Because of that complexity, the corporate minimum tax has faced substantial skepticism. It is less efficient than simply eliminating deductions or raising the corporate tax rate and could open the door for companies to find new ways to make their income appear lower to reduce their tax bills.

Similar versions of the idea have been floated by Mr. Biden during his presidential campaign and by Senator Elizabeth Warren, Democrat of Massachusetts. They have been promoted as a way to restore fairness to a tax system that has allowed major corporations to dramatically lower their tax bills through deductions and other accounting measures.

According to an early estimate from the nonpartisan Joint Committee on Taxation, the tax would most likely apply to about 150 companies annually, and the bulk of them would be manufacturers. That spurred an outcry from manufacturing companies and Republicans, who have been opposed to any policies that scale back the tax cuts that they enacted five years ago.

Although many Democrats acknowledge that the corporate minimum tax was not their first choice of tax hikes, they have embraced it as a political winner. Senator Ron Wyden of Oregon, the chairman of the Senate Finance Committee, shared Joint Committee on Taxation data on Thursday indicating that in 2019, about 100 to 125 corporations reported financial statement income greater than $1 billion, yet their effective tax rates were lower than 5 percent. The average income reported on financial statements to shareholders was nearly $9 billion, but they paid an average effective tax rate of just 1.1 percent.

“Companies are paying rock-bottom rates while reporting record profits to their shareholders,” Mr. Wyden said.

told the Senate Finance Committee last year. “This behavioral response poses serious risks for financial accounting and the capital markets.”

Other opponents of the new tax have expressed concerns that it would give more control over the U.S. tax base to the Financial Accounting Standards Board, an independent organization that sets accounting rules.

“The potential politicization of the F.A.S.B. will likely lead to lower-quality financial accounting standards and lower-quality financial accounting earnings,” Ms. Hanlon and Jeffrey L. Hoopes, a University of North Carolina professor, wrote in a letter to members of Congress last year that was signed by more than 260 accounting academics.

the chief economist of the manufacturing association. “Arizona’s manufacturing voters are clearly saying that this tax will hurt our economy.”

Ms. Sinema has expressed opposition to increasing tax rates and had reservations about a proposal to scale back the special tax treatment that hedge fund managers and private equity executives receive for “carried interest.” Democrats scrapped the proposal at her urging.

When an earlier version of a corporate minimum tax was proposed last October, Ms. Sinema issued an approving statement.

“This proposal represents a common sense step toward ensuring that highly profitable corporations — which sometimes can avoid the current corporate tax rate — pay a reasonable minimum corporate tax on their profits, just as everyday Arizonans and Arizona small businesses do,” she said. In announcing that she would back an amended version of the climate and tax bill on Thursday, Ms. Sinema noted that it would “protect advanced manufacturing.”

That won plaudits from business groups on Friday.

“Taxing capital expenditures — investments in new buildings, factories, equipment, etc. — is one of the most economically destructive ways you can raise taxes,” Neil Bradley, chief policy officer of the U.S. Chamber of Commerce, said in a statement. He added, “While we look forward to reviewing the new proposed bill, Senator Sinema deserves credit for recognizing this and fighting for changes.”

Emily Cochrane contributed reporting.

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How Private Equity Firms Avoid Taxes

There were two weeks left in the Trump administration when the Treasury Department handed down a set of rules governing an obscure corner of the tax code.

Overseen by a senior Treasury official whose previous job involved helping the wealthy avoid taxes, the new regulations represented a major victory for private equity firms. They ensured that executives in the $4.5 trillion industry, whose leaders often measure their yearly pay in eight or nine figures, could avoid paying hundreds of millions in taxes.

The rules were approved on Jan. 5, the day before the riot at the U.S. Capitol. Hardly anyone noticed.

The Trump administration’s farewell gift to the buyout industry was part of a pattern that has spanned Republican and Democratic presidencies and Congresses: Private equity has conquered the American tax system.

one recent estimate, the United States loses $75 billion a year from investors in partnerships failing to report their income accurately — at least some of which would probably be recovered if the I.R.S. conducted more audits. That’s enough to roughly double annual federal spending on education.

It is also a dramatic understatement of the true cost. It doesn’t include the ever-changing array of maneuvers — often skating the edge of the law — that private equity firms have devised to help their managers avoid income taxes on the roughly $120 billion the industry pays its executives each year.

Private equity’s ability to vanquish the I.R.S., Treasury and Congress goes a long way toward explaining the deep inequities in the U.S. tax system. When it comes to bankrolling the federal government, the richest of America’s rich — many of them hailing from the private equity industry — play by an entirely different set of rules than everyone else.

The result is that men like Blackstone Group’s chief executive, Stephen A. Schwarzman, who earned more than $610 million last year, can pay federal taxes at rates similar to the average American.

