A second bipartisan "Big Four" debt limit meeting with President Biden at the White House planned for today has been postponed. A Fox News reporter tweeted that it's because staff talks are going well. The New York Times said, "The delay seems to suggest progress at a pivotal moment. Until now, both sides appeared dug in on their respective positions about what it would take to raise the nation's debt limit." Punchbowl reported that while there have been positive developments, "The Biden administration's negotiators and top leadership aides, who met for two hours on both Wednesday and Thursday, simply haven't made enough progress to kick a menu of policy options up to the principal level."

Energy tax — Treasury and IRS this morning released Notice 2023-38, saying they intend to propose regulations addressing the application of the rules to qualify for the domestic content bonus credit amounts under Sections 45, 45Y, 48, and 48E.

Tax — A bipartisan "Four Corners" group of congressional tax-writing committee leadership May 10 released a statement on a bipartisan, bicameral effort to alleviate double taxation between the US and Taiwan. "Addressing cross-border economic burdens currently faced by American and Taiwanese businesses is urgent and requires the expertise of the tax-writing Committees in Congress," said the statement from Senate Finance Committee Chair Ron Wyden (D-OR), Ranking Member Mike Crapo (R-ID), House Ways & Means Committee Chair Jason Smith (R-MO), and Ranking Member Richard Neal (D-MA). "Taiwan's unique status precludes it from the typical process of remedying double taxation through a treaty; therefore, Congress should amend the tax code to reduce the burden on U.S.-Taiwan cross-border investment."

The statement follows a bipartisan group of Senators on May 5 introducing the Taiwan Tax Agreement Act of 2023, authorizing the Biden Administration to begin negotiations with Taiwan to conclude a tax agreement. The bill was introduced by Senate Foreign Relations Committee Chairman Robert Menendez (D-NJ), ranking member James Risch (R-ID) and members Sens. Chris Van Hollen (D-MD) and Mitt Romney (R-UT). In March 2023, a bipartisan Senate resolution was introduced similarly urging the Administration to initiate negotiations with Taiwan over an income tax agreement.

Politico reported, "The U.S., of course, does not take a position on Taiwan's sovereignty, given China's claims over the nation, and thus hasn't been able to forge an official tax treaty with Taiwan." Bloomberg Tax said, "Double taxation has stymied US efforts to encourage more Taiwanese investment in semiconductors and other high-tech goods because Taiwan says the costs are too high."

If members from both parties are on the same page on that issue, they were certainly not at the May 11 Senate Finance Committee hearing on "Cross-border Rx: Pharmaceutical Manufacturers and U.S. International Tax Policy." Chairman Wyden noted the differing takes and priorities between the parties on the international tax issues, remarking that Republicans must be participating in a different hearing given their lack of stated concern about pharmaceutical company profit shifting. Democratic members and some witnesses criticized perceived profit shifting by the pharmaceutical industry even after enactment of the 2017 TCJA's guardrails, while Republican members expressed concern about the effect of the OECD-led Pillar Two global minimum tax on US MNCs, particularly the undertaxed profits rule (UTPR) and treatment of US tax credits including the R&D tax credit.

The Democratic majority released a report finding that large pharmaceutical companies report a collective 75% of taxable income in foreign subsidiaries, including for some drugs that are household names in the US. Republicans, meanwhile, used the hearing to focus on Pillar Two and the UTPR. The UTPR allows a country to increase taxes on a multinational company if that company has a taxable presence in the UTPR country and another subsidiary or branch of the parent company pays less than the global minimum tax of 15% in another jurisdiction. The UTPR "backstop" rule has been a particular target of Congressional Republicans in recent hearings, including during the March 16 Finance hearing with Secretary Yellen, arguing that the UTPR could have the impact of diminishing the value of US tax incentives like the R&D tax credit.

The staff of the Joint Committee on Taxation has prepared an overview of the U.S. Federal tax system as in effect for 2023 (JCX-9-23).

Health — HHS issued a fact sheet related to the end of the COVID-19 Public Health Emergency (PHE) on May 11.

Hearings — The many congressional hearings scheduled for next week include:

Tuesday, May 16

• 10 a.m., Senate Finance Committee, "House Republican Supplemental IRS Funding Cuts: Analyzing the Impact on Federal Law Enforcement and the Federal Deficit"
• 10 a.m., House Ways & Means Committee, "Health Care Price Transparency: A Patient's Right to Know"
• 2 p.m., House Ways & Means Health Subcommittee, "Why Health Care is Unaffordable: Anticompetitive and Consolidated Markets"
• 3 p.m., Senate Finance Subcommittee on International Trade, Customs, and Global Competitiveness, "Economic Cooperation for a Stronger and More Resilient Western Hemisphere"

Wednesday, May 17

• 10 a.m., Senate Budget Committee, "The Rich Get Richer, Deficits Get Bigger: How Tax Cuts for the Wealthy and Corporations Drive the National Debt"
• 2:30 p.m., Senate Finance Subcommittee on Health Care, "Improving Health Care Access in Rural Communities: Obstacles and Opportunities"

Thursday, May 18

• 10:15 a.m., Senate Finance Committee, "Tax Incentives in the Inflation Reduction Act: Jobs and Investment in Energy Communities"

Congress - The Senate stands adjourned until May 15 at 3:00 p.m. Looking forward, the Senate is scheduled to be in recess the week of May 22. The House is set to be in recess the week of Memorial Day, May 29.

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