflation in nearly 13 years, with consumer prices rising in May by 5% from a year ago. The Labor Department said last month’s increase in the consumer-price index was the largest since August 2008, when the reading rose 5.4%. The core-price index, which excludes the often-volatile categories of food and energy, jumped 3.8% in May from the year before—the largest increase for that reading since June 1992. Prices for used cars and trucks leapt 7.3% from the previous month, driving one-third of the rise in the overall index. The indexes for furniture, airline fares and apparel also rose sharply in May. Gus Faucher, chief economist at PNC Financial Services Group, said that sharp rises continue to be concentrated in parts of the economy that were most whipsawed by the pandemic - in prices for used cars, airfares and hotel stays, for example. “That suggests that this is part of the dislocation from the reopening, and I would expect that…inflation will settle down later this year,” Mr. Faucher said. “When you take a step back and look broadly at inflation throughout the economy, there are lots of areas where prices move very slowly, and it’s going to take a lot to get a sustained acceleration beyond these temporary factors.”

 

Chicago Tribune

Market Watch

Wall Street Journal

Europe is preparing legislation that would jolt the rules of international trade by taxing imported goods based on the greenhouse gases emitted to make them. The 27-nation bloc says it wants to stop polluting industries from shifting production outside Europe to avoid the bloc’s emissions limits and then exporting back into the EU. The proposal would also use the EU’s economic heft to send a powerful signal for other countries to start regulating carbon emissions. U.S. companies worry the proposal would create a web of new red tape hindering companies’ access to the European market; it would establish a new agency to enforce the rules and certify private companies that importers would need to hire to calculate the carbon content of goods produced overseas. Importers of goods covered by the levy—called a carbon border adjustment mechanism—would need to be authorized by the new agency, according to the draft proposal. Officials say the legislation would create a big new market for firms with the expertise to calculate the so-called carbon content of imports. Leaders from the G7 nations will address the international response to climate change at a summit in southwestern England, beginning today.

 

Wall Street Journal

Hin Leong Trading, a failed oil trader in Singapore that owes creditors more than $3.5bn, is suing Deloitte alleging the firm failed to detect “serious irregularities” in its financial statements for more than a decade. “The material misstatements in the plaintiff's audited financial statements led to various banks and financial institutions being grossly misled as to the financial health and state of affairs,” Hin Leong claimed in the suit. “Deloitte knew or ought to have known that these banks and financial institutions were intended users of the plaintiff's audited financial statements and would have relied on the same to extend financing.”

 

Bloomberg