Lawmakers have periodically tried to force private equity to pay more, and the Biden administration has proposed a series of reforms, including enlarging the I.R.S.’s enforcement budget and closing loopholes. The push for reform gained new momentum after ProPublica’s recent revelation that some of America’s richest men paid little or no federal taxes.

nearly $600 million in campaign contributions over the last decade, has repeatedly derailed past efforts to increase its tax burden.

Taylor Swift’s back music catalog.

The industry makes money in two main ways. Firms typically charge their investors a management fee of 2 percent of their assets. And they keep 20 percent of future profits that their investments generate.

That slice of future profits is known as “carried interest.” The term dates at least to the Renaissance. Italian ship captains were compensated in part with an interest in whatever profits were realized on the cargo they carried.

The I.R.S. has long allowed the industry to treat the money it makes from carried interests as capital gains, rather than as ordinary income.

article highlighting the inequity of the tax treatment. It prompted lawmakers from both parties to try to close the so-called carried interest loophole. The on-again, off-again campaign has continued ever since.

Whenever legislation gathers momentum, the private equity industry — joined by real estate, venture capital and other sectors that rely on partnerships — has pumped up campaign contributions and dispatched top executives to Capitol Hill. One bill after another has died, generally without a vote.

One day in 2011, Gregg Polsky, then a professor of tax law at the University of North Carolina, received an out-of-the-blue email. It was from a lawyer for a former private equity executive. The executive had filed a whistle-blower claim with the I.R.S. alleging that their old firm was using illegal tactics to avoid taxes.

The whistle-blower wanted Mr. Polsky’s advice.

Mr. Polsky had previously served as the I.R.S.’s “professor in residence,” and in that role he had developed an expertise in how private equity firms’ vast profits were taxed. Back in academia, he had published a research paper detailing a little-known but pervasive industry tax-dodging technique.

$89 billion in private equity assets — as being “abusive” and a “thinly disguised way of paying the management company its quarterly paycheck.”

Apollo said in a statement that the company stopped using fee waivers in 2012 and is “not aware of any I.R.S. inquiries involving the firm’s use of fee waivers.”

floated the idea of cracking down on carried interest.

Private equity firms mobilized. Blackstone’s lobbying spending increased by nearly a third that year, to $8.5 million. (Matt Anderson, a Blackstone spokesman, said the company’s senior executives “are among the largest individual taxpayers in the country.” He wouldn’t disclose Mr. Schwarzman’s tax rate but said the firm never used fee waivers.)

Lawmakers got cold feet. The initiative fizzled.

In 2015, the Obama administration took a more modest approach. The Treasury Department issued regulations that barred certain types of especially aggressive fee waivers.

But by spelling that out, the new rules codified the legitimacy of fee waivers in general, which until that point many experts had viewed as abusive on their face.

So did his predecessor in the Obama administration, Timothy F. Geithner.

Inside the I.R.S. — which lost about one-third of its agents and officers from 2008 to 2018 — many viewed private equity’s webs of interlocking partnerships as designed to befuddle auditors and dodge taxes.

One I.R.S. agent complained that “income is pushed down so many tiers, you are never able to find out where the real problems or duplication of deductions exist,” according to a U.S. Government Accountability Office investigation of partnerships in 2014. Another agent said the purpose of large partnerships seemed to be making “it difficult to identify income sources and tax shelters.”

The Times reviewed 10 years of annual reports filed by the five largest publicly traded private equity firms. They contained no trace of the firms ever having to pay the I.R.S. extra money, and they referred to only minor audits that they said were unlikely to affect their finances.

Current and former I.R.S. officials said in interviews that such audits generally involved issues like firms’ accounting for travel costs, rather than major reckonings over their taxable profits. The officials said they were unaware of any recent significant audits of private equity firms.

For a while, it looked as if there would be an exception to this general rule: the I.R.S.’s reviews of the fee waivers spurred by the whistle-blower claims. But it soon became clear that the effort lacked teeth.

Kat Gregor, a tax lawyer at the law firm Ropes & Gray, said the I.R.S. had challenged fee waivers used by four of her clients, whom she wouldn’t identify. The auditors struck her as untrained in the thicket of tax laws governing partnerships.

“It’s the equivalent of picking someone who was used to conducting an interview in English and tell them to go do it in Spanish,” Ms. Gregor said.

The audits of her clients wrapped up in late 2019. None owed any money.

As a presidential candidate, Mr. Trump vowed to “eliminate the carried interest deduction, well-known deduction, and other special-interest loopholes that have been so good for Wall Street investors, and for people like me, but unfair to American workers.”

wanted to close the loophole, congressional Republicans resisted. Instead, they embraced a much milder measure: requiring private equity officials to hold their investments for at least three years before reaping preferential tax treatment on their carried interests. Steven Mnuchin, the Treasury secretary, who had previously run an investment partnership, signed off.

