This week (January 25-29)

Congress in: The House and Senate are in session this week. The first House votes of the week were pushed from Monday until Tuesday in light of inclement weather expected in Washington. The House is set to vote on an override of the President's veto of the reconciliation bill that repeals significant portions of the Affordable Care Act. The vote is expected to fail. On Tuesday, January 26, the Senate will begin consideration of S. 2012, the Energy Policy Modernization Act of 2015.

Ways and Means retreat: House Ways and Means Committee Republicans are set to hold a retreat at the Library of Congress.

CBO outlook: CBO plans to release the full Budget and Economic Outlook: 2016 to 2026.

Finance retirement hearing: On January 26 (at 10:00 a.m.), the Senate Finance Committee will hold a hearing on "Helping Americans Prepare for Retirement: Increasing Access, Participation and Coverage in Retirement Savings Plans." Witnesses:

— Dr. Alicia Munnell, Peter F. Drucker, Professor of Management Science, Director Boston College Carroll School of Management, Center for Retirement Research at Boston College, Chestnut Hill, MA
— Mr. John J. Kalamarides, Head of Institutional Investment Solutions, Prudential Financial, Hartford, CT
— Mr. Thomas Barthold, Chief of Staff, Joint Committee on Taxation, Washington, DC

Ways and Means hearing rescheduled: The first Ways and Means Committee hearing of the year, scheduled for Tuesday, January 26 (at 10:00 a.m.), has been rescheduled for February 2. The hearing will focus on "reaching America's potential through pro-growth policies that deliver opportunities for all Americans."

Last week (January 18-22)

Hatch on corporate integration: Senate Finance Committee Chairman Orrin Hatch (R-UT) this week more directly addressed his interest in producing a corporate integration proposal, potentially to be released "in about a couple weeks." Last summer, the Finance Committee Business Income Tax working group released a report that discussed partial corporate integration, under which undistributed income would be taxed at the corporate level but income distributed to shareholders would be taxed only once. This week, Chairman Hatch told reporters that double taxation would be eliminated under his current effort. "It would go a long way toward stopping some of these inversions," Hatch said, according to Politico. Tax Notes reported Hatch as saying he is working on the issue on a bipartisan basis. "I'm going to try to go around it in a way that will bring both sides together," he said. Committee member Ben Cardin (D-MD) was quoted as saying there is bipartisan interest in the issue but the concern "is how you deal with it in isolation and how do you pay for it."

Angus is Ways & Means tax counsel: On January 20, House Ways and Means Committee Chairman Kevin Brady (R-TX) announced three new additions to his Committee senior staff team. Among them: Barbara Angus, currently EY International Tax Policy Leader – National Tax, will serve as Chief Tax Counsel for the Committee. Angus has also served as International Tax Counsel for the Treasury Department and Business Tax Counsel for the Joint Committee on Taxation.

Interest in international tax reform: Multiple press articles this week reported on the prospects for advancing international tax reform. House Speaker Paul Ryan (R-WI), Ways and Means Committee Chairman Brady, and Senator Chuck Schumer (D-NY) have all previously expressed interest in acting on the issue this year. A January 21 Bloomberg article reported on Senator Rob Portman's (R-OH) appeal to the bicameral Republican retreat in Baltimore January 13-14 that international tax reform should not be put off until a new president is in office. "We've got to deal with it. It's urgent," Portman told Bloomberg in an interview. The article also cited a senior administration official as having said President Obama's FY 2017 budget, which is scheduled to be released on February 9, will again propose using short-term revenue from international tax reform for infrastructure investment. An article in The Hill newspaper January 21 reported Senate Finance Committee Chairman Hatch as saying of international tax reform, "It's something that needs to be done. We should want to try to bring that money back but it's got to be done under certain circumstances." Hatch further said, "The real problem is what do you do with the money when it comes back." The article suggested Speaker Ryan would prefer the revenue be used for deficit reduction. Both reports acknowledged opposition from Senate Majority Leader Mitch McConnell (R-KY), who has said he would prefer to address tax reform on a comprehensive basis under a new president, and that revenue from tax reform should be used to lower tax rates.

Preliminary CBO outlook: In a preliminary summary of The Budget and Economic Outlook: 2016 to 2026, the Congressional Budget Office (CBO) projected an FY 2016 deficit of $544 billion, $105 billion more than the $439 billion FY 2015 deficit and the first increase following six years of decline. The FY 2016 estimate is $130 billion higher than the one that the agency projected in August 2015, which CBO said is largely attributable to the year-end tax extenders legislation. The deficit is projected to increase modestly through 2018 but then rise more sharply, reaching $1.4 trillion in 2026, CBO said. Over the 2016-2025 period (which was the 10-year projection period that CBO used last year), CBO now projects a cumulative deficit that is $1.5 trillion larger than the agency projected in August 2015. The increase is attributable to both the tax extenders legislation and lowered expectations for growth in the economy and reduced projections of tax receipts as a result. CBO projected a cumulative 2017-2026 deficit of $9.4 trillion. The projected deficit would increase debt held by the public to 76% of GDP by the end of 2016 and to 86% by the end of the 10-year period, "a little more than twice the average over the past five decades," CBO said. They released the summary of the report early to aid Congress in its work on the forthcoming budget resolution.

Heller letter to Lew: In a January 21 letter to Treasury Secretary Jack Lew, Senate Finance Committee member Dean Heller (R-NV) expressed concern that US multinational companies are being disproportionally targeted by some OECD countries and that the Administration is not taking steps to defend them. He specifically mentioned the European Commission's (EU Commission's) State Aid investigations, which were the subject of a January 15 letter to Lew from Finance Committee leaders, and the OECD Base Erosion and Profit Shifting (BEPS) project. Heller asked Lew for information on the impact of the BEPS project on Nevadan businesses and workers, as well as the impact over the past decade of our current tax code, "specifically our outdated international tax system," on wages and job investment in Nevada.

Quote of the Week

"There is growing momentum for addressing our international tax code, making it far more competitive, encouraging companies to reinvest their profits back in the United States and growing our economy by keeping companies from relocating their intellectual property overseas." — House Ways and Means Committee Chairman Kevin Brady (R-TX), reported by The Hill newspaper January 21.

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