Washington Insider-- Monday
Fight Over Taxes Increases
Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
USDA's Vilsack: Administration 30x30 Plan Not a 'Land Grab'
The Biden administration's 30x30 plan to protect 30% of U.S. lands and ocean territory by 2030 not a "land grab," according to USDA Secretary Tom Vilsack.
The secretary told reporters, "This is not about land grabs, this is really about utilizing public lands and private working lands in a commitment to conservation." He said the department is reaching out to farmers for their suggestions about how to achieve the "30x30" and other goals, but that "there's no intention to take something away from folks," rather the moves are focused on encouraging adoption of climate-smart practices.
He also said the action to increase acreage levels enrolled in the Conservation Reserve Program (CRP) will not increase market prices for commodities.
But the National Grain and Feed Association (NGFA) cautioned that "drastically" increasing CRP could result in negative climate impacts. Mike Seyfert, president and CEO of the NGFA, said, "NGFA believes CRP should be targeted at the most environmentally sensitive portions of farms, and avoid enrollment of whole farms or large tracts of productive farmland. Programs that drastically increase acreage idling in the United States send market signals to competitors to plant more acres, resulting in negative climate and environmental impacts. We look forward to hearing additional details from USDA and working with the department to ensure this acreage is targeted for the most substantial environmental benefits while preserving U.S. agricultural productivity and competitiveness."
Former USDA Secretary Perdue Being Considered As Leader Of University Of Georgia
Atlanta TV station Fox 5 is reporting that the University System of Georgia is considering former USDA Secretary Sonny Perdue to become the next chancellor.
The station reported that a group of students is planning to protest the consideration of Perdue to lead the university system in the state.
"Students Against Sonny" has published a petition on Change.org and plans to hold a protest this week in front of the Board of Regents building in Atlanta.
Washington Insider: Fight Over Taxes Increases
The Hill is reporting this week that lawmakers are digging in for a "bitter fight over tax increases" that President Joe Biden is expected to propose in the coming days – which he says are necessary to pay for expensive infrastructure and family support bills.
The expected proposals, which largely hew to his campaign promises, would raise the corporate tax rate from 21% to 28%, implement a minimum corporate tax, nearly double taxes on investment gains for the wealthiest and tweak inheritance laws.
The announced corporate tax plans would cover a $2.3 trillion infrastructure plan dealing with transport, broadband, water and electricity. Capital gains and other proposals are being finalized ahead of next week's rollout of a so-called family infrastructure plan focusing on early education and home care that could run as high as $1.5 trillion.
Republicans, whose signature achievement under the Trump administration was a 2017 tax bill that cut taxes significantly are continuing to excoriate the proposals. "This is another economic blunder by the Biden Administration," said Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, which deals with taxation.
This time, President Biden is also confronting blowback from progressives such as Sen. Bernie Sanders, I-Vt., who are pushing for the corporate tax rate to return to its 2017 level of 35%. "We need a progressive tax system based on the ability to pay, not a regressive tax system that rewards the wealthy and the well connected," Sanders said in late March. Progressives want Biden to use the extra cash to pay for expanded health coverage.
Republicans are also torn between sacrificing their most recent crowning legislative achievement and proving that they are not obstructionists to popular proposals from a popular president.
A recent survey conducted by The New York Times and Survey Monkey found that two out of three American voters support Biden's American Jobs Plan, The Hill said. The White House has portrayed itself as open to negotiations on pay-fors, though Republicans remain skeptical after the president dismissed their COVID-19 offers and passed his last $1.9 trillion plan with only Democratic support.
"It's the beginning of a discussion," White House press secretary Jen Psaki said Thursday, adding that Biden's red line was his campaign promise to not raise taxes for people making under $400,000 a year.
Moderate Democratic Sen. Joe Manchin of West Virginia has said he prefers a negotiated bipartisan solution, but has drawn a line in the sand, arguing that corporate tax increase should not go beyond 25%.
Republicans presented their $568 billion infrastructure counter-offer Thursday and ruled out any corporate tax increases arguing that the bill should be funded through user fees and already-appropriated funds from the last COVID-19 relief measure.
Sen. Shelly Moore Capito, R-W.Va, who led the effort for the GOP response, said that increasing corporate rates was out of the question. "I think that's a non-negotiable red line," she said. "For me personally, that's a non-starter." But Republicans face an uphill battle with that approach, The Hill says.
"It definitely should be raised, because the break that they got from the Republicans was totally untoward and these corporations should be paying their fair share of taxes," Sen. Mazie Hirono D-Hawaii, said.
Senate Finance Committee Chairman Ron Wyden, D-Ore., said Democrats couldn't accept Capito's red line. "Their idea is that the biggest of the big corporations should not pay one penny in taxes," he said Thursday. "It's pretty hard to get to a bipartisan approach from that. You know, I always try to find common ground, but that's gonna be a stretch."
Republicans backing Capito's counterproposal agreed with Biden on one thing: They don't want to raise the gas tax, despite a push by big business groups hoping to stave off a corporate tax hike.
Complicating things further, a group of House Democrats have insisted that they will vote down any proposal that doesn't roll back limits on the state and local tax deduction, known as SALT.
The GOP tax law limited the deduction to $10,000, a move that largely affected the wealthy in blue states such as California and New York.
But eliminating the deduction would raise the price of legislation by $130 billion, half of which would accrue to millionaires. Progressive Reps. Alexandria Ocasio-Cortez, D-N.Y., and Kathleen Rice, D-N.Y., were the only New York Democrats not to sign onto the SALT letter.
Market watchers believe that ultimately Democrats will moderate their asks in order to secure support for passing their bills, whether that requires simply satisfying moderates such as Manchin for a budget reconciliation bill, or persuading 10 Republican Senators to join them in passing legislation through regular order.
A Thursday analysis from Goldman Sachs predicted that Biden's plans to raise capital gains from 20% to 39.6% on high earners would likely end up closer to 28%. "While it is possible that Congress might pass the proposal in its entirety, we think a moderated version is more likely in light of the razor-thin majorities in the House and Senate," analyst Jan Hatzius noted.
So, we will see. The tax plan will be a hard ask for both parties, and certainly is one producers should watch closely as they proceed this summer, Washington Insider believes.
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