September 12, 2022
What to expect in Washington (September 12)
The House and Senate are in session at the same time for a regular week of business for the first time since July. For both chambers, the focus is on a continuing resolution (CR), to extend government funding beyond September 30 and into December, and what else could be appended to it: energy permitting reform or funding requests by the Administration for Ukraine and COVID. After the elections, and before the December expiration of the CR currently being negotiated, Congress is expected to try to assemble a year-end bill that could address tax and possibly retirement issues in addition to government funding that could extend through the remainder of the fiscal year.
The Senate is holding votes at 5:30 p.m. today on judicial nominations, and procedural steps have been taken in relation to advancing other nominations.
Guidance from Majority Leader Steny Hoyer (D-MD) over the weekend said the House this week will take up:
Politico reported this morning, "The House will move this week to pass a bereavement resolution honoring Queen Elizabeth II and the chamber will adjourn Tuesday, after legislative business is complete, in her honor."
The House Ways & Means Committee is holding two hearings this week, on The Future of U.S.-Taiwan Trade and Preparing America's Health Care Infrastructure for the Climate Crisis.
Government funding — It is increasingly looking like the CR, which Senate Appropriations Committee Chairman Pat Leahy (D-VT) said could run through December 16, may be kept narrow given opposition to other items being considered for inclusion. The White House has requested $47 billion in emergency funding to move with the CR, for Ukraine, COVID-19, monkeypox, and natural disaster recovery. Energy permitting faces resistance from both parties, and additional COVID funding has long been opposed by Republicans.
Ukraine funding could have requisite support. A Fox News report this morning said, "Although some Republicans are expected to raise concerns about the inadequate accountability measures in place for the Ukraine aid, enough bipartisan support is expected for passage."
Permitting — Senate Majority Leader Chuck Schumer (D-NY) made a deal with Senator Joe Manchin (D-WV) to pursue an energy permitting reform bill prior to September 30 as a condition of Senator Manchin's support for the Inflation Reduction Act, and Leader Schumer has been considering attaching the measure to a government funding continuing resolution. Some Democrats in the Senate, where 60 votes will be needed to clear the CR, have expressed concern over the proposal, and more than 70 House Democrats led by Natural Resources Committee Chair Raúl M. Grijalva (D-AZ) last week expressed strong opposition to including "comprehensive permitting reform legislation" in the CR over concerns it could exacerbate vulnerable communities being overburdened by pollution. The members did not explicitly threaten to oppose the CR if it includes the measure, however.
The Wall Street Journal reported, "Opponents cite different reasons for objecting to the permitting bill. Some Republicans feel burned over the passage of the climate and health bill and don't want to help Democrats get it over the finish line. Progressive Democrats are unhappy that the permitting bill will advance fossil-fuel projects in addition to renewable projects. Their combined opposition is a problem for leaders given the narrow margins in both the Senate and the House."
Tax — Looking ahead to a year-end tax package that could move with the next government funding measure — either an omnibus bill or additional CR into next year — Axios September 8 reported that the White House is pushing to address the Child Tax Credit (CTC) expansion with monthly payments that expired at the end of 2021 in conjunction with the TCJA cliff on IRC Section 174 to require five-year R&D amortization rather than expensing in a bid to gain Republican support. Democrats have long been resistant to acting on business tax provisions without addressing the expanded CTC. "We're simply not going to help business, help big corporations, without helping the child tax credit," said Sen. Sherrod Brown (D-Ohio) in the report. The Axios story does, however, seem to overlook the fact that the 174 R&D cliff is not a solely Republican issue and that Senator Manchin's opposition to more CTC spending may not matter if a bipartisan deal comes together.
On the global front, finance ministers from France, Spain, Italy, Germany, and the Netherlands September 9 said they are "fully determined to follow through on our commitment" for a global minimum tax should unanimity within the EU not be reached in the next weeks. A letter noted that "26 out of 27 EU member states expressed their willingness to implement this important step towards tax justice, and our first goal remains to gather a consensus." However, "We stand ready to implement the global minimum effective taxation beginning 2023 and by any legal possible means. We are also fully engaged to complete the work on the better reallocation of taxing rights from huge global multinationals' profits with the objective of signing a multilateral convention by mid-2023."
The Czech presidency of the EU Council is aiming for agreement on the implementation of Pillar Two minimum tax portion of the OECD global corporate tax deal, which has been opposed by Hungary, during an October ECOFIN meeting.
The OECD public consultation meeting on Amount A of Pillar One is taking place today.
Friday, September 16 at 12:00 p.m. ET is the EY Webcast, "Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments." Register.