On Thursday, analysts spotlighted the news that the White House and congressional Democrats were moving toward dropping corporate tax increases they had wanted to include in the bill, as they hoped to forge a deal that could clear the Senate. A spending deal without corporate tax increases would be a potential boon to profits and share prices.

“A stay of execution on higher corporate tax rates would seem a potentially noteworthy development,” Daragh Maher, a currency analyst with HSBC Securities, wrote in a note to clients on Thursday.

An agreement among Democrats on what’s expected to be a roughly $2 trillion spending plan would also open the door to a separate $1 trillion bipartisan infrastructure plan moving through Congress. Progressives in the House are blocking the infrastructure bill until agreement is reached on the larger bill.

But the prospects for an agreement have helped to lift shares of major engineering and construction materials companies. Terex, which makes equipment used for handling construction materials like stone and asphalt, has jumped more than 5 percent this week. The asphalt maker Vulcan Materials has risen more than 4 percent. Dycom, which specializes in construction and engineering of telecommunication networking systems, was up more than 9 percent.

The renewed confidence remains fragile, with good reason. The coronavirus continues to affect business operations around the world, and the Delta variant demonstrated just how disruptive a new iteration of the virus can be.

Another lingering concern involves the higher costs companies face for everything from raw materials to shipping to labor. If they are unable to pass those higher costs on to consumers, it will cut into their profits.

“That would be big,” Mr. McKnight said. “That would be a material impact to the markets.”

But going into the final months of the year — traditionally a good time for stocks — the market also has plenty of reasons to push higher.

The recent weeks of bumpy trading may have chased shareholders with low confidence — sometimes known as “weak hands” on Wall Street — out of the market, offering potential bargains to long-term buyers.

“Interest rates are relatively stable. Earnings are booming. Covid cases, thankfully, are dropping precipitously in the U.S.,” Mr. Zemsky said. “The weak hands have left the markets and there’s plenty of jobs. So why shouldn’t we have new highs?”

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Treasury’s Janet Yellen Is Being Tested by Debt Limit Fight

Ms. Yellen’s task has been complicated by the fact that while she can readily convey the economic risks of default, the debt limit has become wrapped up in a larger partisan battle over Mr. Biden’s entire agenda, including the $3.5 trillion spending bill.

Republicans, including Mr. McConnell, have insisted that if Democrats want to pass a big spending bill, then they should bear responsibility for raising the borrowing limit. Democrats call that position nonsense, noting that the debt limit needs to be raised because of spending that lawmakers, including Republicans, have already approved.

“This seems to be some sort of high-stakes partisan poker on Capitol Hill, and that’s not what her background is,” said David Wessel, a senior economic fellow at the Brookings Institution who worked with Ms. Yellen at Brookings.

While lawmakers squabble on Capitol Hill, Ms. Yellen’s team at Treasury has been trying to buy as much time as possible. After a two-year suspension of the statutory debt limit expired at the end of July, Ms. Yellen has been employing an array of fiscal accounting tools known as “extraordinary measures” to stave off a default.

Uncertainty over the debt limit has yet to spook markets, but Ms. Yellen is receiving briefings multiple times a week by career staff on the state of the nation’s finances. They are keeping her informed about the use of extraordinary measures, such as suspending investments of the Exchange Stabilization Fund and suspending the issuing of new securities for the Civil Service Retirement and Disability Fund, and carefully reviewing Treasury’s cash balance. Because corporate tax receipts are coming in stronger than expected, the debt limit might not be breached until mid- to late October, Ms. Yellen has told lawmakers.

A Treasury spokeswoman said that Ms. Yellen is not considering fallback plans such as prioritizing debt payments if Congress fails to act, explaining that the only way for the government to address the debt ceiling is for lawmakers to raise or suspend the limit. However, she has reviewed some of the ideas that were developed by Treasury during the debt limit standoff of 2011, when partisan brinkmanship brought the nation to the cusp of default.

A new report from the Bipartisan Policy Center underscored the fact that if Congress fails to address the debt limit, Ms. Yellen will be left with no good options. If the true deadline is Oct. 15, for example, the Treasury Department would be approximately $265 billion short of paying all of its bills through mid-November. About 40 percent of the funds that are owed would go unpaid.

