How carbon capture works and the debate about whether it's a future climate solution
Power plants and industrial facilities that emit carbon dioxide, the primary driver of global warming, are hopeful that Congress will keep tax credits for capturing the gas and storing it deep underground.
The process, called carbon capture and sequestration, is seen by many as an important way to reduce pollution during a transition to renewable energy.
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Business Insider
24 minutes ago
- Business Insider
The clock's ticking on codifying DOGE cuts into law
Congress has until July 18 to pass a $9.4 billion DOGE cuts package. That includes cuts to foreign aid and public broadcasting. It's running into resistance from GOP senators. With just over three weeks to go before a critical deadline, the push to codify DOGE cuts is hitting resistance on Capitol Hill. Several GOP senators sound skeptical about the $9.4 billion in cuts to foreign aid and public broadcasting funding that the Trump administration is asking Congress to approve, raising the prospect of a high-profile setback for the DOGE project just weeks after Elon Musk and President Donald Trump's public feud. The House narrowly approved the cuts, in part identified by Musk and the White House DOGE Office, earlier this month. The administration's troubles were evident at a Senate Appropriations Committee hearing on Wednesday. Lawmakers in both parties highlighted the potential negative impacts of clawing back the funding as they heard testimony from Russell Vought, the director of the White House Office of Management and Budget. "We have Native American radio stations in South Dakota. They get their funding through NPR, 90-some percent of what they use," Republican Sen. Mike Rounds of South Dakota said at the hearing. "They will not continue to exist if we don't find a way to take care of their needs." Republican Sen. Susan Collins of Maine, the committee chair, also raised concerns about the $1.1 billion in public broadcasting cuts. Another moderate Republican, Sen. Lisa Murkowski of Alaska, has previously said that she's opposed to the cuts because rural Alaskan communities depend on the funding. Several GOP lawmakers are also concerned about the $8.3 billion in foreign aid cuts. Sen. Mitch McConnell of Kentucky, the former Senate GOP leader, broadly criticized DOGE efforts to cut wasteful foreign aid spending during his remarks at the hearing. "There's plenty of absolute nonsense masquerading as American aid that shouldn't receive another bit of taxpayer funding," McConnell said. "But the administration's attempt to root it out has been unnecessarily chaotic." Several of them have raised concerns in particular about cuts to PEPFAR, a global program to combat and treat HIV/AIDS, though the administration has insisted that life-saving programs will continue to receive funding. 'My biggest concern is that the appropriations process work' Democratic senators are expected to unanimously oppose the cuts, just as their counterparts did in the House. With the Senate divided 53-47, that means Republicans can only afford to lose three votes. The administration is using a process known as "rescission" to pursue the cuts, which allows the White House to ask Congress to claw back money it has already approved. The process has not been successfully used in over two decades, and the Senate rejected a rescission request in 2018, during Trump's first term. Lawmakers must approve the cuts within 45 days of the request — July 18 — or Trump is required by law to spend the money. The administration has said that this could be the first of several rescission requests. Democrats have argued that the prospect of constant rescissions threatens to undermine the bipartisan government funding process, where both parties agree to provisions in funding bills that they may not support in order to get enough votes to clear the 60-vote filibuster threshold in the Senate. Rescissions only require 51 votes in the Senate, raising the prospect that Republicans, led by the White House, could unilaterally strip out Democratic priorities after funding bills are passed. At least one Republican senator appeared to be listening to those arguments on Thursday. "My biggest concern is that the appropriations process work, and that Republicans and Democrats agree that the process will end up in a negotiated settlement," Rounds said. "If we get to the point where the Democrats look at this and say, 'We can put it in the bill, but they're not going to fund it, or they're not going to use it,' then there's no reason for them to work with us to get to 60 votes." Rounds said that he would "try to negotiate" with the administration about preserving public broadcasting funding, while Collins told reporters after the hearing that she wanted to see "fundamental changes" to the bill and was working on an amended version. If the Senate passes an amended version of the bill, the House would have to pass the measure again before the July 18 deadline.
