December 8, 2021
What to expect in Washington (December 8)
Majority Leader Chuck Schumer (D-NY) said on the Senate floor December 6 the Build Back Better Act (H.R. 5376) budget reconciliation bill must be completed before the end of 2021 because expanded Child Tax Credit payments expire at the end of December and must "continue uninterrupted," a view also expressed this week by Ways & Means member Suzan DelBene (D-WA). In a December 6 letter to members, Senator Schumer maintained that he wants to get the bill done by Christmas and said, "Senate committees are preparing the Senate version of the bill by making necessary technical and 'Byrd proofing' edits to the House bill;" 8 of 12 committees with reconciliation instructions submitted final Senate text, but not Finance and HELP, with the two largest pieces of the bill; and the goal is to "finalize the remaining committees over the course of this week and next." That could put the bill on the Senate floor the week of December 20.
Appearing at the Wall Street Journal (WSJ) CEO Council December 7, Senator Joe Manchin (D-WV) repeated his trepidation about moving quickly on the bill citing the significance of the tax changes it includes, making provisions temporary to mask their true cost, and inflation concerns. "The unknown we're facing today is much greater than the need that people believe in this aspirational bill that we're looking at," he said. "We've gotta make sure we get this right. We just can't continue to flood the market, as we've done." (The next inflation report, the Consumer Price Index for November 2021, is scheduled to be released on Friday.)
Politico reported December 6 that some Democrats want to proceed with the BBBA even without a commitment of support from Senator Manchin. "My experience in this business is you have to bring it to a vote to finally see where you are. All this speculation notwithstanding, people have to face the reality of yes or no," said Senate Majority Whip Dick Durbin (D-Ill.). Manchin's had "more than enough time … there comes a point where the American people expect a result."
Tax - The House reconciliation bill's 15% minimum tax on book income for corporations with annual adjusted financial statement income over $1 billion — which became a focus of the bill after Senator Kyrsten Sinema (D-AZ) rejected rate increases — remains controversial and the subject of significant press and trade association attention over concerns from green energy companies, manufacturers, and pension plans.
A December 7 WSJ story said of the tax: "For many companies, the biggest problem will be accelerated depreciation for capital investments, often tied to high-paying manufacturing jobs. The large upfront tax deductions for accelerated depreciation are bigger than companies' expenses for book-income purposes, so those deductions would be harder to claim under the minimum tax. Similarly, companies with past losses can usually use those as tax deductions against current income. The plan allows the use of losses generated starting in 2020 but generally not older ones, which could be a problem for recent startups that turn profitable."
A December 6 Roll Call story: "Since it became clear in late October that the 15 percent minimum tax could make its way into the bill after what seemed to be a quixotic attempt by progressive lawmakers and the Biden administration, groups representing businesses and tax professionals have hurried to lobby for tweaks. Proponents of the tax are standing by its current structure and carve outs, which would allow businesses to continue to benefit from incentives like tax credits for research and development and low-income housing and clean energy investments. But pension plan contributions and 'phantom income' associated with pension assets that shows up in annual 10-K filings couldn't be deducted, nor could the cost of depreciating solar, wind, geothermal and other renewable energy properties."
Debt limit — The House December 7 approved 222-212 a bill (S. 610) that would allow the Senate to increase the Federal debt limit by a simple majority vote, rather than the 60-vote filibuster threshold. The process change was appended to a bill that would extend the 2% Medicare sequester moratorium through the end of March, defer the cost of the American Rescue Plan to the 2023 so-called PAYGO scorecard, and mitigate other provider cuts. The bill must be passed by the Senate (with at least 10 Republican votes) and both chambers must still vote on a separate bill to increase the debt limit.
Hearings - The Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth hearing on "Promoting Competition, Growth, and Privacy Protection in the Technology Sector" December 7 took aim at tech monopolies, the sale of information through data brokers, the acquisition of information by foreign nations, and privacy rules. Tax issues were not a focus, though Senator Sheldon Whitehouse (D-RI) did reference "double Irish" and "Dutch sandwich" tax strategies that he said could give some companies competitive advantage and virtual monopolies because they put themselves in a position where they don't have to pay taxes, unlike their smaller competitors. (He was perhaps referring to a 2010 Bloomberg article on the use of tax havens.) Full Committee Chairman Ron Wyden (D-OR) said automobiles are essentially computers on wheels, expressed concern about data brokers, and suggested he would soon introduce legislation to address the export of US citizens' data to foreign nations. "I'm a privacy hawk," he said.
A Ways & Means Social Security Subcommittee hearing, "The Fierce Urgency of Now — Social Security 2100: A Sacred Trust," December 7 focused on Rep. John Larson's (D-CT) legislation on the issue. Proponents cited the proposed across-the-board benefit increase for current and future beneficiaries as giving retirees a livable wage and boosting the economy, as well as the more accurate cost-of-living adjustment. The bill would also increase benefits for low-wage workers. Detractors criticized the expanded scope of Social Security taxes (applying the payroll tax to earnings above $400,000) to pay for the increased benefits.
Today is the Ways & Means Oversight Subcommittee hearing on "The Pandora Papers and Hidden Wealth."
A new installment of the ProPublica series on tax, focused on real estate and oil, was published yesterday.
Congress - Rep. Devin Nunes (R-CA), next in line to become Ways & Means Chairman if Republicans win control of the House, is leaving Congress to join former President Trump's social media company. The company announced Monday he would join in January 2022. Elected in 2002, Nunes joined Ways & Means in 2005 when the Committee Chair was Bill Thomas, a mentor to Rep. Nunes.
Former Senator Bob Dole will lie in state in the Capitol on Thursday.