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Federal Reserve Expects to Raise Interest Rates in 2023

Federal Reserve officials left policy unchanged on Wednesday but moved up expectations for when they would first raise interest rates from rock bottom, a sign that a healing labor market and rising inflation were giving policymakers confidence that they would achieve their full employment and stable price goals in coming years.

Fed policymakers expect to make two interest rate increases by the end of 2023, the central bank’s updated summary of economic projections showed Wednesday. Previously, the median official had anticipated that rates would stay near zero — where they have been since March 2020 — at least into 2024. The Fed now sees rates rising to 0.6 percent by the end of 2023, up from 0.1 percent.

The significant upgrade comes as the economy is healing, and as Fed officials penciled in stronger growth in 2021, faster inflation and slightly quicker labor market progress next year.

“Progress on vaccinations has reduced the spread of Covid-19 in the United States,” the Fed said in a statement released at the conclusion of its June 15-16 policy meeting, one that contained several optimistic revisions. “Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.”

late April, and since it last released economic projections in March. Inflation data have come in faster than officials had expected, and consumer and market expectations for future inflation have climbed. Employers have been hiring more slowly than they were this spring, as job openings abound but it takes workers time to flow into them.

The Fed continued to call that inflation increase largely “transitory” in its new statement. It has consistently pledged to take a patient approach to monetary policy as the economic backdrop rapidly shifts.

Mr. Powell acknowledged that “inflation has come in above expectations” but suggested it was largely because of robust consumer demand coupled with shortages and bottlenecks as the economy reopens.

“Our expectation is that these high inflation readings that we’re seeing now will start to abate,” he said, adding that if prices moved up in a way that was inconsistent with the Fed’s goal, central bankers would be prepared to react by reducing monetary policy support.

The central bank made no changes on Wednesday to its main policy interest rate, which has been set at near zero since March 2020, helping keep borrowing cheap for households and businesses. The Fed will also continue to buy $120 billion in government-backed bonds each month, which keeps longer-term borrowing costs low and can bolster stock and other asset prices. Those policies work together to keep money flowing easily through the economy, fueling stronger demand that can help to speed up growth and job market healing.

Officials have pledged to continue to support the economy until the pandemic shock is well behind the United States. Specifically, they have said that they want to achieve “substantial” progress toward their two economic goals — maximum employment and stable inflation — before slowing their bond purchases. The bar for raising interest rates is even higher. Officials have said they want to see the job market back at full strength and inflation on track to average 2 percent over time before they will lift interest rates away from rock bottom.

a “number” of officials at the Fed’s April meeting suggested that they would like to start talking about how and when to begin the so-called taper soon, minutes from that gathering showed.

The Fed is buying $80 billion in Treasury bonds each month, and $40 billion in mortgage-backed securities. Those purchases have helped to push the central bank’s balance sheet holdings up to about $8 trillion — roughly twice as big as they were as recently as summer 2019.

Officials including Robert S. Kaplan, the president of the Federal Reserve Bank of Dallas, and Patrick Harker, the president of the Federal Reserve Bank of Philadelphia, have signaled that they think it would be appropriate to get those discussions going. Other important policymakers have sounded patient, with John Williams, the New York Fed president, saying that “we’re not near the substantial further progress marker,” in a June 3 Yahoo Finance interview.

Mr. Powell said on Wednesday that officials had begun “talking about talking about” slowing those bond purchases but that the central bank was not preparing to start tapering anytime soon.

“I expect that we’ll be able to say more about timing as we start to see more data,” Mr. Powell said.

Some Republican politicians have questioned whether emergency monetary policy settings remain necessary as the economy reopens and growth rebounds, the Fed has signaled over that the United States is in for a long period of central bank support.

preferred inflation gauge came in at 3.6 percent in April compared to the previous year and is likely to jump even higher in May. The more up-to-date Consumer Price Index was up 5 percent in the year through last month, partly as the figures were compared to very low readings last year.

Officials expect the current price pop to prove temporary, the product of one-off data quirks and the fact that demand is recovering faster than supply chains coming out of the pandemic. Markets seem to broadly share that view: While they have penciled in slightly higher inflation, that recent increase in expectations appears to be stabilizing at a level that is probably more or less consistent with the Fed’s goals.

Still, Wall Street strategists and politicians in Washington alike are watching for any sign that Fed officials have become more concerned about lasting price pressures as some stickier prices in the real economy — such as shelter costs — stabilize and increase.

