Tax Notes, a leading U.S. tax information service to which I subscribe, sponsored last Wednesday an hour-long Zoom meeting in which two leading tax economists and Richard E. Neal, the chair of the House Ways and Means Committee, made forecasts about pending Congressional legislation on current U.S. tax and economic issues.
I attended the Tax Notes meeting. As readers will know, this column usually deals with COVID-related federal and New Hampshire laws and orders and with their New Hampshire impact. This is a one-week break of sorts to tell you the Tax Notes panel’s predictions as I interpreted them. I hope these predictions will interest you, and, personally, I hope they will pan out. If they do, the benefits to Americans, in general, and to New Hampshire, in particular, will be massive.
Despite their frequent and sometimes vicious partisan attacks on one another, Democrats and Republicans are both aware of the extreme gravity of current American health, economic and racial issues. Their answers to these issues will be deeply bipartisan — and powerful. And if passed, they could be revolutionary.
— Because of the coronavirus pandemic, tax revenues available to states and localities will decline by at least 25% in 2020 and probably for years thereafter. The only realistic solution is massive federal contributions. In the Heroes Act in its final form, Congress will make those contributions.
— Without the extension of current federal tax credits, hundreds of thousands of American businesses will have to terminate millions of their current employees. In the Heroes Act, Congress will extend these credits.
— Although current statistics estimate that 40 million Americans are now unemployed, this estimate is undoubtedly low. We need to enact a vast new infrastructure program, not only because our current infrastructure is gravely deficient but even more so to provide millions of jobs. This means new highways, harbors, airports, public buildings, dams, bridges, sewers, power supplies, everything. In the Heroes Act or thereafter, Congress will enact that program.
— Because of the pandemic, millions of students of every age will have to continue their education online; but the families of many of these students lack computers and online access. In the Heroes Act or thereafter, Congress will remedy this lack.
— Millions of coronavirus victims lack and will continue to lack employee health insurance and cannot afford health care. In the Heroes Act or thereafter, Congress will finance this care.
— Congress will repeal major provisions of the 2017 Tax Cuts and Jobs Act that have increased the federal income taxes of millions of individuals and families.
— To provide the above benefits to Americans, Congress will have to substantially increase federal income taxes – and not only on the very wealthy but also on the middle class. Congress won’t raise these taxes now, but it will when the economy begins to recover.
— Because it lacks sufficient enforcement funds and personnel, the IRS has long been unable to collect at least $400 billion a year owed but evaded by taxpayers. Congress will provide the IRS with substantial new collection capabilities.
— To enact the above legislation, Congress will act before the August 2020 Democratic and Republican conventions. Because it must.
John Cunningham is a Concord tax and business lawyer. He has published “Limited Liability Company Operating Agreements” and “Maximizing Pass-Through Deductions under Internal Revenue Code Section 199A”. Both are the leading books in their fields.