Tax News Update    Email this document    Print this document  

Congress returns today from a two-week recess for a busy work period until Memorial Day, with the agenda expected to include the America COMPETES/USICA competitiveness conference committee, negotiations over a $10 billion COVID package, and a potential revival of budget reconciliation talks. There is pressure on Democrats to advance legislation addressing concerns about the economy ahead of the midterm elections.

“Lawmakers are pushing leaders on issues ranging from student-loan forgiveness to lowering the cost of prescription drugs, steps they argue can shore up households shaken by rising inflation and economic uncertainty that Republicans have blamed on Mr. Biden,” The Wall Street Journal reported April 22. In the wake of the Build Back Better Act (BBBA) filled with Democratic priorities stalling after it passed the House in November 2021, Rep. Ro Khanna (D-CA) said, “Pick a couple of them and just deliver them.” It’s well-known by now that Senator Joe Manchin (D-WV) is apparently open to a narrower, climate-focused reconciliation bill that also addresses tax changes and deficit reduction. “In the coming weeks, [Democrats] are preparing to make a final attempt at resurrecting elements of the healthcare, education and climate package, which included provisions designed to lower the price of some prescription drugs,” the report said.

In an April 24 Washington Post story: “’My sense is this is a make or break moment,’ Sen. Chris Van Hollen (D-Md.) said about the fate of the Democratic spending agenda. ‘This will be the moment people have to look at each other, eyeball to eyeball, and make a determination of whether we’ll move forward.’” The story said, “Central to [Democrats’] task is a renewed attempt to pass a sprawling overhaul to health care, education, climate and tax law, a package of spending once known as Build Back Better… Democrats now aim to finalize their work on a new version of the stalled measure by July 4,” though some members see the deadline as Memorial Day. “For now, the uncertainty has stoked fresh speculation that Manchin might once again upend the political ambitions of his own party. And it has unnerved fellow Democrats, coming at a time when anxieties are high that voters could penalize lawmakers if they fail to deliver before the election,” it said.

The New York Times reported April 22 that President Biden had “lamented that two Democrats, Senators [Manchin] and Kyrsten Sinema of Arizona, had joined Republicans in holding up much of his hopes for a more expansive social spending bill and other initiatives. Those include the heart of Mr. Biden’s climate policy: a $555 billion plan to pivot the nation to clean energy and electric vehicles, which analysts have said would get the United States about halfway to the White House’s 2030 goal.”

Details regarding funeral arrangements will be forthcoming following the passing of former Senate Finance Committee Chairman Orrin Hatch (R-UT), the longest-serving Senate Republican who retired in 2018 after a 42-year career in the chamber capped by significant involvement in the Tax Cuts & Jobs Act in 2017.

Upon returning to session, the Senate kicks off with a procedural vote on the Lael Brainard Fed nomination today at 5:30 p.m. In the tax-writing committees, the House Ways & Means Committee has scheduled an April 28 hearing (at 10:30 a.m.) with HHS Secretary Xavier Becerra, rescheduled from earlier in April. House Majority Leader Steny Hoyer (D-MD) said April 22 that near-term House business will include legislation to aid Ukraine defense systems and small business bills, and that the Senate should “take action without further delay so that we can proceed to a conference committee” on the competitiveness bills. 

Competitiveness – Conferees for the House America COMPETES Act/Senate USICA conference committee have already been announced by both parties in both chambers, and number around 100 members, reflecting the broad scope of the bills across many committee jurisdictions and the desire of many members to be included, perhaps in part because formal conference committees have been a rarity in recent years. The 2017 TCJA was the last major policy conference committee of note. The Senate process to formally go to conference will require an agreement between Senate Majority Leader Chuck Schumer (D-NY) and Republican leader Mitch McConnell (R-KY) on nonbinding votes on motions to instruct conferees.

Both the House and Senate bills include $52 billion in CHIPS Act funding as well as funds to encourage emerging technologies, but the Senate bill is more prescriptive on which technologies to encourage. The Senate bill passed on a bipartisan basis, the House bill did not, and its trade and climate change provisions not supported by Republicans are expected to fall out because Republican votes are needed in the Senate. “One of the big-ticket items is a $45 billion program in the House bill to enhance supply chains in the U.S. There was no such provision in the Senate bill. The money would provide grants, loans or loan guarantees to companies, local governments and tribes trying to build or relocate manufacturing plants producing critical goods,” said an April 18 AP story. In addition to trade and climate change provisions, the House bill addresses immigration and would “create a new visa category for entrepreneurs.”

COVID funding – A $10 billion COVID funding deal was announced prior to the recess by Senators Schumer and Mitt Romney (R-UT) after a previous package was struck from the Omnibus funding bill over opposition to a state & local aid claw-back as the offset. The new approach relies on about $5 billion in funding from unspent COVID funds for small businesses in Treasury and SBA programs, including for shuttered performance venues, which is drawing objections from affected businesses. The funding measure is also complicated by Republican efforts to extend the Title 42 border policy.

Global tax – The OECD/G20 Inclusive Framework on BEPS Public consultation meeting on the Implementation Framework of the global minimum tax is ongoing this morning. There were 73 submissions with over 500 pages of comments on administration of the rules.

On Friday, April 22, public comments on the Draft Model Rules for Domestic Legislation on Scope under Pillar One were posted.

Retirement – The top item in the Sunday Washington Post Outlook section questioned whether the benefits of the bipartisan SECURE 2.0 package, which has passed the House and is primed for committee-level action in the Senate soon and enactment at some point this year, are tilted toward the wealthy. The costliest provision, to increase the age at which individuals must take required minimum distributions from 72 to 75, “would mean that taxpayers with supersize IRAs could enjoy three extra years of tax-free growth before they needed to take money out. Lower-income retirees wouldn’t benefit because they don’t have the luxury of holding off on withdrawals, which they need to cover living expenses,” the analysis said.

A retirement policy-focused episode of the WCEY podcast DC Dynamics has been posted to EY.com.

Friday, April 29 (at 12:00 p.m.) is the EY Webcast, “Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments.” Register.

———————————————