Biden Announces Spending to Reduce Racial Wealth Gap

By Yuval Rosenberg

Biden Announces Plans to Reduce Racial Wealth Gap

On the 100th anniversary of the massacre of Black citizens by a
racist mob in Tulsa, Oklahoma, the Biden administration released
details on new programs intended to reduce the long-standing racial
wealth gap in America.

The White House plan focuses on building wealth for Black
families by boosting minority-owned small businesses and expanding
access to homeownership. One initiative aims to increase federal
contracts with minority-owned small businesses by 50%, which the
administration says would translate into an extra $100 billion in
revenues for those businesses over five years. A second initiative
seeks to reduce racial discrimination in the housing market, with
Housing Secretary Marcia Fudge leading a task force examining
zoning laws and lending practices.

In addition to the initiatives announced Tuesday, the White
House said it will reverse rules made by the Trump administration
that weakened protections for minorities provided by the Fair
Housing Act.

Targeted spending in infrastructure plan: The White House
also highlighted ways that Biden’s infrastructure proposal, the
$2.3 trillion American Jobs Plan, would benefit minority racial
groups. Administration officials said that a $10 billion community
revitalization fund included in the proposal would target
historically underserved areas such as Greenwood, the neighborhood
in Tulsa destroyed a century ago. The proposal also includes $31
billion for investment in minority-owned businesses, while
historically black colleges and universities would share $46
billion in new funding with other schools that serve minority
populations.

A long and painful history: In a
statement, the White House drew a straight line
from the infamous racial violence in Tulsa a century ago to the
current low levels of wealth in Black households and communities.
“Because disparities in wealth compound like an interest rate, the
disinvestment in Black families in Tulsa and across the country
throughout our history is still felt sharply today,” the document
says. “The median Black American family has thirteen cents for
every one dollar in wealth held by White families.”

Still, some Black leaders expressed concerns about the White
House plan, and what it leaves out, with the NAACP criticizing the
lack of student loan forgiveness. “Student loan debt continues to
suppress the economic prosperity of Black Americans across the
nation,” NAACP President Derrick Johnson said in a statement. “You
cannot begin to address the racial wealth gap without addressing
the student loan debt crisis.”

The White House plan is also silent on the issue of reparations,
which some Black leaders have advocated.

A Make-or-Break Week for Infrastructure Talks

President Biden set a soft deadline of Memorial Day for
infrastructure talks with Republicans to yield significant
progress, saying that he was prepared to move ahead without GOP
support if necessary. Memorial Day has come and gone, but Biden is
keeping the talks going for at least
one more week. He will host Sen. Shelley Moore
Capito (R-WV), the Republican point person on infrastructure, at
the White House Wednesday afternoon for another round of
negotiations.

Capito and other Senate Republicans last week issued a $928
billion infrastructure plan, including just $257 billion in new
spending, to counter Biden’s revised $1.7 trillion proposal, which
is entirely new spending.

Capito told
“Fox News Sunday” that she spoke with Biden by
phone on Friday and he said, “Let’s get this done.” Capito said she
believes that means that the president’s “heart is in it” — but she
acknowledged that the two sides still have some fundamental
differences.

“We disagree on the definition of infrastructure and we've been
working with the president to bring it back to the physical core
idea of infrastructure that we’ve worked so well on in the past,”
she said, adding that Republicans continue to want to rely on user
fees and unused Covid relief funds rather than Biden’s proposed tax
hikes to pay for an infrastructure package.

‘Fish or cut bait’: Transportation Secretary Pete
Buttigieg told CNN’s “State of the Union” on Sunday that the White
House is “getting pretty close to a fish or cut bait moment” on the
bipartisan talks. “This can’t go on in terms of the condition of
our infrastructure. Therefore, the negotiations can’t go on forever
either,” he said.

Buttigieg said there needs to be a “clear direction” for the
infrastructure negotiations by next week, when senators return to
the capital.

Sen. Lindsey Graham (R-SC) said Tuesday morning that a
bipartisan infrastructure deal is “very possible,” adding “there’s
a deal to be had on an infrastructure package around a trillion
dollars if [Biden] wants to go down that road.”

White House allies reportedly expect Biden to make a decision on
using the process called budget reconciliation, which would allow
Democrat to pass a bill without Republican votes, by mid-June if
talks stall.

The bottom line: Time is running out and there are still
some differences that may prove too big to bridge. Goldman Sachs
economists said Friday that it’s hard to see how a deal comes
together. "Although bipartisan discussions on an infrastructure
package are continuing, the already low odds of success appear to
be dwindling further," economist Alec Phillips said in a note to
clients. The Goldman analyst said that Democrats will likely pass
one large, combined infrastructure package via reconciliation, with
House passage possibly coming in July and Senate approval waiting
until September or October.

The final package, Phillips said, will likely scale back Biden’s
plans and end up totaling slightly more than $3 trillion, with tax
increases offsetting about half that amount.

SALT Deduction Cap Didn’t Led to Exodus From High Tax States:
Report

The 2017 Republican tax law’s $10,000 cap on the deductibility
of state and local taxes did not lead taxpayers in high-tax states
to flee en masse to states without an income tax, such as
Florida and Texas, according to a Bloomberg News
analysis of IRS data.

Bloomberg’s Jonathan Levin reports that that tax overhaul “had a
negligible initial impact on the nation’s domestic migration
patterns” and there was no SALT cap bump for Florida, Texas or
Washington, which also has no income tax:

“In the first year after the cap was put in place,
zero-wage-tax states netted about $1.24 in new earnings from
migrants for every $100 already earned there -- slightly less than
the net migration rates in the previous three years. Florida, the
top destination among zero-tax states, netted $2.65, also a drop
from the previous years’ rates. …

“The net migration rate remained negative in high-tax
states including New York, New Jersey and California. But as with
the states at the opposite end of the tax spectrum, there was no
observable shift in trend. In fact, New York’s negative net
migration rate got slightly less negative.”


Read the full story at Bloomberg.

Number of the Day: $3.96 Billion

Media giant ViacomCBS and its corporate predecessors saved
roughly $4 billion by using a complex web of corporate tax shelters
in Barbados, the Bahamas, Luxembourg, the Netherlands and Britain,
according to a report published Tuesday by the Centre for Research
on Multinational Corporations, a nonprofit funded in part by the
Dutch Ministry of Foreign Affairs.

The New York Times’s Edmund Lee
reports: “Much of the $30 billion in non-U.S.
royalty revenue brought in by the company’s film and TV franchises,
such as ‘SpongeBob,’ ‘Star Trek’ and ‘Mission: Impossible,’ has not
been subject to corporate taxes, the study determined.”

The company called that study “deeply flawed and misleading” and
said it “demonstrates a fundamental misunderstanding of U.S. tax
law,” according to the Times.

Chart of the Day

President Biden has proposed raising the top federal
income tax rate to 39.6%, up from the current top rate of 37%. The
tax hike would raise $132 billion in revenue over five years, the
Treasury Department says, which Biden wants to use to help fund his
$1.8 trillion American Families Plan. Here’s a look at how the
threshold for the top tax bracket would change via a chart by

CNBC.

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