McKinsey, typically holds investments for more than five years. The measure, part of a $1.5 trillion package of tax cuts, was projected to generate $1 billion in revenue over a decade.

credited Mr. Mnuchin, hailing him as “an all-star.”

Mr. Fleischer, who a decade earlier had raised alarms about carried interest, said the measure “was structured by industry to appear to do something while affecting as few as possible.”

Months later, Mr. Callas joined the law and lobbying firm Steptoe & Johnson. The private equity giant Carlyle is one of his biggest clients.

It took the Treasury Department more than two years to propose rules spelling out the fine print of the 2017 law. The Treasury’s suggested language was strict. One proposal would have empowered I.R.S. auditors to more closely examine internal transactions that private equity firms might use to get around the law’s three-year holding period.

The industry, so happy with the tepid 2017 law, was up in arms over the tough rules the Treasury’s staff was now proposing. In a letter in October 2020, the American Investment Council, led by Drew Maloney, a former aide to Mr. Mnuchin, noted how private equity had invested in hundreds of companies during the coronavirus pandemic and said the Treasury’s overzealous approach would harm the industry.

The rules were the responsibility of Treasury’s top tax official, David Kautter. He previously was the national tax director at EY, formerly Ernst & Young, when the firm was marketing illegal tax shelters that led to a federal criminal investigation and a $123 million settlement. (Mr. Kautter has denied being involved with selling the shelters but has expressed regret about not speaking up about them.)

On his watch at Treasury, the rules under development began getting softer, including when it came to the three-year holding period.

Monte Jackel, a former I.R.S. attorney who worked on the original version of the proposed regulations.

Mr. Mnuchin, back in the private sector, is starting an investment fund that could benefit from his department’s weaker rules.

Even during the pandemic, the charmed march of private equity continued.

The top five publicly traded firms reported net profits last year of $8.6 billion. They paid their executives $8.3 billion. In addition to Mr. Schwarzman’s $610 million, the co-founders of KKR each made about $90 million, and Apollo’s Leon Black received $211 million, according to Equilar, an executive compensation consulting firm.

now advising clients on techniques to circumvent the three-year holding period.

The most popular is known as a “carry waiver.” It enables private equity managers to hold their carried interests for less than three years without paying higher tax rates. The technique is complicated, but it involves temporarily moving money into other investment vehicles. That provides the industry with greater flexibility to buy and sell things whenever it wants, without triggering a higher tax rate.

Private equity firms don’t broadcast this. But there are clues. In a recent presentation to a Pennsylvania retirement system by Hellman & Friedman, the California private equity giant included a string of disclaimers in small font. The last one flagged the firm’s use of carry waivers.

The Biden administration is negotiating its tax overhaul agenda with Republicans, who have aired advertisements attacking the proposal to increase the I.R.S.’s budget. The White House is already backing down from some of its most ambitious proposals.

Even if the agency’s budget were significantly expanded, veterans of the I.R.S. doubt it would make much difference when it comes to scrutinizing complex partnerships.

“If the I.R.S. started staffing up now, it would take them at least a decade to catch up,” Mr. Jackel said. “They don’t have enough I.R.S. agents with enough knowledge to know what they are looking at. They are so grossly overmatched it’s not funny.”

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Tax cheats cost the U.S. $1 trillion per year, I.R.S chief says.

The United States is losing approximately $1 trillion in unpaid taxes every year, Charles Rettig, the Internal Revenue Service commissioner, estimated on Tuesday, arguing that the agency lacks the resources to catch tax cheats.

The so-called tax gap has surged in the last decade. The last official estimate from the I.R.S. was that an average of $441 billion per year went unpaid from 2011 to 2013. Most of the unpaid taxes are the result of evasion by the wealthy and large corporations, Mr. Rettig said.

“We do get outgunned,” Mr. Rettig said during a Senate Finance Committee hearing on the upcoming tax season.

Senator Ron Wyden of Oregon, the Democratic chairman of the committee, called the $1 trillion tax gap a “jaw-dropping figure.”

spending proposal that the Biden administration released last week asked for a 10.4 percent increase above current funding levels for the tax collection agency, to $13.2 billion. The additional money would go toward increased oversight of tax returns of high-income individuals and companies and to improve customer service at the I.R.S.

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Yellen calls for a global minimum corporate tax rate.

Treasury Secretary Janet L. Yellen made the case on Monday for a global minimum tax, kicking off the Biden administration’s effort to help raise revenue in the United States and prevent companies from shifting profits overseas to evade taxes.

