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SEC stops defense of climate disclosure rule

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The Securities and Exchange Commission voted to end its legal defense of the climate-related disclosure rule it approved last year under the Biden administration.

The climate disclosure rule was facing numerous lawsuits from business groups and a temporary stay imposed by a court, the SEC had already paused it last April after narrowly approving a watered-down rule last March. The former SEC chairman, Gary Gensler, who had pushed for the rule, stepped down in January and acting chairman, Mark Uyeda, who had voted against the rule, announced in February that he was directing the SEC staff to ask a federal appeals court not to schedule the case for argument. He cited a recent presidential memorandum from the Trump administration imposing a regulatory freeze, and he effectively paused the litigation. The vote on Thursday effectively suspends the rule.

“The goal of today’s Commission action and notification to the court is to cease the Commission’s involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules,” Uyeda said in a statement Thursday.

The SEC noted that states and private parties have challenged the rules, and the litigation was consolidated in the Eighth Circuit Court of Appals. SEC staff sent a letter to the court stating that the Commission was withdrawing its defense of the rules and that Commission counsel are no longer authorized to advance the arguments in the brief the Commission had filed. The letter stated that the SEC yields any oral argument time back to the court.

One of the SEC commissioners blasted the move and pointed to the arduous, years-long process of crafting the climate rule. “By way of politics, the current Commission would like to dismantle that rule. And they would like to do so unlawfully,” said SEC commissioner Caroline Crenshaw in a statement Thursday. “The Administrative Procedure Act governs the process by which we make rules. The APA prescribes a careful, considered framework that applies both to the promulgation of new rules and the rescission of existing ones. There are no backdoors or shortcuts. But that is exactly what the Commission attempts today. By its letter, we are apparently letting the Climate-Related Disclosures Rule stand but are withdrawing from its defense in court. This leaves other parties, including the court, in a strange and perhaps untenable situation. In effect, the majority of the Commission is crossing their fingers and rooting for the demise of this rule, while they eat popcorn on the sidelines.”

Environmental groups were critical of the SEC’s vote. “Climate change is a growing financial risk, and ending the SEC’s defense of its own climate disclosure rule is a dangerous retreat from investor protection,” said Ben Cushing, sustainable finance campaign director at the Sierra Club, in a statement. “Letting companies hide climate risks doesn’t make those risks any less real — it just makes it harder for investors to manage them and protect their long-term savings. The SEC is leaving investors in the dark at exactly the moment transparency and action is most needed.”

“The SEC was established to protect investors, and for more than 20 years, investors have clearly and overwhelmingly stated that they need more clear, consistent, and decision-useful information on companies’ exposure to climate-related financial risks,” said Steven M. Rothstein, Ceres’s managing director for the Ceres Accelerator for Sustainable Capital Markets, in a statement. “The ongoing acceleration of physical climate impacts, including the tragic fires in Los Angeles, has underscored the importance of transparency on these risks. Investors have clearly indicated they require better disclosure, with $50 trillion in assets under management broadly supportive of the rule adopted in March 2024. This is clearly a step backward in helping investors and other market participants have the information they need to manage climate-related financial risks.”  

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Accounting

Millionaire tax would generate about $400B in revenue

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A Republican proposal to impose a tax hike on millionaires offers to generate about $400 billion over a decade, according to two new estimates provided to Bloomberg News, providing fresh revenue to partially offset the cost of the party’s multitrillion-dollar tax package.

The Budget Lab at Yale projects that taxing income over $1 million at a 40% rate would generate $420 billion over a decade. The Tax Foundation in its own preliminary analysis finds that the new bracket would raise $358 billion over the same 10-year period, according to Garrett Watson, the director of policy analysis for the think tank. 

The two estimates from nonpartisan think tanks differ slightly because each group uses different assumptions about economic performance. But the figures suggest that the creation of a millionaire tax bracket could help President Donald Trump enact some of his campaign trail pledges, including eliminating taxes on tips, which is estimated to cost $118 billion over ten years.

Lawmakers are slated to return to Washington next week following a two-week recess, with their top priority crafting a package to renew Trump’s 2017 cuts for households and closely held businesses. They’re also discussing new priorities, including ending taxation on overtime pay and new tax breaks for seniors and car buyers. No taxes on overtime pay would cost at least $680 billion over 10 years, according to the Tax Foundation.

The Senate has deployed an accounting gimmick so that the $3.8 trillion cost of extending Trump’s first-term tax cuts counts as $0 for budgeting purposes. But Republicans have a strict $1.5 trillion revenue limit for any new reductions, putting pressure on them to scale back some of their ideas or find revenue offsets — such as the millionaire bracket — to pay for new tax breaks.

Trump has indicated he is open to higher taxes on the wealthiest Americans, but not all Republicans are convinced it’s a good idea. The concept of higher levies on top earners runs counter to years of Republican orthodoxy.

House Majority Leader Steve Scalise has pushed back, saying they oppose any rate increase. Iowa Senator Chuck Grassley told constituents at a town hall last week that an increase in the top rate is slated to be discussed in the Senate Finance Committee, but added “that doesn’t mean it’s going to happen.”

“It’s certainly on the table,” House Ways and Means Committee member Nicole Malliotakis of New York said Monday on Bloomberg Television. orted.

Lawmakers interested in the idea argue that it would be good politics to raise taxes on the wealthy to create new working class tax breaks, including a possible increase in the child tax credit.

