Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. HAVE WE SAID ALL EYES ON MANCHIN? To Clyburn's point, Manchin — whose opposition to the previous version of the BBB has left everything in limbo for more than a month now— has suggested that any further talks on the White House's climate and safety net agenda haven't gotten that serious in recent weeks. But the West Virginia Democrat has left something of a roadmap for a potentially slimmed-down BBB, including on both the big picture construction of the legislation and its individual parts. (Manchin has also pushed for work requirements to be paired with the Child Tax Credit, which seems to be a tougher sell among his fellow Democrats.) At the same time, congressional leaders don't seem to be overpromising on Build Back Better these days. Congress has a mid-February deadline for government funding, and Speaker Nancy Pelosi is teeing up a China competitiveness bill as the House waits to see what develops with Manchin. Something else worth watching: The business lobby by and large has spent months and months trying to kill the BBB. But there could be at least a bit of downside for some companies if that actually happens. For instance, multinationals could get double taxed on foreign profits if other countries implement the minimum tax engineered by the global tax agreement, and the U.S. doesn't make any changes to its existing minimum tax as part of its social spending package, as The Wall Street Journal's Andrew Duehren noted. Further reading: " A Biden ally takes over one of Build Back Better's main opponents," via our Hailey Fuchs. A SWING AROUND THE STATES: The trend is quite clear, and it's practically nationwide — states from coast to coast are cutting taxes in their new legislative sessions, helped in no small part by federal pandemic relief funds. But how states are deciding to cut taxes can vary quite a bit. And though it can be a bit too easy to fall into the red state/blue state divide when discussing tax cuts, there are some big-picture differences between how states run by Democrats and those run by Republicans are seeking to offer tax relief. And this is probably the biggest one: It's the red states that are really interested in income tax cuts. Idaho would drop its top rate as part of a record-setting tax cut currently moving through the legislature. Lawmakers in Utah are wasting no time in doing something similar, by cutting the state's single income tax rate. Meanwhile, Republicans in Iowa want to move to a flat income tax , with some hoping to scrap the income tax altogether. A number of GOP officials in Mississippi also want the income tax gone for good, while Arkansas already beat some of their fellow red states to the punch — cutting taxes in a special session in December. (And this isn't even getting into the possibilities in Indiana, South Carolina, West Virginia and other states.) There might be a blue state here or there looking at cutting income taxes — Gov. Kathy Hochul in New York has proposed accelerating middle-class tax cuts already on the books, for example, as the Tax Foundation's Jared Walczak pointed out. This hasn't gone unnoticed among progressive groups, either. The Center on Budget and Policy Priorities and others have come out swinging against tax cut proposals they believe would essentially leverage temporary funding infusions into permanent tax cuts heavily weighted toward the rich and business interests. More sympathetic groups would say that income tax cuts are good for the economy, and there's a longstanding argument over how much lower state taxes can lure new residents. But back to the point at hand: It's also interesting that the kind of tax cuts generally associated with blue states, more targeted exemptions and credits, are being embraced by red, blue and purple states. Both California and Idaho, for instance, are looking into direct payments. Officials in Iowa, Nebraska and New Mexico have examined exempting retirement or Social Security income from taxation. And as Richard Auxier of the Urban-Brookings Tax Policy Center has noted, state versions of the Earned Income Tax Credit are all the rage all around the country. Michigan, with a Democratic governor and Republican legislature, are looking into expanding their version, while Connecticut and Hawaii are thinking the same. More on this below, but Arizona — fully controlled by Republicans — is also thinking about an EITC, after Indiana, Missouri and Oklahoma all expanded theirs last year.
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