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June 12, 2023

What to expect in Washington (June 12)

On Monday, the House will meet at noon for morning hour and 2 p.m. for legislative business, with no votes until 6:30 p.m. Republican leaders will hope to have resolved the standoff with a group of conservative members who brought action on the floor to a halt last week. To that end, one of the bills the House will consider this week is H.J. Res. 44, Rep. Andrew Clyde's (R-GA) Congressional Review Act (CRA) resolution to block the Biden administration's pistol brace rule. Freedom Caucus Republicans last week had complained that GOP leaders were blocking Clyde's measure because he did not vote for the debt limit agreement. Later in the week the House is also scheduled to vote on HR 288, the Separation of Powers Restoration Act, which would reverse the Supreme Court's 1984 Chevron ruling that courts should generally defer to a federal agency's interpretation of an ambiguous statue; HR 1640, the Save Our Gas Stoves Act; and HR 277, the REINS Act, which would require every new "major rule" proposed by federal agencies to be approved by Congress before going into effect.

The Senate will gavel in at 3 p.m. and resume consideration of Elizabeth Allen to be Under Secretary of State for Public Diplomacy, with a cloture vote at 5:30 p.m. Majority Leader Chuck Schumer (D-NY) has also filed cloture on the nominations of Jared Bernstein to be chair of the Council of Economic Advisers, and two district judges.

Among the hearings this week, Treasury Secretary Janet Yellen will testify on June 13 on the state of the international financial system at the House Financial Services Committee. Also on Tuesday at 10 a.m., the House Ways and Means Committee will mark up the "Tax Cuts for Working Families Act," "Small Business Jobs Act" and "Build It in America Act" — bills that, when combined into the American Families and Jobs Act, fulfill Chairman Jason Smith's (R-MO) commitment to develop a tax-based economic package springing from field hearings the committee held earlier this year in West Virginia, Oklahoma and Georgia.

The three Ways & Means bills include the following provisions:




Tax Cuts for Working Families Act (H.R. 3936)

renames the standard deduction the guaranteed deduction, adds a new bonus guaranteed deduction of $2,000/individual and $4,000/married filing jointly, phased out at a 5% rate for taxpayers with modified AGI of $200,000/individual and $400,000/married filing jointly


Small Business Jobs Act (H.R. 3937)

  • Increases the independent contractor information reporting threshold under Sections 6041 and 6041A to $5,000 in a calendar year
  • Reverts to the previous de minimis reporting exception for third party settlement organizations of $20,000
  • For the Section 1202 exclusion for gain on sale of qualified small business stock:
    • shortens the holding period
    • provides a holding period tacking rule with respect to a qualified convertible debt instrument
    • extends exclusion for Section 1202 gains to stock in S corporations
  • Increases maximum IRC Section 179 small business expensing amount to $2.5m and phase-out threshold amount to $4m
  • Establishes rural opportunity zones


Build It in America Act (H.R. 3938)

  • TCJA cliffs, reverts through 2025 (retroactive) to prior policy on:
    • R&D expensing in place of the IRC Section 174 R&D five-year amortization requirement
    • IRC Section 163(j) interest deduction limitation (EBITDA threshold)
    • 100% bonus depreciation
  • Supply chain security:
    • Repeals the Hazardous Substance Superfund excise tax for oil
    • Provides for creditability of certain foreign taxes without regard to current foreign tax credit (FTC) regulations
    • Imposes a 60% excise tax on purchases of U.S. farm and ranch land by entities from "a country of concern"
    • Clean energy provisions repealed or modified:
      • Repeal of clean electricity production credit
      • Repeal of clean electricity investment credit
      • Modification of clean vehicle credit
      • Repeal of credit for previously owned clean vehicles
      • Repeal of credit for qualified commercial clean vehicles

TCJA cliffs:


Supply chain:


Clean energy:





~ -$21b

Chairman Smith did not announce a markup for the "Defending American Jobs and Investment Act," which the chairman released on June 2 and would impose retaliatory taxes on companies whose headquarters are in countries that adopt the undertaxed profits rule under OECD Pillar Two, and other "discriminatory" and "extraterritorial" taxes.