Raising an additional $400 billion from millionaires is approximately enough money to increase the child tax credit for parents to $2,500 from $2,000, according to Andrew Lautz of the Bipartisan Policy Center. The general rule of thumb is that a $1,000 increase in the child tax credit costs about $700 billion, he said.

Lawmakers have wide latitude to debate the level of a new rate and at what income threshold it kicks in. For example, lawmakers could have the higher tax rate kick in at $5 million in income, generating only $150 billion over 10 years, the Budget Lab estimates. That would affect 75,000 taxpayers, compared to 650,000 taxpayers who would see their taxes rise if the 40% rate applied to income starting at $1 million. 

The analyses don’t address if Congress makes any changes to the 20% pass-through deduction. Expanding the top bracket would impact business owners who pay their company taxes on their individual tax returns. Lawmakers like North Carolina’s Thom Tillis have said they are open to the millionaire bracket, but want to include some carveouts for business income.

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Accounting

Democrats take aim at Puerto Rico tax perks for crypto

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Democratic lawmakers on Monday introduced a bill to block investors from using Puerto Rico as a cryptocurrency tax haven — a proposal unlikely to advance without Republican support and as Congress prioritizes extending the 2017 tax cuts.

Under current laws, qualified investors living in the U.S. Commonwealth are not required to pay local or federal taxes on capital gains, including crypto appreciation. That tax break — part of a broader package of tax incentives known as Act 60 — has made the island a haven for thousands of digital currency enthusiasts.  

The bill introduced by New York Representative Nydia Velazquez and other Democratic lawmakers comes as President Donald Trump has been embracing crypto and promised to slash regulations that affect digital assets.

If passed, the Fair Taxation of Digital Assets in Puerto Rico Act of 2025 would add a new section to the Internal Revenue Code that would make digital-asset income on the island subject to federal rules.

In a statement to Bloomberg News, Velazquez said the bill will close a critical loophole, “making sure everyone plays by the same rules.”

“This wave of crypto investors hasn’t helped Puerto Rico’s recovery or strengthened the local economy,” Velazquez said. “Instead, it’s driven up housing costs, pushed out local residents, and added pressure to an island where nearly 40% of people live in poverty — all while costing the federal government billions in lost tax revenue.”

According to Velazquez’s office, Puerto Rico will lose an estimated $4.5 billion in revenue from 2020 to 2026 due to tax breaks for wealthy investors.  

Earlier this month, Governor Jenniffer Gonzalez presented a package of measures that would extend Act 60 benefits through 2055, but also require new applicants for the incentives to pay 4% on capital gains. By contrast, cryptocurrency holders on the U.S. mainland might pay as much as 20% and 37% on long-term and short-term capital gains, respectively, according to Velazquez’s office. 

Crypto boosters say the tax breaks are drawing high net-worth individuals with fintech expertise to the struggling island. Among those who call Puerto Rico home are Dan Morehead, the founder of Pantera Capital, a crypto-focused investment firm; crypto evangelist Brock Pierce; and YouTube celebrity and sometime digital-asset promoter Jake Paul.

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Accounting

Tennessee passes law expanding CPA licensure path

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The Tennessee General Assembly passed legislation backed by the Tennessee Society of CPAs adding an extra pathway to a CPA license, as more states make efforts to alleviate the shortage of new accountants.

SB 1316/HB 1330, introduced by Senate Majority Leader Jack Johnson and House Majority Leader William Lamberth on behalf of the administration, was filed for introduction on Feb. 6. The legislation aligns with Tennessee Governor Bill Lee’s goal to streamline state boards and simplify licensing. Members of the Tennessee Society of CPAs lobbied for licensing changes in February.

The legislation offers two pathways to licensure for prospective CPAs starting Jan. 1, 2026. Applicants can either:

  • Ccomplete the traditional path of at least 150 semester hours of college education including a bachelor’s degree plus one year of accounting experience; or,
  • Complete at least 120 semester hours of college education including a bachelor’s degree plus two years of accounting experience.

For both options, the coursework needs to include an accounting concentration as determined by Tennessee State Board of Accountancy rule.
In addition, the legislation includes CPA practice mobility provisions so CPAs can still practice across state lines. Current and future CPAs who don’t have a principal place of business in Tennessee will be able to practice in the state if they hold a valid CPA license in good standing from another state and if, at the time of licensure, they showed evidence of having passed the Uniform CPA Exam. They need to consent to the jurisdiction and disciplinary authority of the TSBOA, comply with the applicable statute and board rules of the state, and cease offering services in Tennessee if their license in the state of issuance is deemed to be no longer valid. These changes will take effect July 1, 2025.

(Read more: See what other states are doing to expand paths to becoming a CPA.)

“This legislation is a key step in ensuring that the demand for skilled accounting professionals, specifically licensed CPAs, can be met now and in the future,” said TSCPA president and CEO Kara Fitzgerald in a statement Monday. “Tennessee was a leader in advocating for the 150-hour rule in the 1990s, and as the needs of the profession change, Tennessee will continue to lead in evolving our licensure model to make sure we meet those needs.”

The bill will now be sent to Gov. Lee and, once he signs it, will become effective on the dates stated above.

Other states besides Tennessee have been expanding beyond the traditional 150-hour requirement for CPA licensure with alternative pathways. Earlier this month, Iowa added another pathway to CPA licensure and Georgia passed a CPA licensure bill.

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