Treasury Secretary Janet Yellen’s testimony before the Senate Finance Committee highlighted some of the expected debates around tax issues, as much of the 2017 Tax Cuts and Jobs Act will expire next year.
The Biden administration estimates its budget would raise more than $4 trillion in net revenue over 10 years. While much of the budget recycles previous tax proposals, it also introduced new revenue-raisers, including an increase of the new corporate alternative minimum tax from 15% to 21%, an expansion of the limit on deducting compensation exceeding $1 million under Section 162(m), and further increasing IRS funding by more than $100 billion for the next 10 years.
Yellen acknowledged that the administration would seek to preserve the current income tax brackets for filers with income below $400,000 but would not commit to maintaining the current standard deduction level, which also sunsets at the end of next year.
Yellen generally sought to avoid statements that could box the administration into negotiating positions should President Joe Biden be re-elected and defended Treasury’s participation in multilateral OECD talks around the taxation of multinational corporations.
“We’re attempting to negotiate in the OECD a significant Pillar 1 agreement that will bring significant benefits to American businesses that have been hit with unfair and discriminatory tax burdens in many parts of the world,” said Yellen, while defending criticisms that the OECD framework will hurt U.S. businesses while sending billions in tax revenue overseas. Yellen argued that the UTPR and Pillar 2 portions of that international agreement would increase revenues for the federal government.
Questioned about Biden administration efforts to eliminate tax benefits for fossil fuel companies, Yellen said that such provisions need to be eliminated to allow renewable energy sources to grow. She later amended that statement by saying the Biden administration seeks to create a “level playing field” for renewables.
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