Ms. Yellen, in a speech to the Chicago Council on Global Affairs, called 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, Ms. Yellen said, referring to countries trying to outdo one another by lowering tax rates in order to attract business.

Her remarks came as the White House and Democrats in Congress begin looking for ways to pay for President Biden’s sweeping infrastructure plan to rebuild America’s roads, bridges, water systems and electric grid.

“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” Ms. Yellen said. “It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”

will release a new plan on Monday to overhaul the way the United States taxes multinational corporations. In addition to raising revenue, the proposal, which is co-authored by Senator Sherrod Brown of Ohio and Senator Mark Warner of Virginia, seeks to discourage companies from shifting profits and jobs to low-tax countries to avoid paying taxes in America. It also creates new incentives through the tax code for companies to invest in research and manufacturing in the United States.

The speech represented Ms. Yellen’s most extensive comments since taking over as Treasury secretary, and she underscored the scope of the challenge ahead.

“Over the last four years, we have seen firsthand what happens when America steps back from the global stage,” Ms. Yellen said. “America first must never mean America alone.”

Ms. Yellen also highlighted her priorities of combating climate change and reducing global poverty and underscored the importance of the United States helping to lead the world out of the crisis caused by the pandemic. Ms. Yellen called on countries not to pull back on fiscal support too soon and warned of growing global imbalances if some countries do withdraw before the crisis is over.

The slow pace of the deployment of vaccines around the world is also a concern for Ms. Yellen, who lamented that many developing and middle-income countries have been unable to invest in robust rollouts of inoculations, which could hurt the global economy.

“The result will likely be a deeper and longer-lasting crisis, with mounting problems of indebtedness, more entrenched poverty, and growing inequality,” Ms. Yellen said, estimating that as many as 150 million people could be pushed into extreme poverty this year. “This would be a profound economic tragedy for those countries, one we should care about.”

In a sharp break with the administration of former President Donald J. Trump, Ms. Yellen emphasized the importance of the United States working closely with its allies, noting that the fortunes of countries around the world are intertwined.

Overhauling the international tax system is a big part of that. Corporate tax rates have been falling around the world in recent years. Under the Trump administration, the rate in the United States was cut from 35 percent to 21 percent. Mr. Biden wants to raise that rate to 28 percent and increase the international minimum tax rate that American companies pay on their foreign profits to 21 percent.

The Organization for Economic Cooperation and Development, in coordination with the United States, has been working to develop a new international tax architecture that would include a global minimum tax rate for multinational corporations as part of its effort to curtail profit shifting and tax base erosion.

Ms. Yellen said she is working with her counterparts in the Group of 20 advanced nations on changes to the global tax system that will help prevent businesses from shifting profits to low-tax jurisdictions.

“President Biden’s proposals announced last week call for bold domestic action, including to raise the U.S. minimum tax rate, and renewed international engagement, recognizing that it is important to work with other countries to end the pressures of tax competition and corporate tax base erosion,” Ms. Yellen said. “We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom.”

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Democrats Prepare Plan to Raise Taxes on Multinational Corporations

WASHINGTON — Senator Ron Wyden, the Oregon Democrat in charge of writing tax legislation, will release a new plan on Monday to overhaul the way the United States taxes multinational corporations, in what could be a blueprint for how lawmakers will finance President Biden’s infrastructure plan.

The proposal could raise hundreds of billions of dollars from companies that operate across international borders, according to analyses of similar proposals by congressional scorekeepers. Senators Sherrod Brown of Ohio and Mark Warner of Virginia, both Democrats, signed on as co-authors.

In addition to raising revenue, the plan seeks to discourage companies from shifting profits and jobs to low-tax countries to avoid paying taxes in the United States. It also creates new incentives through the tax code for companies to invest in research and manufacturing in the country.

The proposal would tweak several aspects of President Donald J. Trump’s signature 2017 tax law, which created a series of new mechanisms for how the United States taxes multinational companies. It would increase the rate of a global minimum tax that was included in that legislation and change how it is applied to income that corporations earn in various countries overseas. It would also alter two other parts of the 2017 law in ways that the senators say would better encourage investment in America.

Those measures mirror the Biden administration’s ambitions on international taxation. Separately on Monday, Treasury Secretary Janet L. Yellen called 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, Ms. Yellen said, referring to countries trying to outdo one another by lowering tax rates in order to attract business.

“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” Ms. Yellen said. “It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”

Last week, Mr. Biden proposed spending $2 trillion on an infrastructure package, financed over 15 years by higher corporate taxes. That includes raising the corporate tax rate to 28 percent from 21 percent and a variety of changes to international tax rates.

