Stimulus checks, but not as many

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With help from Brian Faler

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Quick Fix

— Baby steps on the next coronavirus package: Senate Majority Leader Mitch McConnell floated the idea of a stricter income cap on a second round of stimulus checks.

— Oh, there were takes on this: A foundation of Grover Norquist’s Americans for Tax Reform, with its longstanding goal of shrinking the size of government, was among the groups that accepted Paycheck Protection Program loans.

— Margrethe Vestager, Silicon Valley’s bane from Brussels, still has Big Tech in her sights.

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Driving the Day

WHAT’S NEXT? There certainly doesn’t seem to be any sprint toward reaching a fourth or fifth (depending on your definition) Covid-19 relief measure, with McConnell also saying on Monday while back in Kentucky that Senate Republicans would release a new proposal once they return to Washington in two weeks — which would give Congress about two more workweeks to figure something out before expanded unemployment insurance runs out.

But the majority leader did sound pretty onboard with another round of stimulus checks, as NBC News reported, something that House Democrats also approved in their latest coronavirus package back in May, and that the White House has become more vocal in supporting. McConnell’s marker — suggesting those checks should be limited to those making around $40,000 a year — also came as no surprise to Democrats, who have been hearing Republicans say that the next Covid-19 legislation should be more targeted for awhile now.

There’s clearly still some fleshing out needed there — for instance, would that $40,000 be for single filers? And if so, what’s the cut-off for married couples? (Stimulus checks phased out completely at $99,000 and $198,000 in the CARES Act.) In any event, it suggests that Republicans are consolidating behind the idea of sending direct payments to a smaller universe of taxpayers, if still a pretty large chunk of families.

More Covid-19 odds and ends: McConnell also specifically pointed out how the pandemic has dragged down key parts of the tourism industry, like hotels and restaurants — another area where both President Donald Trump and other GOP officials have been talking about offering aid.

Interestingly enough, the chief executive of Tripadvisor, Stephen Kaufer, said over the weekend that a tax incentive for vacationers — one of the ideas that’s out there, and one that hasn’t gotten great reviews from experts — wouldn’t make much of a difference.

“What’s best for the travel industry, at least my opinion, is really getting the pandemic under control. And that isn’t about a tax credit for someone to take a vacation, it’s really about leadership from our federal government, from the state governments, from local governments,” Kaufer said on CBS’ “Face the Nation.”

More Sunday show: Labor Secretary Eugene Scalia reiterated the Trump administration’s interest in a payroll tax cut on “Fox News Sunday,” even though the White House is on something of an island with that desire.

And finally: Here’s another group hoping for help from the next Covid-19 measure — barbershops and beauty salons, lots of which are owned by minorities and/or women and can’t offer takeout like restaurants. The Professional Beauty Association is seeking the same kind of incentive currently available to restaurants, which can get a tax credit for payroll taxes paid on customer tips, as Bloomberg Tax’s Kaustuv Basu noted.

THEY WERE DOWN WITH PPP: The ATR affiliate received between $150,000 and $350,000 from PPP, according to data released on Monday by the Treasury Department and Small Business Administration.

Of course, Norquist has long fought for lower taxes while railing against federal spending — he once famously said he hoped to shrink the government down to a size that it could be drowned in a bathtub. In a statement, ATR said the money was for its foundation, a related 501c(3) organization that it said had been “badly hurt” by the lockdown, and the loan allowed it to “maintain its employees without laying anyone off.” ATR also noted in the statement that it did not oppose creating the PPP because it was “compensation for a government taking during the shutdown.”

But also of course: That didn’t stop the charges of hypocrisy from flowing in. (Among the other groups to get a PPP loan: The Ayn Rand Institute.) “So much for his disdain for federal assistance,” as Elise Bean, a former Senate tax investigator, put it. “Instead, his organization is now a poster child showing how PPP funds are going to those who don’t need the money but are well connected — here, an anti-tax group that reports losses year after year but has never gone out of business.”

Others noted that Norquist signed on to a letter imploring Washington to stop pouring on the spending after the CARES Act was passed — something that would, for instance, make life more difficult for states and localities that are also trying to stave off layoffs.

And yet: Hypocrisy accusations aside, most everyone seems to agree that the ATR foundation used the program exactly as policymakers intended. Also of note: There are still PPP funds left over, so the foundation didn’t box out another company or organization for the money. Another good question: Might it have been better for the government’s bottom line for the foundation to take the loan, instead of laying off employees who then would have gotten expanded unemployment insurance?

Around the World

SHE’S BACK: Vestager is starting to lay out a new regulatory agenda aimed at fostering more competition in the tech field, dealing with issues like companies’ liabilities for their content. But on the tax front, the big issue in Brussels is still a bloc-wide digital tax now that the global Organization for Economic Cooperation and Development process is on the skids. And Vestager remains a full-throated supporter of that idea: “So many businesses have to work very hard to make a profit, and from that profit to then pay taxes,” she said, via The Wall Street Journal. “They should not be met with competitors for capital, skilled employees and customers who do not contribute to society.

More OECD: Watch out for this — as our colleagues in Europe noted, the OECD is considering decoupling Pillar One (dealing with tax base issues) and Pillar Two (seeking a global minimum tax), and could put that idea in front of G-20 finance ministers in the coming weeks. That’s basically what Treasury Secretary Steven Mnuchin called for when he threw the talks into upheaval last month, but it’s also not something that may go over well among other negotiators.

Around the Nation

IT’S ON: The Seattle City Council cleared a new tax on big businesses that’s expected to raise some $200 million a year for housing and other priorities, The Seattle Times reported. It’s the latest effort by the council to squeeze more revenue out of Amazon and other companies paying high salaries in the city. Mayor Jenny Durkan has supported previous measures to tax big companies, but has expressed concerns about the new bill that would tax businesses based on how many employees make at least $150,000 a year.

Quick Links

Progressive groups are going after House Ways and Means Chairman Richard Neal (D-Mass.), who could be the next big name in a highly watched primary.

Rep. Bill Pascrell (D-N.J.) is recovering from heart surgery.

WSJ obituary on Edward Kleinbard: “Tax lawyer reinvented himself as a crusading professor.”

The Accidental Americans Association is filing a new lawsuit over the Foreign Account Tax Compliance Act.

Did You Know?

Chillicothe, Ohio, was twice that state’s capital, and was also Ohio’s first capital. It was replaced for good by Columbus in 1816.