The Hill
33 minutes ago
- The Hill
The tax code has a hidden bias against hiring US citizens
Congress designed the tax code to raise revenue and to foster various policy goals. In doing that, it should not discriminate against its own people. But when it comes to employment hiring decisions, it does exactly that — it incentivizes employers to employ immigrants over equally qualified U.S. citizens and resident counterparts. How is this possible? A common experience shared by U.S. citizens and residents is seeing sizable portions of their paychecks taken out in the form of employment taxes to fund Social Security and Medicare. In addition, their employers must separately pay these taxes too (and federal unemployment tax to boot). The combination of employment taxes is not insignificant, taking a steep percentage out of workers' paychecks and similarly reducing business profitability. Perhaps surprisingly, the situation is wholly different with respect to foreign students coming to the nation's shores. The tax code exempts workers on student visas and their employers from employment taxes. In the past, the cost in foregone tax revenue associated with the student visa tax exemption was likely meager. The number of foreign students was negligible, and it was perhaps expected that many would return to their home countries. Yet in today's global environment, and given the broad desire for U.S.-based education and work experience, the number of foreign students attending U.S. universities has dramatically increased over the last half century. This fundamental transformation is one that Congress likely neither accounted for nor contemplated, and it is costing billions in foregone tax revenue. How does this employment bias manifest itself in the workplace? Suppose a newly hired U.S. citizen were to earn $100,000 in wages. She would pay $7,650 in Social Security and Medicare taxes, and her employer would bear an equivalent tax, plus a federal unemployment tax of $420. In contrast, if this same person were on a student visa, or a recent foreign graduate allowed to work in the U.S., neither she nor her employer would pay any employment tax. Given the choice between two equally qualified job candidates — the U.S. citizen or the foreign candidate — the economic choice is clear: The foreign candidate is cheaper to hire due to the reduced tax burden. This discriminatory effect may be even more pronounced for entry-level jobs, given that many applicants share the same bona fides — namely, being a recent college graduate. Historically, there is an underlying rationale for this exemption. Foreign students generally would not be eligible for the programs supported by these taxes (e.g., Social Security), particularly if they returned to their home country after graduation. However, facts on the proverbial ground have changed. First, many students may later seek citizenship or residency in the U.S. Second, there is a pressing financial need to keep Social Security solvent. Finally, query whether the tax code should discriminate against its own citizens and residents as they compete in an ever-more demanding and competitive workforce. Congress has several reform options it might consider. It could, for example, repeal the exemption altogether or repeal the exemption on the employer tax obligation; alternatively, it could strictly limit the exemption to those students up to the point when they secure their degrees. Fundamentally, the tax code should not discriminate against its own citizens. Indeed, as Congress reexamines tax and immigration policies, it should also critically examine their intersection and the incentives it creates and those it may harm. Congress should give due consideration to this important issue and decide whether the status quo is in our national interest or if reform is needed. Jay A. Soled is a distinguished professor of Taxation at Rutgers Business School and Timothy M. Todd is dean and professor of Law at Liberty University School of Law. They are the authors of the academic article, 'Hiring Biases Fostered Under the Code.'
Yahoo
33 minutes ago
- Yahoo
Trump's 'revenge tax' on other countries could hit U.S.
A controversial tax being proposed by President Donald Trump's administration that could cost Canadians and Canadian businesses billions is also likely to cost the U.S. government, according to an assessment by a non-partisan U.S. congressional office. It is also likely to cost American companies by prompting investors from countries hit with the tax to move investments out of the U.S, according to the assessment. Dubbed the "revenge tax," Section 899 of Trump's One Big Beautiful Bill Act calls for a new withholding tax to be imposed on investment income paid out by American companies to investors who live in countries the U.S. government considers to have unfair or discriminatory taxes. Canada's digital services tax, which hits companies like Amazon, Google, Meta, Uber and Airbnb with a tax on revenue from Canadian users, is among the taxes the U.S. considers discriminatory. Top Canadian officials acknowledge privately that they are concerned by the prospect of Trump's new withholding tax and are closely watching what is happening in Washington — as are Canadian investors, companies, investment advisors and tax lawyers. Federal Finance Minister François-Philippe Champagne says he's standing by the tax — which has its first big payment due June 30. "The DST is in force and it's going to be applied," he told reporters on Parliament Hill last week. Two different versions of Section 899 are currently before Congress, but both versions risk hitting Canadians and Canadian companies with a new withholding tax. The version adopted by the House of Representatives would take effect quickly and impose a five per cent withholding tax on things like dividends to Canadians from U.S. companies, adding another five per cent each year to a maximum of 20 per cent. An amendment to that section, currently before the Senate, would delay the tax until 2027 and would top it out at 15 per cent. The Senate has not yet voted on the bill, although it is being pressured by Trump to approve the legislation by July 4, the U.S. national holiday. A study of Section 899 by the U.S. Congress's non-partisan Joint Committee on Taxation (JCT), which performs a function similar to Canada's Office of the Parliamentary Budget Officer, predicts that the new tax would initially bring billions into the U.S. Treasury. However, it also predicts those revenues would then start to decline — and that by 2033 or 2034 it would actually lead to a drop in revenue. The version of Section 899 adopted by the House of Representatives is expected to rake in an estimated $116.3 billion US between 2025 and 2034 for the U.S. Treasury, with $12.5 billion US in 2026 rising to $28.7 billion US in 2027 and $31.8 billion US in 2028. However, the analysis projects that revenues would then start to decline. By 2033, the withholding tax is projected to cost the U.S. Treasury $4.8 billion US in lost revenue and, by 2034, $8.1 billion US. The amended version of Section 899 is projected to bring in only $52.2 billion US between 2025 and 2034. But by 2034 it too would cost the U.S. government $2.5 billion US in lost revenue. A source familiar with the JCT's work said its analysis assumes that the U.S. gross national product will remain fixed and foreign laws, like the DST, will not change. What it assumes will change, however, is the behaviour of individuals and companies to avoid the withholding tax. The JCT projects that the reduction in demand for direct and portfolio investment on the part of foreign investors will reduce the value of U.S. assets. In turn, that drop in value will lead to a loss in tax revenue for the U.S. Treasury. David Macdonald, senior economist with the Canadian Centre for Policy Alternatives, said the JCT's analysis makes a very big assumption — that countries like Canada won't hit back at the U.S. with their own retaliatory taxes. He said the ongoing trade war has shown that Canada is willing to hit back. Should Canada retaliate, Macdonald said the U.S. is more exposed than Canada on the tax front because a lot of American companies operate here. "They make a lot more profits in Canada than Canadian companies make in profits operating in the U.S.," Macdonald said. Macdonald agreed with the JCT's assessment that the withholding tax could prompt an exodus of investment in U.S. securities, predicting that many companies are probably already figuring out ways to hedge their investments. He said this is bad for business and risks damaging the economies of both countries. "Nobody wins a trade war and nobody wins a tax war," said Macdonald.