If inflation does take off in a lasting way and the Fed has to lift interest rates to slow the economy and tame price pressures, that could be bad news. Rapid rate adjustments have a track record of causing recessions, which throw vulnerable workers out of jobs.

But the Fed tries to balance risks when setting policy, and so far, it has seen the risk of pulling back support early as the one to avoid. Millions of jobs are still missing since the start of the pandemic, and monetary policy could help to keep the economy recovering briskly so that displaced employees have a better chance of finding new work.

Alan Rappeport and Matt Phillips contributed reporting.

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Janet Yellen says interest rates might need to rise to keep economy from overheating.

Treasury Secretary Janet L. Yellen said higher interest rates might be needed to keep the economy from overheating given the large investments that the Biden administration is proposing to rebuild the nation’s infrastructure and remake its labor force.

The comments, shown on Tuesday at an event sponsored by The Atlantic, come amid heightened concern from some economists and businesses that the United States is in for a period of higher inflation as stimulus money flows through the economy and consumers begin spending again. The Treasury secretary has no role in setting interest rate policies.

Jerome H. Powell, the Federal Reserve chair, said last month that the central bank is unlikely to raise interest rates this year and wants to see further healing in the American economy before officials will consider pulling back their support by slowing government-backed bond purchases and lifting interest rates.

While the Fed is watching for signs of inflation, Mr. Powell and other Fed officials have said they believe any price spikes will be temporary and will not be sustained. On Monday, John C. Williams, president of the Federal Reserve Bank of New York, said that while the economy is recovering, “The data and conditions we are seeing now are not nearly enough” for the Fed’s policy-setting committee “to shift its monetary policy stance.”

spending approximately $4 trillion over a decade and would pay for the investments with tax increases on companies and the rich.

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Treasury Puts Taiwan on Notice for Currency Practices: Live Updates

Vietnam and Switzerland as manipulators in its final report in 2020. The Biden administration’s report undid those designations, citing insufficient evidence.

Instead, the department said it would continue “enhanced engagement” with Vietnam and Switzerland and begin such talks with Taiwan, which includes urging the trading partners to address undervaluation of their currencies.

“Treasury is working tirelessly to address efforts by foreign economies to artificially manipulate their currency values that put American workers at an unfair disadvantage,” Ms. Yellen said in a statement.

Taiwan is the United States’ 10th largest trading partner in 2019, according to the United States trade representative. Vietnam is the 13th largest, and Switzerland is 16th.

The Treasury Department did not label China as a currency manipulator, instead urging it to improve transparency over its foreign exchange practices.

Treasury kept China, Japan, Korea, Germany, Italy, India, Malaysia, Singapore and Thailand on its currency monitoring list, and added Ireland and Mexico.

“Sonia” chats with coworkers — from a distance.
Credit…IBM

Millions of workers are wondering what the office will be like when they go back after a long stretch of remote work. Employers are trying to prepare them for it.

IBM has designed a “reorientation” program to help its employees adjust when they return to a familiar setting but face a host of unfamiliar new procedures, the DealBook newsletter writes.

“It’s sort of like the first day of school,” said Joanna Daly, the company’s vice president of talent. “A day early, kids go and get to see the classroom or see how things work.”

This is needed, she said, because it is “not simply returning to the workplace as it existed before or the ways of working as it existed before.”

IBM made a “day in the life” video to show employees what to expect. One version of the 11-minute-long video seen by DealBook starts with “Paul” going back to one of IBM’s offices in Britain. To start the day, he goes through a self-screening checklist to assess potential exposure. He enters the office through designated entrances and picks up his masks for the day (and disinfectant wipes if he needs them). Arrows guide him through the halls and up one-way staircases. Only one person is allowed in the bathroom at a time.

The cafeteria is closed, so Paul must bring his lunch. He can’t use the whiteboards or marker pens in conference rooms (and he shouldn’t linger there longer than necessary). If Paul sees other IBMers not following the safety protocols, “It is OK to politely remind them,” the narrator assures him.

Along with the video, IBM produced an 18-page presentation depicting “Sonia’s’’ return to the workplace, serving as a friendly, cartoon-filled back-to-work manual.

“We’re looking now at how might anxiety manifests itself differently for different employees around being back together and then how do we address that,” Ms. Daly said, “through practical understanding of health and safety and also through having enough flexibility in the environment that everyone can kind of get used to coming back.”

