Tax Pros Call on Congress to Delay Filing Deadline

By Yuval Rosenberg

Why Biden’s Win on Covid Relief Is a Big Deal

President Joe Biden’s $1.9 trillion Covid relief bill is on
track to become law on Wednesday, and while you may be
understandably most concerned about what it means for you — how big
a “stimulus check” you’ll get and
when you can expect it — the massive package
includes
plenty of other provisions that are likely to have
major effects on the country and add to the massive political
implications of the legislation. Here’s why the American Rescue
Plan could be an even bigger deal than you think.

It represents a monumental shift in policy thinking: The
bill itself and its path to passage illustrate how the political
landscape has changed since President Barack Obama’s roughly $800
billion stimulus package faced pushback from both Democrats and
Republicans in 2009. The Washington Post’s Jeff Stein
highlights the sea change in thinking about debt
and deficits:

“On the right, congressional Republicans may still fret about
higher deficits — but the most popular politician among their
voters does not. As a candidate and as president, Donald Trump blew
past Republican concerns about the deficit, pushing for trillions
in additional spending and tax cuts and running unprecedented
peacetime debt levels.
“And on the left, Democratic lawmakers have increasingly
learned to ignore fears about spending too much. Party leaders have
said they suffered crippling political defeats in the 2010s
precisely because they did not deliver enough meaningful economic
relief under Obama — a mistake that they see an opportunity to
correct under Biden. Democrats also repeatedly tout the 2017
Republican tax cut, which is expected to add approximately $2
trillion to the national debt, as a reason to be skeptical of GOP
concerns about fiscal restraint.”

Republicans opposed to the relief package may be criticizing its
size and content, but the party’s recent messaging has focused on
issues besides the rising debt. “Moderate vulnerable Democrats feel
a lot more freedom to vote for a big spending bill in the current
moment — because the polls suggest it’s popular, and because the
case against Democrats is being made on Dr. Seuss and Mr. Potato
Head, not the debt,” Dave Hopkins, a professor of political science
at Boston College, told Stein.

And, potentially, an equally monumental political change:
Democrats have portrayed the relief package as an opportunity to
show the American public that Ronald Reagan was wrong when he said,
“The nine most terrifying words in the English
language are: I'm from the government, and I'm here to help.”

Party leaders have touted the idea that the package can
demonstrate “that their government can work for them,” as Biden put
it, and “that government actually is making their lives better,” as
Senate Majority Leader Chuck Schumer (D-NY) said.

To some extent, that reflects the circumstances of the current
crisis and the requirements for an effective national pandemic
response — but Biden is making a bigger, longer-term bet, too, by
planning to follow up on the relief bill with a potentially larger
package investing in infrastructure and addressing climate
change.

“The $1.9 trillion bill, which passed the Senate on Saturday, is
a ‘BFD’ at both the ground level and the 10,000-foot one,” writes
Eric Levitz at
New York “The legislation’s immediate policy
consequences are profound and far-reaching, while its most
significant provisions represent paradigm shifts in the Democratic
Party’s approach to governance, which is to say the law could
plausibly mark a leftward realignment in American policymaking, at
least if Biden & Co. continue to govern in its spirit.”

But Democrats still have work to do: Progressives may be
heartened by the Biden plan, but Democrats still have a way to go
before they can really claim to have delivered that “leftward
realignment” in policymaking. The plan may be popular now, but
Democrats still have to sell their plan — and Republicans believe
they can turn public opinion against the legislation ahead of the
2022 midterm elections.

Beyond the messaging battles, Democrats still want to make
permanent some of the temporary social welfare benefits provided by
the legislation — namely, an increased child tax credit and more
generous subsidies for health insurance. “That task will be much
harder than passing the initial legislation,”
writes New York’s Jonathan Chait. Achieving it may
require tax increases that won’t be easy to pass, he says: “While
raising taxes on the rich is Democratic Party canon, getting 218
House Democrats and all 50 Senate Democrats to agree on a sizable
tax increase on the rich is hardly assured. Any one Senate
Democrat’s idiosyncratic objection can sink the whole
plan.”

Tax Break in Covid Relief Bill Leads to Calls for Congress to
Delay Filing Deadline

The Senate version of the $1.9 trillion Covid relief bill
includes a tax break on unemployment benefits that, if signed into
law, will no doubt be welcomed by those tallying up their 2020 tax
bills. The provision exempts the first $10,200 in jobless benefits
received last year from federal income taxes for households that
earned less than $150,000 — saving roughly 40 million taxpayers as
much as $25 billion.

The problem, as The Wall Street Journal’s Richard Rubin

reports, is that as of late February more than 45
million people have already filed their taxes for 2020. That means
millions of people may have to amend their returns to take
advantage of the rule change. On top of that, the IRS will need to
reprogram its computers to incorporate the new tax break. Both
situations will further stress a tax agency that is already
struggling to keep up during the pandemic.

Some tax professionals say it’s time for Congress to delay
tax day. “It makes it really hard on the tax practitioners,” one
accountant told Rubin. “Nobody really cares about us, but it just
makes it so difficult. You’re laughing. We cry.”

At least two lawmakers agree. Reps. Richard Neal (D-MA),
chair of the tax-writing House Ways and Means Committee, and Bill
Pascrell (D-NJ) released a statement Monday calling for a delay.
“Facing enormous strain and anxiety, taxpayers need flexibility
now,” they said. “We demand that the IRS announce an extension as
soon as possible.”

Former IRS Commissioner John Koskinen told Rubin that the
IRS would probably have to stop processing tax returns for a few
days if the tax break is signed into law in order to make the
necessary adjustments. “You really are trying to fix the plane when
you’re flying it,” he said.

About 4 in 10 Americans Still Facing Financial Losses in
Pandemic: Poll

A
new poll by the Associated Press and the NORC
Center for Public Affairs Research shows how divided Americans are
when it comes to their experiences with money during the pandemic.
About 44% of poll respondents said they are still experiencing a
loss of income due to Covid-19, while 50% said they weren’t seeing
any income losses at all.

Of the 44% reporting reduced incomes, most said the effect
was minor. Only 17% of poll respondents reported a major impact on
their current incomes.

About half of respondents said they had experienced some
kind of income loss over the nearly year-long course of the
pandemic. A quarter said someone in their household had been laid
off, and a third reported that someone in their household had
experienced a reduction in their work hours. The results varied for
different demographic groups, with Black (29%) and Hispanic (38%)
respondents reporting more layoffs than whites (21%).

“The poll’s findings reflect what some economists have
called a ‘K-shaped recovery,’ where there have been divergent
fortunes among Americans,” the AP said. “Those with office jobs
were able to transition to working from home while those who worked
in hard-hit industries such as entertainment, dining and travel
suffered. The poor have struggled to recover financially compared
to the wealthy and Black and Latino households have not bounced
back as well as their white counterparts.”

The poll of 1,434 people was conducted between February 25
and March 1 and has a margin of error of 3.4 percentage
points.

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