June 23, 2023
What to expect in Washington (June 23)
The Senate June 22 approved the Resolution of Advice and Consent to Ratification for Treaties Cal. #1, Tax Convention with Chile (Treaty Doc. 112-8) on a 95-2 vote. Senators Rand Paul (R-KY) and Josh Hawley (R-MO) voted against the resolution. Reuters reported, “Final approval will send the treaty to the White House, where President Joe Biden planned to sign the papers necessary for ratification.” Senate Majority Leader Chuck Schumer (D-NY) said on the floor just prior to the vote that while the treaty hasn’t gotten a lot of attention, it is one of the more important recent items of business in the Senate. The treaty, which had been approved by the Foreign Relations Committee in the last Congress but not the full Senate, was cleared by the Committee June 1 to advance in the Senate after GOP concerns about potential double taxation relating to foreign tax credits were addressed with a declaration in the Text of the Resolution of Advice and Consent.
In a June 21 floor speech on the Chile treaty, Foreign Relations Chairman Bob Menendez (D-NJ) expressed some broader concerns, saying, “Treaties are a shared constitutional responsibility of the Senate and the Executive Branch. Nonetheless, as we worked last year to move the Chile Tax Treaty through the Senate, the Biden Administration withdrew from our tax treaty with Hungary without consulting with the Senate or providing advance notice, let alone approval. It is deeply disappointing that presidents of both parties have advanced these types of unilateral actions and omissions in the past. Let me be clear: such actions are completely inconsistent with our constitutional structure. I have asked the President to commit — at minimum — to meaningful consultations with the Senate Foreign Relations Committee prior to terminating any treaty. Without such a commitment, I will work to address this issue in future resolutions of advice and consent, as well as in legislation. And I will continue to work to make sure that the Senate protects our constitutional prerogatives on treaties.”
In other Foreign Relations committee news, consideration of the Taiwan Tax Agreement Act (S. 1457) that was held over from June 21 has been rescheduled for July 13 (the Senate is out for the next two weeks). A Taiwan agreement not only faces concerns from Senator Paul, a member of the Committee, but is the subject of a jurisdictional tussle between Foreign Relations and the tax-writing committees, whose chairs and ranking members argue that Taiwan’s unique status precludes it from the typical process of remedying double taxation through a treaty and Congress should amend the tax code to reduce the burden on U.S.-Taiwan cross-border investment.
Politico Morning Tax said June 23 of the Chile tax vote, “The Senate action on the accord is encouraging to those now hoping to move some sort of tax agreement with Taiwan, a partner in the U.S. effort to develop its semiconductor manufacturing base.”
The June 22 House Budget Committee hearing on “Reigniting American Growth and Prosperity: Incentivizing Economic Excellence Through Tax Policy” featured members and witnesses relitigating the benefits of the Tax Cuts & Jobs Act and tax policy decisions under the Biden administration and considering the oft-debated question of whether higher corporate taxes are passed on to consumers. Chairman Jodey Arrington (R-TX) said, “We need a productive, the most productive and most competitive tax rate. We can’t have [other nations] have a lower tax rate on their businesses, their job creators than we do in the United States. And even today, after lowering the corporate rates, you combine the state taxes on businesses and federal taxes, we’re paying more than … our competitor, and our adversary; that’s a problem. So, let’s work together and try to figure out how to get this right.”
IRS — The IRS has issued proposed regulations (REG-124123-22) specifying the method for constructing the corporate bond yield curve used to (1) establish interest rates for calculating present value and making other calculations under defined benefit plans and (2) discount unpaid losses and estimated salvage recoverable for insurance companies. Comments may be submitted by August 22, 2023. A public hearing is scheduled for August 30.
Congress — The House and Senate are scheduled to be out of session for two weeks after this week, returning the week of July 10. The House is in today and voting on a housing-related bill (H.R. 3564). The Senate is out now and will next convene on Monday, July 10 at 3:00 p.m., with a vote at 5:30pm on the Motion to Invoke Cloture on Executive Calendar #178 Xochitl Torres Small, a former House member, to be Deputy Secretary of Agriculture.
What to Expect in Washington will not be published while Congress is away, but other WCEY Alerts will be issued as events warrant.