On Monday, Mr. Biden continued to press for those tax increases, saying that companies need to pay their fair share and that there was “no evidence” behind concerns from Republicans that raising tax rates would drive investment out of the United States.

“You’re talking about companies in the Fortune 500 that haven’t paid a single penny in tax for three years. Come on man,” he said.

The president is expected to detail as much as $2 trillion more in education, health care and other spending initiatives later this month, much of which would be financed by raising taxes on high-earning individuals. Mr. Biden’s aides have estimated that his international tax proposals could raise more than $600 billion over the course of 10 years.

Mr. Wyden, in a news release, said that the senators tax plan would “not only generate critical revenue to pay for President Biden’s infrastructure package,” but would also “encourage additional investment in the United States and its workers.”

The Senate drafters do not specify the exact new tax rates associated with their plan or how much additional tax revenue it would raise, choosing instead to wait and set rates to match Democrats’ spending ambitions later this year. “I’m going to start rolling out specific proposals so that people can have ideas about how they might proceed,” Mr. Wyden said in an interview last month.

The presence of Mr. Brown, one of the most progressive Democrats in the Senate on tax issues, and the more centrist Mr. Warner as co-authors suggests the Wyden plan could attract widespread support in a Democratic caucus that most likely cannot afford to lose a single vote for Mr. Biden’s infrastructure plan.

Mr. Brown said in a statement on the plan that “corporations should pay their fair share, just like Ohio families do, and they shouldn’t get a tax break for shipping workers’ jobs overseas.”

Mr. Warner argued that the proposal would provide an incentive to invest in the United States, saying “we need an international tax system that rewards companies making investments here in the U.S., particularly in cutting-edge technologies that will dictate the future success of our economy and ability to create good-paying jobs.”

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Biden Poised to Raise Taxes on Business and the Rich

Many liberal economists say there are good reasons to raise taxes, starting with using those funds to invest in workers and help build economic opportunity. Spending on physical infrastructure, like roads and water pipes, or on programs like education and child care that are meant to help people earn more money could help curb persistent inequalities in income and wealth. The economists also say that tax increases that are properly set up would provide incentives for multinational companies to keep jobs in the United States and not shift profits to lower-tax foreign countries.

“The purpose of the tax system is to both raise enough revenue for what the government wants to do, and to make sure that as we’re doing that we are encouraging activities that are in the national interest and discouraging ones that are not,” said Heather Boushey, a member of the White House’s Council of Economic Advisers.

Key Democrats are trying to bring the party to consensus. The top tax writer in the Senate, Ron Wyden of Oregon, is drafting a series of bills to raise taxes, many of them overlapping with Mr. Biden’s campaign proposals.

“I’ll be ready to raise what the Democratic caucus decides is required to move forward,” Mr. Wyden, the chairman of the Senate Finance Committee, said in an interview.

Mr. Wyden’s plans include big changes to the portions of Mr. Trump’s tax cuts that overhauled how the United States taxes multinational companies, including the creation of a minimum tax of sorts on income earned abroad. Mr. Wyden and many Democratic economists, including some inside the Biden administration, say that the tax was devised in a way that it ultimately incentivized companies to continue moving profits and activities offshore to avoid American taxes. Republican economists and some tax experts disagree and say the law has allowed U.S. companies to better compete globally.

A report from the congressional Joint Committee on Taxation this month showed that multinational companies paid an average U.S. tax rate of less than 8 percent on their income in 2018, down from 16 percent in 2017. The report also found that those companies did not slow their practice of booking profits in low-tax havens like Bermuda.

Mr. Biden, Mr. Wyden and Mr. Sanders have all drafted plans to raise revenues by amending the 2017 law to force multinational companies to pay more to the United States. One of the most lucrative ways to do that, according to tax scorekeepers, would be to increase the rate of the global minimum tax, forcing those companies to pay higher U.S. tax rates no matter where they locate jobs or profits.

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Biden’s Task: Overhaul the Economy, as Fast as Possible

WASHINGTON — After a two-month, $2 trillion sprint to pass aid for an economy still hobbled by the coronavirus pandemic, President Biden is finally set to detail his “Build Back Better” agenda next week in Pittsburgh. Its name, carried over from the 2020 campaign, has become a catchall phrase that cabinet officials and junior aides use to describe all manner of plans to overhaul American capitalism.

In the weeks ahead, the president’s strategic choices will show the country what “building” really means, to him.

Mr. Biden’s forthcoming proposals, which aides and documents suggest could cost as much as $4 trillion over the next decade, are a pivot to the core economic agenda he campaigned on: rebuilding infrastructure, revitalizing America’s competitiveness in emerging industries and reducing the barriers that hold back men of color and women in the workplace.