The tax bills released by Chairman Smith wouldn't be expected to be enacted as-is, given that the TCJA cliffs remain mired in a partisan standoff over a child tax credit (CTC) expansion sought by Democrats, as well as opposition by President Biden and congressional Democrats to rolling back clean energy provisions. However, the bills could represent the House GOP's negotiating position for talks later this year.

The bills were met with skepticism from Democrats. Ways & Means Ranking Member Richard Neal (D-MA) said in a statement: "It's Republican clockwork. Not even a week after their manufactured default crisis and it is back to tax cuts for the wealthy and well-connected. This stoops to a new low even for them: retroactive corporate tax cuts, next-to-nothing for the most vulnerable children and families and sneaking in favors for Big Oil. Make no mistake about it, they are laying the groundwork for even bigger cuts in 2025, and the only way they will ever achieve a balanced budget is by sticking seniors and working families with the bill."

Senate Finance Committee Chair Ron Wyden (D-OR) said business tax provisions must be paired with provisions helpful to children. "Other elements in this package will never get Democratic support. Too much of this package is made up of giveaways to the wealthy and big corporations, and it goes without saying that repealing landmark clean energy incentives from the Inflation Reduction Act is a nonstarter in the Senate," he said. "Republicans are so dedicated to this ideological fight against anything that addresses the climate crisis, they're willing to commit major acts of economic self-sabotage."

The Washington Post reported, "Roughly a week after Congress approved a measure to slash federal spending and suspend the debt ceiling, House Republicans on Friday unveiled a sprawling set of proposals that aim to cut taxes for businesses and families. The new legislative package threatens to add billions of dollars to the nation's growing debt at a time when Republicans have clamored in Washington for austerity — and recently drove the government to the brink of default in pursuit of it." The report said JCT "estimated that the three GOP bills together would add about $21 billion to the deficit over the next 10 years. But some budget experts said that figure tells only part of the story, since Republicans relied on a series of timing and accounting maneuvers to create the impression of a low price tag."

Taiwan — On Tuesday Senate Finance will mark up the United States-Taiwan Initiative on 21st-Century Trade First Agreement Implementation Act, which would approve the Agreement between the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States regarding Trade between the United States of America and Taiwan, done on June 1, 2023. The bill was announced in a statement from Chairman Wyden, Senate Finance Ranking Member Mike Crapo (R-ID), Chairman Smith and Ranking Member Neal. The bill is seen as a move to reclaim Congress' jurisdiction over trade agreements with Taiwan, though the White House has asserted that congressional approval is unnecessary because the new pact is not a treaty. Because Taiwan is not recognized by the U.S. as a sovereign nation, it cannot sign treaties. In a joint statement Friday, Crapo said, "This legislation proves that Congress … cannot be bypassed, nor is there any reason to do so. Congress is ready to pursue an ambitious trade agenda on a bipartisan basis. The administration should recognize it is now time to negotiate real agreements with market access."

CAMT - A Joint Committee on Taxation staffer said June 9 that the corporate alternative minimum tax was not intended to include tax-exempt organizations' investment income, Bloomberg reported. JCT Legislation Counsel Gordon Clay, speaking at a conference in Washington, said that while there are questions about including investment income in a tax-exempt entity's adjusted financial statement income, that was not the intent of the law. "That'll be sorted out, I'm sure," Clay said. "But … in general, I think it's very unlikely that there are any exempt organizations with more than a billion dollars' worth of UBIT," or unrelated business taxable income, which is the threshold above which the CAMT levies a 15% tax. Clay noted concerns that because the statute leaves out exceptions under tax code Section 512 (b), which excludes income from sources like dividends, rent payments and interest, money made from university endowments might be subject to tax, Bloomberg reported.


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