Pressure remains on the high resolution debt limit

CBO: Significant risk that the federal government will run out of cash and borrowing power before June 15. In a May 12 report, the Congressional Budget Office wrote that failure to act on the debt limit “will ultimately result in payment delays for some government activities, a default on the government’s debt obligations, or both.” A default “could cause distress in credit markets, disruptions in economic activity, and rapid increases in Treasury rates,” the CBO said.

Indeed, paying off the national debt could be catastrophic. or worse. TPC’s Len Burman warns that “the risk of a national debt default … could send the world economy into recession or depression.” Worse, the exercise could also become routine in the future if lawmakers see holding the debt ceiling hostage as a way to pass other reforms, Burman writes.

On Capitol Hill this week… The Senate Budget Committee will hold a hearing Wednesday to examine how tax cuts for the wealthy and corporations relate to the national debt. The Senate Finance Committee will hold several hearings. Tuesday’s full panel will examine how additional funding for the IRS could affect the federal law enforcement system and the federal deficit; The Subcommittee on International Trade, Customs and Global Competitiveness will study economic cooperation issues; The Health Subcommittee will hold a hearing Wednesday on improving access to health care in rural communities; And on Thursday, the full panel will examine the tax breaks in the Inflation Reduction Act that affect energy communities. The House Ways and Means Committee will hold a hearing on health care price transparency on Tuesday, and its subcommittee on health will hold a hearing on health care access on Wednesday.

And tomorrow at TPC: “Increasing Revenue from Corporations.” TPC and the University of North Carolina Tax Center are hosting a virtual event beginning at 11:00 am. Two expert panels will assess the implications of proposals to use corporate financial income as the tax base and to impose an additional tax on the purchase of corporate shares. Keynote speaker Itai Greenberg, former Deputy Assistant Secretary for Multilateral Negotiations at the US Department of the Treasury, discusses the new global tax treaty that is working and how it could change the way multinational corporations are taxed. Learn more and register here.

One year tax freeze in Portland, Oregon? Portland city bureaus want to raise taxes and fees in the upcoming annual budget. But Mayor Ted Wheeler plans to seek a one-year tax freeze, which could require budget cuts or cuts to municipal services next year. “The bottom line for me is that Portlanders are overwhelmed with increased taxes, utility rates and fees,” he said. “I’m asking government leaders at all levels to work together to protect those affected by this increase and protect our economic future.”

For the latest tax news, subscribe to the Tax Policy Center’s Daily Deductions. Sign up here Get it delivered to your inbox by 8:00 a.m. weekdays (only on Mondays when Congress is in recess). We welcome tips on new research or other news. Email to Renu Zaretsky [email protected].

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