House Ways and Means Committee Democrats appear closer to consideration of a tax extenders bill after Chairman Richard Neal (D-MA) discussed with members June 11 the possibility of a package to extend through 2020 provisions that expired at the end of 2017 and 2018, and will expire at the end of 2019. A markup could occur as soon as the week of June 17.

The primary revenue offset for the package would be an accelerated sunset of the Tax Cuts and Jobs Act (TCJA) estate tax regime. The TCJA roughly doubled the estate tax exemption, which is an inflation-adjusted $11.4 million per-person for 2019 and is currently scheduled to revert to the 2017 level in 2026. The exemption would be reduced sooner under the plan being contemplated by Ways and Means, and the Committee in recent weeks has discussed having the higher exemption amount expire at the end of 2023 instead of the end of 2025.

Another revenue offset apparently being discussed in relation to the bill, a one percentage point increase in the 21% statutory corporate income tax rate, is reportedly being contemplated to pay for a two-year expansion of the Earned Income Tax Credit and child and dependent care tax credit. Enhancements under discussion include expansion of the EITC to childless workers, full refundability for both credits, an increase in the exclusion for employer-provided dependent care assistance, and benefits for Puerto Rico and other territories.

The package could also provide disaster tax relief assistance for those affected by disasters occurring since the beginning of 2018.

A tax extenders bill (S. 617) introduced in February by Senate Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) would retroactively extend, through 2019, the 26 tax provisions that have been expired since the end of 2017 and another three that expired at the end of 2018 (the reduction in the deduction floor for medical expenses, the oil spill liability trust fund rate, and the black lung liability trust fund excise tax).

Provisions that expire at the end of 2019 include: look-through treatment of payments between related controlled foreign corporations under the foreign personal holding company rules (CFC look-thru rule); the work opportunity credit; the new markets tax credit; and the beginning-of-construction date for wind renewable power facilities eligible to claim the electricity production credit or investment credit in lieu of the production credit. Provisions expiring at the end of 2019 would potentially be extended through the end of 2020 under the bill being contemplated by the Ways and Means Committee, as would the provisions that expired at the end of 2017 and 2018.

House Democrats, having adopted new "pay-go" rules for bills coming to the House floor, have been particularly sensitive to trying to ensure that any revenue losing bills are offset. While extensions of expired or expiring provisions have traditionally not been offset, it appears including offsets may be necessary in order to get a bill out of the Ways and Means Committee and through the House. The accelerated sunset of the estate tax exemption level and the potential increase in the corporate rate may not be well-received by Republicans in control of the Senate, leaving uncertain the question of whether and how an extenders package will ultimately be paid for.

Chairman Grassley and Ways and Means Ranking Member Kevin Brady (R-TX) issued a joint statement June 11 saying: "If press reports are true, this proposal is a non-starter. Raising taxes on American families and businesses would throw a wrench in this historically strong economy and destroy an untold number of jobs across the country. We hope that House Democrats instead choose to work with us to end business-as-usual as it concerns these temporary tax provisions and not use these provisions as leverage in unrelated tax policy disagreements. It's simply not fair to the millions of American taxpayers who have waited long enough for Congress to address expired and expiring tax policies."

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