Tax News Update    Email this document    Print this document  

New House Speaker Mike Johnson (R-LA) said again on Fox News Sunday that another continuing resolution (CR) will likely be necessary after current government funding expires November 17, despite the House and Senate making progress on the regular slate of 12 annual appropriations bills. "We worked through the weekend. On a stopgap measure, we recognize that we may not get all the appropriations bills done by this deadline of November 17. But we're going to continue in good faith," Speaker Johnson said. "And the difference between … now and what we've dealt with in years past is that this would allow us time, and everybody understands, allow us time to continue this appropriations process." House business this week includes the Transportation-HUD and Financial Services & General Government appropriations bills.

Below is a table on the status of the appropriations bills.

Speaker Johnson has proposed a CR until January 15 rather than the regular year-end deadline, which he signaled will help deter potential Senate efforts to impose an omnibus appropriations bill on the House. It's unclear how a January CR target may scramble efforts to move tax and other outstanding items by the end of the year, which are seen as most likely to move with some future government funding bill. Tax packages usually ride along on a year-end omnibus appropriations bill, but the desire by the Speaker to have another continuing resolution through early January complicates tax package prospects as these stopgap spending bills tend not to be used as a vehicle for costly tax cut packages.

The House last week passed the Israel Security Supplemental Appropriations Act (H.R. 6126), to provide $14.5 billion in Israel aid with an equal amount in IRS funding rescissions. The narrow bill won't be accepted by the Democratic-led Senate. Senators from both parties support considering Israel aid in conjunction with money for Ukraine, along the lines of the Administration's more than $100 billion supplemental funding request to cover those two issues plus border security resources. The IRS rescission will likely be stripped, and Majority Leader Chuck Schumer (D-NY) has said emergency spending should not be offset. The Washington Post reported that Speaker Johnson has suggested that "if the Senate sends back an Israel aid bill that does not include spending cuts, he won't put it on the floor."

Johnson said yesterday, "What they don't like is that in the House, we're trying to be good stewards of the taxpayers' resources. We offset that spending. Instead of printing new dollars and/or borrowing it from another nation to send over to fulfill our obligations and help our ally, we want to pay for it. What a concept, and we're trying to change how Washington works. And so, by taking that money from this giant fund, over $65 billion that's sitting there to build up the IRS, we weighed those priorities and said, 'You know what? It's more important to protect Israel right now than it is to hire more IRS agents.'"

The Senate returns to session at 3 p.m. today (November 6) with a procedural vote related to the nomination of Monica Bertagnolli to be Director of the National Institutes of Health (NIH) at 5:30 p.m.

Hearings — The Ways & Means Committee is holding a hearing on "Ensuring that 'Woke' Doesn't Leave Americans Broke: Protecting Seniors and Savers from ESG Activism," on Tuesday, November 7 at 10 a.m.

The Senate Finance Committee and Senate Budget Committee are both holding hearings targeting the taxation of high-income individuals this week:

• The Senate Finance Committee hearing, "Examining How the Tax Code Affects High-Income Individuals and Tax Planning Strategies," is planned for Thursday, November 9 (at 10 a.m.)
• The Senate Budget Committee hearing, "Fairness and Fiscal Responsibility: Cracking Down on Wealthy Tax Cheats," is set for Wednesday, November 8, 2023 (at 10 a.m.), with witnesses including Natasha Sarin, formerly of the Biden Treasury Department and now a Yale professor.

The exact impetus for the hearings isn't clear, but the Wall Street Journal reported in a story on Republican efforts to roll back the IRS funding boost in the IRA, "Natasha Sarin, who helped develop the IRS expansion as a Treasury Department official, said the agency is showing real progress that threatens wealthy tax dodgers. 'Once the IRS starts lodging concrete successes from the IRA investments, it's going to be much harder, even for critics of the agency, to defend why they want wealthy people to not pay taxes their constituents are paying,' said Sarin, who now teaches at Yale University."

Health — The Senate Finance Committee is holding a markup of its health care discussion draft that contains provisions related to pharmacy benefit managers (PBMs), mental health, provider reimbursement, and more on Wednesday, November 8 at 10 a.m.

AI — An EY Tax Alert, "President Biden issues Executive Order on development and use of Artificial Intelligence in US immigration processes," is available here.

An EY Webcast, "What you need to know: Biden Executive Order on AI," is November 8 from 12:30-1:15 p.m. Register here.

Elections — A Washington Post analysis of the 2024 congressional elections said, "Needing a net gain of just five seats to claim the majority, House Democrats are close to an even-money bet to prevail Nov. 5, 2024, according to a survey of top nonpartisan analysts, with 11 Republican seats in deep-blue California and New York among the Democrats' top targets. Democrats are trying to buck almost 75 years of history in which the House majority has not changed hands during a presidential election cycle. And Senate Republicans, needing a two-seat gain for a full majority, enter 2024 without a single seat of their own in jeopardy, so far, as Democrats defend three seats in states Donald Trump won easily in 2020 and four others the ex-president lost narrowly."

———————————————