Mr. Biden will have the benefit of momentum in pushing them, and of a political moment that seems ripe for another large spending bill. Democrats are riding high on the public approval ratings for their coronavirus relief bill across the country. Even the most conservative Democrats in the Senate are eager to spend big again to address infrastructure concerns that have festered for a decade, and to combat widened income inequality that has helped fuel the rise of populist politicians in both parties.

low-carbon energy economy.

toured the Mississippi River to celebrate projects built with money from an $800 billion economic stimulus bill that had passed seven years before. He stopped at a port, a bus and train terminal, and a rail yard where he declared, “I’m a railroad guy.”

In his campaign, he spoke frequently of the need to build more in the United States to improve the economy and better compete with international rivals like China in a host of emerging industries like fifth-generation cellular networks, known as 5G, and advanced battery manufacturing. Like President Donald J. Trump before him, he has set ambitious goals to reverse a decades-long slide in American factory employment, pledging to create at least five million new jobs in manufacturing and innovation. Aides say he is particularly fond of repeating his pledge to install 500,000 electric-car charging stations across the country.

The “Build Back Better” plan that his economic advisers recommended Mr. Biden pursue this week would lead with those physical investments: a combination of spending and tax incentives on traditional infrastructure, high-growth industry cultivation and carbon-reducing energy investment that documents suggest could top $2 trillion.

But Mr. Biden’s economic advisers emphasize that the economy needs more than construction to increase productivity and achieve the president’s goals. They argue that it also needs investments in education, like universal prekindergarten and free community college, and in efforts to relieve the burdens of caring for family that often hamper working women. Those initiatives are included in the second half of the proposal that aides took to Mr. Biden this week, along with extensions of newly expanded tax credits meant to fight poverty.

 stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more.

Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read more

This credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.

There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.

The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.

“This next package is really about investing in our future and making the kind of smart investments that we know will increase growth,” Ms. Rouse said at a White House news briefing. “And we want that growth to be widely shared.”

“These aren’t simply women’s issues,” she said. “They affect all families, the ability of our economy to recover and our nation’s competitiveness.”

Inside the administration, aides disagree on the likelihood that both halves of the plan — the physical piece and the human piece — could pass Congress this year. Some see hope that Republicans, spurred by the business community, could join an effort with Democrats to muster 60 votes to pass a bill that spends heavily on roads, bridges, water systems and other traditional infrastructure. Some Democrats, like Senator Joe Manchin III of West Virginia, a key swing vote, have insisted that Republicans be involved in the effort.

But most Democrats in and outside the White House see little chance, if any, of a large bipartisan bill taking shape. They point to early opposition from Senator Mitch McConnell of Kentucky, the Republican leader, who has called the proposals a likely “Trojan horse” for tax increases, and whose aides have begun labeling them a “Green New Deal” in disguise, even before Mr. Biden releases the details.

Lobbyists following the process closely expect Mr. Biden to allow Senate moderates to effectively test the proposition, giving them a fixed time to line up 10 Republicans behind an ambitious infrastructure bill that would almost certainly need to be financed by something other than the tax increases on the wealthy and corporations that the administration favors.

At the same time, Democratic leaders will most likely prepare to move at least one part of Mr. Biden’s plans quickly through the budget reconciliation process, which allows senators to skirt the filibuster and pass legislation with a bare majority, as they did for the coronavirus relief bill. Senator Ron Wyden of Oregon, the chairman of the Finance Committee, said in an interview that he is drawing up legislative text for tax increases to fund the Biden spending: “I’m going to start rolling out specific proposals so that people can have ideas about how they might proceed,” he said.

Moving on a party-line basis could leave all or most of the “human” programs behind, some in the administration fear. But analysts in Washington suggest many of them could eventually be rolled into an epic, single bill, perhaps costing $3 trillion and offset in part by tax increases on corporations and the rich, which would pass with only Democratic votes.

The idea, said Jon Lieber, a former aide to Mr. McConnell who is now managing director, United States, for the Eurasia Group in Washington, is that by moving fast and aggressively, Mr. Biden might be able to strong-arm even reluctant Democrats, who see their political fates tied to the continuing success of the administration in the polls.

The odds of a large bill passing this year, Mr. Lieber said, are “very, very, very, very good. What would stop them?”

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A Last-Minute Add to Stimulus Bill Could Restrict State Tax Cuts

WASHINGTON — A last-minute change in the $1.9 trillion economic relief package that President Biden signed into law this week includes a provision that could temporarily prevent states that receive government aid from turning around and cutting taxes.

The restriction, which was added by Senate Democrats, is intended to ensure that states use federal funds to keep their local economies humming and avoid drastic budget cuts and not simply use the money to subsidize tax cuts. But the provision is causing alarm among some local officials, primarily Republicans, who see the move as federal overreach and fear conditions attached to the money will impede upon their ability to manage their budgets as they see fit.

