Neal, Mnuchin To Negotiate Virus Relief Bill, Infrastructure

By Dylan Moroses
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Law360 (June 3, 2020, 5:35 PM EDT) -- Treasury Secretary Steven Mnuchin and Rep. Richard Neal, D-Mass., the House Ways and Means Committee chair, will meet this week to continue negotiations on another round of coronavirus relief legislation that could include major infrastructure spending, Neal said Wednesday.

Neal said he would lay out Democrats' plans to pursue a major infrastructure spending package and would hope to reach an accord with the Trump administration. He said he conferred with House Democratic leaders to determine what infrastructure policies should be pitched to the White House, but it remains unclear whether Mnuchin will want to include an infrastructure plan in the next coronavirus legislation.

"I intend to raise the outline on Friday with him of what we intend to do; whether or not they want to include that in the next round of negotiations … or whether they want to do it separately, we intend to press forward on that legislation," Neal said at a webinar hosted by Tax Analysts.

Democratic leaders of the House Transportation and Infrastructure Committee on Wednesday introduced the Investing in a New Vision for the Environment and Surface Transportation in America Act, or Invest in America Act, one part of a $760 billion infrastructure spending plan to repair the country's roads, bridges, railways, airports and harbors that Democrats released earlier this year. The legislation would increase funding for federal surface and rail transportation programs by 46% over current levels to help fund repairs and improvements for the next five years, according to a fact sheet.

Lawmakers told Law360 in May that a five-year highway reauthorization bill with bond financing options could be included in coronavirus relief legislation as part of an economic recovery package aimed at creating jobs and spurring growth.

Aside from infrastructure, extending boosted unemployment benefits and the employer-based worker retention tax credit while securing more funding for state and local governments are some of the priorities Democrats will have on entering negotiations on virus relief legislation with Mnuchin on Friday, Neal said.

The next bill should also specify that Paycheck Protection Program loan funds for business expenses are tax-deductible, a change that has garnered support from leaders on the tax writing panels in the House and Senate, Neal said.

Neal characterized the coronavirus relief bill that House Democrats introduced last month as the opening act in a multistage process to negotiate the next round of legislation with the Senate and White House, but it remains to be seen how Senate lawmakers will act on the bill or revise the measure.

House Democrats in May introduced the Health and Economic Recovery Omnibus Emergency Solutions Act, or Heroes Act, a $3 trillion bill that would address many of the priorities Neal mentioned during his remarks. The House passed the Heroes Act in a vote that nearly all Republicans opposed May 15.

The legislation includes many tax provisions such as temporarily repealing the cap on state and local tax deductions for 2020 and 2021 and temporary expansions of the earned income and child tax credits. The bill would institute a second round of economic impact payments to many Americans in the form of refundable tax credits, while rolling back provisions that changed the tax treatment of business losses in previous virus relief legislation.

The Heroes Act would also increase the employee retention credit to be worth 80% of qualified wages up to $15,000 per calendar quarter and up to $45,000 for the calendar year. The threshold for determining a "large employer" would be increased, from companies with more than 100 employees to companies with more than 1,500 employees or gross receipts above $41.5 million.

Following Neal's remarks during the webinar, Mark Mazur, director of the Urban-Brookings Tax Policy Center, said the next virus relief bill would solicit "great interest" from lawmakers because it's most likely the last tax policy vehicle until the lame duck session of Congress following November elections. With national party conventions delayed until at least August, Congress will have June and July to prepare another round of coronavirus legislation.

Mazur said that the employee retention tax credit and ensuring the PPP loan program works properly should be in the next virus relief bill, and another round of direct stimulus payments to taxpayers remains an open question. Including infrastructure in the legislative package to address the coronavirus pandemic could be a way to garner wider bipartisan support, Mazur said.

The Treasury Department didn't immediately respond to a request for comment.

--Additional reporting by Andrew Kragie, Alan K. Ota and Stephen Cooper. Editing by Robert Rudinger.

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