IBM, which has 346,000 employees, hasn’t set a timeline for when its U.S. workers will return to the office. The company’s chief executive, Arvind Krishna, has said he expects 80 percent of them will work in a hybrid fashion when they do.

Mercedes-Benz said the electric EQS can travel up to 480 miles on a single charge, a feat the company attributed to new battery technology and the car’s aerodynamic shape.
Credit…Mercedes/Associated Press

Mercedes-Benz unveiled an electric counterpart to its top-of-the-line S-Class sedan on Thursday, the latest in a series of moves by German automakers to defend their dominance of the high end of the car market against Tesla.

The EQS, which will be available in the United States in August, is the first of four electric vehicles Mercedes will introduce this year, including two S.U.V.s that will be made at the company’s factory in Alabama and a lower-priced sedan. Mercedes did not announce a price for the EQS, but it is unlikely to be lower than the S-Class, which starts at $94,000 in the United States.

The cars could be decisive for Daimler, the parent company of Mercedes, as it tries to adapt to new technology.

“It is important to us,” Ola Källenius, the chief executive of Daimler, said of the EQS during an interview. “In a way it is kind of day one of a new era.”

The EQS has a range of 770 kilometers or about 480 miles, according to Mercedes. If that figure is confirmed by independent testing, the EQS would dethrone the Tesla Model S Long Range Plus as the production electric car that can travel the farthest between charges. The Tesla currently occupies the No. 1 spot with a range of just over 400 miles, according to rankings by Kelley Blue Book.

The EQS owes its stamina to advances in battery technology and an exceptionally aerodynamic design, Mr. Källenius said. Some analysts question whether Mercedes can sell enough electric vehicles to justify the cost of development, but Mr. Källenius said, “We will make money with the EQS from the word ‘go.’”

The EQS is the latest attempt by German carmakers to show that they can apply their expertise in engineering and production efficiency to battery-powered cars. Vehicles are Germany’s biggest export, so the carmakers’ success or failure will have a significant impact on the country’s prosperity.

On Wednesday, Audi, the luxury unit of Volkswagen, unveiled the Q4 E-Tron, an electric SUV. The Q4 shares many components with the Volkswagen ID.4, an electric SUV that the company began delivering to customers in the United States in March. Though priced to compete with internal combustion models, neither vehicle offers as much range as comparable Tesla cars.

In the S-Class tradition, the EQS offers over-the-top luxury features like software that can recognize when a driver might be feeling fatigued and can offer to turn on the massage function embedded in the seat.

“You’re going to get S-Class level refinement in a very, very high performing electric car,” Mr. Källenius said. “That’s your buying argument.”

Car buyers in Wuhan in January. China is trying to get its consumers to return to their prepandemic spending levels.
Credit…Gilles Sabrié for The New York Times

China on Friday reported that its economy grew by a remarkable 18.3 percent in the first three months of this year compared with the same period last year. But the spike is as much a reflection of how bad matters were a year ago — when the China’s output shrank by 6.8 percent — as it is an indication of how China is doing now.

Global demand for the computer screens and video consoles that China makes is soaring as people work from home and as a pandemic recovery beckons. That demand has continued as Americans with stimulus checks look to spend money on patio furniture, electronics and other goods made in Chinese factories.

China’s recovery has also been powered by big infrastructure. Cranes dot city skylines. Construction projects for highways and railroads have provided short-term jobs. Property sales have also helped strengthen economic activity.

Exports and property investment can carry China’s growth only so far. Now China is trying to get its consumers to return to their prepandemic ways.

Unlike much of the developed world, China doesn’t subsidize its consumers. Instead of handing out checks to jump-start the economy last year, China ordered state-owned banks to lend to businesses and offered tax rebates.

Travel restrictions over the Lunar New Year holiday dampened consumer appetite and slowed the momentum of Chinese shoppers. But retail data on Friday showed that March sales were better than expected, raising hopes that consumers might be starting to feel confident.


By: Ella Koeze·Data delayed at least 15 minutes·Source: FactSet

Global stocks rose on Friday after a string of strong economic reports and company earnings.

The S&P 500 rose 0.2 percent, set for its fourth straight week of gains and another record. The benchmark had gained 1 percent in the week through Thursday and is up nearly 5 percent so far this month.

The Stoxx Europe 600 rose 0.6 percent on Friday, also climbing to a record, while the FTSE 100 in Britain climbed above 7,000 points for the first time since February 2020. Stock indexes in Japan, Hong Kong and China all closed higher.