Officials are scrambling to understand what strings are attached to the $220 billion that is expected to be parceled out among states, territories and tribes and are already pressing the Treasury Department for guidance about the restrictions they will face if they take federal money.

Under the new law, $25 billion will be divided equally among states, while $169 billion will be allocated based on a state’s unemployment rate. States can use the money for pandemic-related costs, offsetting lost revenues to provide essential government services, and for water, sewer and broadband infrastructure projects.

based on a formula that considers its unemployment rate rather than its population. Conservative-leaning states, many of which had less onerous coronavirus restrictions and did not shut down as much business activity, claim they are essentially being penalized for prioritizing their economies during the pandemic.

But early analyses of the bill show that both conservative-leaning and liberal-leaning states will receive big chunks of cash. California, Florida, New York and Texas will each get more than $10 billion in aid, according to a Tax Foundation tally.

Still, the tax language has angered Republicans — none of whom voted for the rescue package — and on Thursday, Senator Mike Braun, Republican of Indiana, introduced legislation to reverse it.

many cities are facing budget crunches, state finances have turned out to be relatively healthy.

A New York Times analysis this month found that, on balance, state revenues were generally flat or down slightly last year compared with 2019 as expanded unemployment benefits allowed consumer spending and tax revenues to keep flowing.

“Idaho would potentially subsidize poorly managed states simply because we are using our record budget surplus to pursue historic tax relief for our citizens,” Gov. Brad Little of Idaho said this week. “We achieved our record budget surplus after years of responsible, conservative governing and quick action during the pandemic, and our surplus should be returned to Idahoans as I proposed.”

Gov. Jim Justice, a Republican of West Virginia, criticized Mr. Manchin in an interview this week with CNN.

How Has the Pandemic Changed Your Taxes?

Nope. The so-called economic impact payments are not treated as income. In fact, they’re technically an advance on a tax credit, known as the Recovery Rebate Credit. The payments could indirectly affect what you pay in state income taxes in a handful of states, where federal tax is deductible against state taxable income, as our colleague Ann Carrns wrote. Read more.

Mostly.  Unemployment insurance is generally subject to federal as well as state income tax, though there are exceptions (Nine states don’t impose their own income taxes, and another six exempt unemployment payments from taxation, according to the Tax Foundation). But you won’t owe so-called payroll taxes, which pay for Social Security and Medicare. The new relief bill will make the first $10,200 of benefits tax-free if your income is less than $150,000. This applies to 2020 only. (If you’ve already filed your taxes, watch for I.R.S. guidance.) Unlike paychecks from an employer, taxes for unemployment aren’t automatically withheld. Recipients must opt in — and even when they do, federal taxes are withheld only at a flat rate of 10 percent of benefits. While the new tax break will provide a cushion, some people could still owe the I.R.S. or certain states money. Read more.

Probably not, unless you’re self-employed, an independent contractor or a gig worker. The tax law overhaul of late 2019 eliminated the home office deduction for employees from 2018 through 2025. “Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,” the I.R.S. said. Read more.

Self-employed people can take paid caregiving leave if their child’s school is closed or their usual child care provider is unavailable because of the outbreak. This works similarly to the smaller sick leave credit — 67 percent of average daily earnings (for either 2020 or 2019), up to $200 a day. But the caregiving leave can be taken for 50 days. Read more.

Yes. This year, you can deduct up to $300 for charitable contributions, even if you use the standard deduction. Previously, only people who itemized could claim these deductions. Donations must be made in cash (for these purposes, this includes check, credit card or debit card), and can’t include securities, household items or other property. For 2021, the deduction limit will double to $600 for joint filers. Rules for itemizers became more generous as well. The limit on charitable donations has been suspended, so individuals can contribute up to 100 percent of their adjusted gross income, up from 60 percent. But these donations must be made to public charities in cash; the old rules apply to contributions made to donor-advised funds, for example. Both provisions are available through 2021. Read more.

“He’s hurting his own people in the state of West Virginia,” Mr. Justice said. “I do not condone it.”

The provision is also raising questions about what actually constitutes a tax cut and whether the law could prevent states from other types of tax relief. The language of the legislation appears to offer states little wiggle room.

Jared Walczak, the vice president for state projects at the Tax Foundation’s Center for State Tax Policy, said that the fine print in the law raised many complicated questions for states that, in some cases, would be awarded money for things that they either do not need or that they already had plans to pay for out of their budgets. It is not clear, for example, if a state could use aid money for an expense related to the coronavirus that it was already planning to pay for and then offer tax credits with the additional surplus.

