January 13, 2023 What to expect in Washington (January 13) Addressing the federal debt limit is expected to be one of the most pressing issues before Congress this year and House Speaker Kevin McCarthy (R-CA) said January 12 an appropriations spending caps deal that accompanied a suspension of the Federal debt limit during the last administration could be a model for addressing the issue. "When Nancy Pelosi was speaker, that's what transpired. To get a debt ceiling, they also got a cap on spending for the next two years. Spending is out of control here," Speaker McCarthy said during a news conference, adding that he told the President he would like to "sit down with him early and work through these challenges." The Bipartisan Budget Act of 2018 lifted discretionary spending caps for FY2018 and FY2019 over Budget Control Act limits in effect at the time and suspended the debt limit through March 1, 2019. The Bipartisan Budget Act of 2019 lifted discretionary spending caps for FY2020 and FY2021 over BCA limits and suspended the public debt limit through July 31, 2021. Congress then increased the debt limit in December 2021. With Speaker McCarthy having committed to conservative members not to take up a debt limit bill without deep spending cuts, there are already discussions about fallback options for bringing an increase up in the House, including the rarely used "discharge petition" process, which requires 218 member signatures. The January 12 Wall Street Journal reported: "Rep. Brendan Boyle (D., Pa.), the top-ranking Democrat on the House Budget Committee, said he has already talked to a number of colleagues about using the discharge petition to raise the debt limit, but he cautioned that the conversations among individual members have been casual and are far from a plan. 'Bottom line: People who may think it will be easy to utilize are mistaken,' Mr. Boyle said. Rep. Brian Fitzpatrick (R., Pa.), co-chair of the bipartisan Problem Solvers Caucus, said Democrats and Republicans are 'very much so' discussing the possibility of a discharge petition. But he added, 'We're going to have to marry it with some kind of controls on deficits. So that's what we're going to have to figure out.'" Tax — An EY Alert, "IRS releases interim guidance on 15% corporate alternative minimum tax," is available here. House passage January 9 of the Family and Small Business Taxpayer Protection Act (H.R. 23), to roll back the Inflation Reduction Act (IRA) IRS funding increase, and the commitment by Speaker McCarthy to bring to a vote the Fair Tax Act (H.R. 25) to eliminate the national income tax and replace it with a national consumption tax have caught the attention of President Biden. The President said January 12: "I was disappointed that the very first bill the Republicans in the House of Representatives passed would help wealthy people and big corporations cheat on their taxes at the expense of ordinary, middle-class taxpayers. And it would add $114 billion to the deficit. Their very first bill … House Republicans are preparing to vote on a national sales tax bill. National sales tax, that's a great idea. It would raise taxes on the middle class by taxing thousands of everyday items from groceries to gas, while cutting taxes for the wealthiest Americans." Congress — The Republican membership of the House Ways and Means Committee has been set. New Republican members recommended for the Committee are:
On January 12, Governor Jim Pillen announced that former Governor Pete Ricketts will be appointed as Nebraska's next U.S. Senator, replacing Senator Ben Sasse (R-NE), who resigned January 8. Global tax — Politico Morning Tax cited former Treasury official Itai Grinberg as sounding "particularly confident about the prospects of a global minimum tax" at a January 12 conference hosted by Georgetown, where he returned as a law professor. "I think it's becoming clear to everyone that the world appears to be going ahead on Pillar Two," Grinberg said. "I think it's now a matter of when it'll make it so that both US and foreign-headquartered multinationals face a substantially similar level of minimum taxation." Tax Notes coverage of the event said: "Those who wanted to take a wait-and-see approach must now support a country-by-country GILTI regime, according to Grinberg. 'Meanwhile, we now face two years where we are unlikely to see major tax legislation move forward in our country,' he said. The United States will see individual tax expirations, as well as scheduled rate increases for the GILTI and foreign-derived intangible income regimes, which are likely to move a reform bill in 2025, Grinberg said. 'Not to mention pressure coming from foreign UTPRs that I suspect may hit a little in 2025 but perhaps not land in real force until 2026 because of safe harbors and other developments we haven't seen yet,' he added." Manal Corwin has been appointed to serve as the next Director of the OECD Centre for Tax Policy and Administration beginning April 3, OECD announced January 13. What to Expect in Washington won't be published next week while Congress is out of session. ____________________________
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