China reported on Friday that its economy grew by 18.3 percent in the first three months of the year compared with the same period last year, when swathes of the country had been shut down because of the coronavirus pandemic. On Thursday, data showed U.S. retail sales in March leapt past expectations, increasing by nearly 10 percent, and initial state jobless claims fell last week to their lowest level of the pandemic.

This week, banks including Goldman Sachs and JPMorgan Chase reported better-than-expected earnings, and their chief executives delivered upbeat economic forecasts.

The yield on 10-year Treasury notes slipped to 1.57 percent on Friday. Last month, concerns that government spending would overheat the economy and lead to higher inflation sent bond yields shooting higher, to 1.74 percent on March 31. But those worries appear to have been soothed by central bank officials, who have repeatedly said they expect increases in inflation to be temporary.

Earlier this week, data showed that prices in the United States rose 2.6 percent in March from a year earlier, a larger-than-normal increase partly because prices of some items fell in March 2020 as the pandemic took hold.

Another reason yields have drifted lower is a “remarkable” demand for bonds, ING, a Dutch bank, said. Recent Treasury bond auctions have received more bids than normal, and JPMorgan Chase sold $13 billion of bonds on Thursday, the biggest sale ever by a bank, according to Bloomberg.

“Cash has to go somewhere, and it can’t all go into equities,” the ING analysts wrote in a note to clients.

James O’Keefe, the founder of the conservative group Project Veritas, in 2015.
Credit…Stephen Crowley/The New York Times

Twitter said on Thursday that it had blocked the account of James O’Keefe, the founder of the conservative group Project Veritas.

Mr. O’Keefe’s account, @JamesOKeefeIII, was “permanently suspended for violating the Twitter Rules on platform manipulation and spam,” specifically that users cannot mislead others with fake accounts or “artificially amplify or disrupt conversations” through the use of multiple accounts, a Twitter spokesman said.

In a statement on his website, Mr. O’Keefe said he will file a defamation lawsuit against Twitter on Monday over its claim that he had operated fake accounts.

“This is false, this is defamatory, and they will pay,” the statement said.

“Section 230 may have protected them before, but it will not protect them from me,” Mr. O’Keefe said, referring to a legal liability shield for social media. That shield, part of the federal Communications Decency Act, has become a favorite target of lawmakers in both parties.

In February, Twitter permanently suspended the Project Veritas account, saying it had posted private information. It also temporarily locked Mr. O’Keefe’s account.

“We were trying to find the most incendiary way of making them mad,” Caolan Robertson said of the videos he used to make.
Credit…Alexander Ingram for The New York Times

To keep you watching, YouTube serves up videos similar to those you have watched before. But the longer someone watches, the more extreme the videos can become.

Caolan Robertson learned how making clever edits and focusing on confrontation could help draw millions of views on YouTube and other services. He also learned how YouTube’s recommendation algorithm often nudged people toward extreme videos.

Over more than two years, he helped produce and publish videos for right-wing Youtube personalities including Lauren Southern, Cade Metz reports for The New York Times.

Knowing what garnered the most attention on YouTube, Mr. Robertson said, he and Ms. Southern would devise public appearances meant to generate conflict. They attended a women’s march in London and, with Ms. Southern playing the part of a television reporter, approached each woman with the same four-word question: “Women’s rights or Islam?”

They often received a confused, measured or polite response, according to Mr. Robertson. They continued to ask the question and sharpened it. Ms. Southern, for example, said it would be difficult for Muslim women to answer the question because their husbands wouldn’t let them attend the march. That caused anger to build in the crowd.

“It appears in the videos that we are just trying to figure out what is going on, gather information, understand people,” Mr. Robertson said. “But really, we were trying to find the most incendiary way of making them mad.”

Ms. Southern described the situation differently. “We asked the question because we knew it was going to force people to question their own political views and realize the contradiction in being a hard-core feminist but also supporting a religion that, quite frankly, has questionable practices around women,” she said. And, she added, they used video techniques that any media company would use.

Attendees of the disastrous Fyre Festival in the Bahamas won $2 million in a class-action settlement that is subject to final approval.
Credit…Jake Strang, via Associated Press

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What’s in Biden’s Tax Plan?

WASHINGTON — The Biden administration unveiled a tax plan on Wednesday that would increase the corporate tax rate in the U.S. and limit the ability of American firms to avoid taxes by shifting profits overseas.