“If the federal government intends to forbid any sort of revenue negative tax policy, no matter what its size, because a state received some funding, that would be a radical federal entanglement in state fiscal policy that may go beyond what was intended,” Mr. Walczak said.

Such questions will largely hinge on how Treasury Secretary Janet L. Yellen interprets the legislation and what guidance the Treasury Department gives to states.

A department official noted that the law says that states and territories that receive the aid cannot use the funds to offset a reduction in net tax revenue as a result of tax cuts because the money is intended to be used to support the public health response and avoid layoffs and cuts to public services. More guidance on the matter is coming, the official said.

The lack of clarity also raises the risk that states use the money for projects or programs that do not actually qualify under the law and then are forced to repay the federal government. States are required to submit regular reports to the Treasury Department accounting for how the funds are being spent and to show any other changes that they have made to their tax codes. The department will also be setting up a system of monitoring how the funds are being used.

Emily Swenson Brock, the director of the Federal Liaison Center at the Government Finance Officers Association, said that the eligible uses of the federal aid appeared to be relatively limited for the states and that some might actually find it challenging to deploy the money in a useful way.

“It’s complicated here for the states,” Ms. Brock said, adding that her organization had asked the Treasury Department for an explanation. “Congress is reaching in and telling these states how they can and can’t use that money.”

Before they receive federal funds, states will have to submit a certification promising to use the money according to the law. They could also decline funding or, if they are set on tax cuts, they could offset them with other sources of revenue that do not include the federal funds.

For many states, the federal money is welcome even if they do not necessarily need it for public health purposes.

Melissa Hortman, the speaker of the Minnesota House of Representatives, said that she was hopeful that the federal government gives states the flexibility to use the money to make up for lost revenue from the virus. She suggested that the state should look to make new investments in education and transportation. Minnesota is expected to have a budget surplus for the next two years and will receive more than $2 billion in aid.

“It’s not too much money,” said Ms. Hortman, a Democrat. “Our country has just lived through a once-in-a-hundred-year pandemic.”

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Tech’s Legal Shield Appears Likely to Survive as Congress Focuses on Details

WASHINGTON — Former President Donald J. Trump called multiple times for repealing the law that shields tech companies from legal responsibility over what people post. President Biden, as a candidate, said the law should be “revoked.”

But the lawmakers aiming to weaken the law have started to agree on a different approach. They are increasingly focused on eliminating protections for specific kinds of content rather than making wholesale changes to the law or eliminating it entirely.

That has still left them a question with potentially wide-ranging outcomes: What, exactly, should lawmakers cut?

One bill introduced last month would strip the protections from content the companies are paid to distribute, like ads, among other categories. A different proposal, expected to be reintroduced from the last congressional session, would allow people to sue when a platform amplified content linked to terrorism. And another that is likely to return would exempt content from the law only when a platform failed to follow a court’s order to take it down.

open to trimming the law, an effort to shape changes they see as increasingly likely to happen. Facebook and Google, the owner of YouTube, have signaled that they are willing to work with lawmakers changing the law, and some smaller companies recently formed a lobbying group to shape any changes.

December op-ed that was co-written by Bruce Reed, Mr. Biden’s deputy chief of staff, said that “platforms should be held accountable for any content that generates revenue.” The op-ed also said that while carving out specific types of content was a start, lawmakers would do well to consider giving platforms the entire liability shield only on the condition that they properly moderate content.

Supporters of Section 230 say even small changes could hurt vulnerable people. They point to the 2018 anti-trafficking bill, which sex workers say made it harder to vet potential clients online after some of the services they used closed, fearing new legal liability. Instead, sex workers have said they must now risk meeting with clients in person without using the internet to ascertain their intentions at a safe distance.

Senator Ron Wyden, the Oregon Democrat who co-wrote Section 230 while in the House, said measures meant to address disinformation on the right could be used against other political groups in the future.

“If you remember 9/11, and you had all these knee-jerk reactions to those horrible tragedies,” he said. “I think it would be a huge mistake to use the disgusting, nauseating attacks on the Capitol as a vehicle to suppress free speech.”

Industry officials say carve-outs to the law could nonetheless be extremely difficult to carry out.

“I appreciate that some policymakers are trying to be more specific about what they don’t like online,” said Kate Tummarello, the executive director of Engine, an advocacy group for small companies. “But there’s no universe in which platforms, especially small platforms, will automatically know when and where illegal speech is happening on their site.”

The issue may take center stage when the chief executives of Google, Facebook and Twitter testify late this month before the House Energy and Commerce Committee, which has been examining the future of the law.

“I think it’s going to be a huge issue,” said Representative Cathy McMorris Rodgers of Washington, the committee’s top Republican. “Section 230 is really driving it.”

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