February 16, 2022
What to expect in Washington (February 16)
What can be done to address inflation and who will support it is a focus in the Senate this week. Republicans began to take aim at the gas tax holiday proposed by Democrats in four of the toughest midterm races, and Democrats discussed other ideas. Senate Majority Leader Chuck Schumer (D-NY) said following the Tuesday party lunch that Democrats haven’t aligned behind a position, but a gas tax holiday is one of the “many things that we’re looking at in terms of reducing costs.” Politico reported that Senator Raphael Warnock (D-GA), a sponsor of the gas tax bill, “is pitching a suspension of the state sales tax on some essential goods.” Senator Mark Kelly (D-AZ) tweeted, “Families are struggling with the high costs of gas, groceries, and so much more. One way we can provide relief is by getting rid of the federal gas tax for the rest of the year.”
Roll Call reported that Senate Democrats “plan to bring legislation to the floor in March designed to cut costs for Americans” and other ideas under discussion include “capping insulin costs and other measures to lower the cost of prescription drugs” that were addressed in the stalled Build Back Better Act (BBBA). (Congress is out next week, with both chambers returning February 28.) Senator Schumer suggested separate bills would be brought up, not combined or attached to a package. “If we can get 60 votes on a bunch of them, that’s fine,” he said. “But when we can’t, we’re still going to move forward, and you’ll see some votes on the floor on these as well.”
Senate GOP Whip John Thune (R-SD) said a gas tax holiday is “an attempt to provide some political cover for Democrats who are running for re-election this year.” Senator Joe Manchin (D-WV) is also skeptical.
Global tax – Ahead of her virtual participation in the meeting of G20 finance ministers and central bank governors Thursday and Friday, Reuters reported a Treasury official as saying Secretary Yellen “will express confidence that momentum will be maintained among 136 countries to finalize an agreement for a 15% global minimum corporate tax this year, so that it can be put into force in 2023. The official said Democrats in the U.S. Congress broadly support the international tax provisions. ‘Secretary Yellen expects they will be part of any Build Back Better bill passed,’ the official added…”
Tax – Law360 February 15 reported: “Several senior Democrats said potential limits on the tax information reporting mandate for cryptocurrency brokers enacted in the bipartisan Infrastructure Investment and Jobs Act (117 P.L. 58) could move in a package of extensions of expired tax incentives, including tax breaks for research and business interest expenses. They said other cryptocurrency-related tax measures could be examined in tandem with a proposal to clarify the reporting mandate’s scope and moved in an omnibus spending bill … or other legislation.” House Ways & Means Committee Chairman Richard Neal (D-MA) said proposals to change the scope of the new reporting mandate would be evaluated as part of an examination of tax issues involving cryptocurrency and nonfungible tokens, or NFTs, and that “the whole process of cryptocurrency needs a full review here.”
During August 2021 consideration of the IIJA, a standoff over the legislative process was credited with preventing the consideration of additional amendments, including on cryptocurrency, and the House subsequently passed the Senate bill in November following its own controversy over interplay with the BBBA. Senate Finance Committee Chairman Ron Wyden (D-OR) was among those pushing for changes and said in the report he wants “to clarify that the information reporting mandate does not cover cryptocurrency miners, developers of digital assets and sellers of certain hardware and software used to control access to cryptocurrency.”
Tax Notes was the latest to report on a push in Congress to address the TCJA IRC Section 174 requirement that R&D expenses be amortized over five years rather than expensed, which would have been delayed under the now-stalled BBBA. Senator Maggie Hassan (D-NH) said rolling back the requirement is part of discussions for inclusion in the FY2022 omnibus spending bill. Leaders hope to have the omnibus ready by March 11 if the continuing resolution to extend government funding through that date is enacted (there is some controversy holding it up in the Senate). “We’re having ongoing discussions about that issue as well as making the R&D tax credit more available to small businesses and start-ups,” Senator Hassan said.
Nominations – Senate Banking Committee Republicans boycotted confirmation votes on five Federal Reserve nominees yesterday, including Chairman Jerome Powell and vice chair-designee Lael Brainard. Chairman Sherrod Brown (D-OH) postponed the session after Ranking Member Pat Toomey (R-PA) and other Republicans did not appear and the committee could not muster a quorum. Republicans contended that the vote on Sarah Bloom Raskin, the Biden administration’s nominee for Fed vice chair of supervision, was premature because they are seeking more information about Raskin’s involvement in the 2017-18 effort to secure a “Fed master account” for Reserve Trust, a Colorado financial technology firm where Raskin served on the board of directors. Toomey said he was willing to do votes on the other four nominees yesterday, but Brown declined that offer. Toomey said that “important questions about Ms. Raskin’s use of the ‘revolving door’ remain unanswered largely because of her repeated disingenuousness with the Committee.” Chairman Brown said Raskin “has been the subject of an unrelenting smear campaign and fearmongering by the Ranking Member and Republicans – something that’s become all too common.”
The Senate voted 50-46 to confirm Robert Califf as commissioner of the Food and Drug Administration (FDA). Four Democrats voted against the nomination: Joe Manchin (WV), Ed Markey (MA), Richard Blumenthal (CT), and Maggie Hassan (NH), plus Bernie Sanders (I-VT), objecting to his pharmaceutical industry ties and concerns he would not act aggressively enough to stem the opioid crisis. The FDA has been without a permanent leader for nearly 400 days, led by career FDA official Janet Woodcock in an acting capacity during a tumultuous time at the agency, colored by criticism of its pandemic response and controversies such as the decision to approve the controversial Alzheimer’s drug, Aduhelm. Califf is a cardiologist who served as FDA commissioner during President Barack Obama’s final year in office. Republicans voting in favor included Senators Toomey, Roy Blunt (MO), and Richard Burr (NC).
Health – The Washington Post reported February 15, “The Biden administration told lawmakers it may need about $30 billion in additional aid to combat the coronavirus, as it looks to restock key public health programs with new funds and ensure it is prepared against any future variants. Top officials from the Department of Health and Human Services briefed key lawmakers about their spending needs Tuesday…”
Infrastructure – During a House Ways & Means Select Revenue Measures Subcommittee February 15 hearing on “Examining the Economic Impact of Federal Infrastructure Investment,” Democrats sought to highlight the benefits for members’ districts of the IIJA enacted in November 2021. The administration has mounted a similar communications effort intended to make sure the public understands how the IIJA benefits Americans’ lives. Republican members sought to relitigate the value of the IIJA – only 13 House Republican supported it – asserting it didn’t invest enough in roads and bridges and took an overly broad view of what “infrastructure” is and questioning the level of investment in light of inflation concerns.
Friday, February 18 (12:00 p.m.) is the EY Webcast, “Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments.” Register.