Much of the plan is aimed at reversing a deep reduction in corporate taxes under President Donald J. Trump. A 2017 tax bill slashed the corporate rate to 21 percent from 35 percent and enacted a series of other provisions that the Biden administration says have encouraged firms to shift profits to lower-tax jurisdictions, like Ireland.

Some of the provisions in President Biden’s plan can be enacted by the Treasury Department, but many will require the approval of Congress. Already, Republicans have panned the proposals as putting the U.S. at a disadvantage, while some moderate Democrats have indicated they may also want to see some adjustments, particularly to the proposed 28 percent corporate tax rate.

Administration officials estimate the proposals will raise a total of $2.5 trillion in new tax revenue over a 15 year span. Analysts at the University of Pennsylvania’s Penn Wharton Budget Model put the estimate even higher, estimating a 10-year increase of $2.1 trillion, with about half the money coming from the plan’s various changes to the taxation of multinational corporations.

Organization for Economic Cooperation and Development.

The administration sees raising the rate as a way to increase corporate tax receipts, which have plunged to match their lowest levels as a share of the economy since World War II.

Many large companies pay far less than the current tax rate of 21 percent — and sometimes nothing. Tax code provisions allow firms to reduce their liability through deductions, exemptions, offshoring and other mechanisms.

The Biden plan seeks to put an end to big companies incurring zero federal tax liability and paying no or negative taxes to the U.S. government.

the so-called global intangible low-taxed income (or GILTI) tax to 21 percent, which would narrow the gap between what companies pay on overseas profits and what they pay on earned income in the U.S.

And it would calculate the GILTI tax on a per-country basis, which would have the effect of subjecting more income earned overseas to the tax than under the current system.

A provision in the plan known as SHIELD (Stopping Harmful Inversions and Ending Low-tax Developments) is an attempt to discourage American companies from moving their headquarters abroad for tax purposes, particularly through the practice known as “inversions,” where companies from different countries merge, creating a new foreign firm.

Under current law, companies with headquarters in Ireland can “strip” some of the profits earned by subsidiaries in the United States and send them back to the Ireland company as payment for things like the use of intellectual property, then deduct those payments from their American income taxes. The SHIELD plan would disallow those deductions for companies based in low-tax countries.

The Biden administration wants other countries to raise their corporate tax rates, too.

The tax plan emphasizes that the Treasury Department will continue to push for global coordination on an international tax rate that would apply to multinational corporations regardless of where they locate their headquarters. Such a global tax could help prevent the type of “race to the bottom” that has been underway, Treasury Secretary Janet Yellen has said, referring to countries trying to outdo one another by lowering tax rates in order to attract business.

Republican critics of the Biden tax plan have argued that the administration’s focus on a global minimum tax is evidence that it realizes that raising the U.S. corporate tax rate unilaterally would make American businesses less competitive around the world.

The president’s plan would strip away longstanding subsidies for oil, gas and other fossil fuels and replace them with incentives for clean energy. The provisions are part of Mr. Biden’s efforts to transition the U.S. to “100 percent carbon pollution-free electricity” by 2035.

The plan includes a tax incentive for long-distance transmission lines, would expand incentives for electricity storage projects and would extend other existing clean-energy tax credits.

A Treasury Department report estimated that eliminating subsidies for fossil fuel companies would increase government tax receipts by over $35 billion in the coming decade.

“The main impact would be on oil and gas company profits,” the report said. “Research suggests little impact on gasoline or energy prices for U.S. consumers and little impact on our energy security.”

Doing away with fossil fuel subsidies has been tried before, with little success given both industry and congressional opposition.

The Internal Revenue Service has struggled with budget cuts and slim resources for years. The Biden administration believes better funding for the tax collection agency is an investment that will more than pay for itself. The plan released on Wednesday includes proposals to bolster the I.R.S. budget so it can hire experts to pursue large corporations and ensure they are paying what they owe.

The Treasury Department, which oversees the I.R.S., noted in its report that the agency’s enforcement budget has fallen by 25 percent over the last decade and that it is poorly equipped to audit complex corporate filings. The agency is also unable to afford engaging in or sustaining multiyear litigation over complex tax disputes, Treasury said.

As a result of those constraints, the I.R.S. tends to focus on smaller targets while big companies and the wealthiest taxpayers are able to find ways to reduce their tax bills.

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