January 22, 2024
What to expect in Washington (January 22)
The $78 billion Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) approved by the Ways & Means Committee on Friday — addressing TCJA pre-cliffs and the Child Tax Credit (CTC), plus the US-Taiwan Expedited Double-Tax Relief Act, disaster relief, and housing provisions — could get a vote in the House when the chamber returns the week of January 29. (The House is out of session this week.) Chairman Jason Smith (R-MO) said on Fox News on Friday, "We just voted after a four-and-a-half-hour markup today in the Ways and Means Committee by a vote of 40-3. And so now we will go towards the House floor. What's in it is a mixture of items that help families, but also help small businesses."
The bill was proposed with Senate Finance Committee Chairman Ron Wyden (D-OR) and, while Finance Republicans are reportedly insisting on a markup, no plans have been announced. Putting the bill on the floor as a standalone is more complicated in the Senate given the difficulty of limiting amendments. "We're continuing to work with Republican senators to get them on board. I have probably spoken to more senators in the last 72 hours than I have ever spoken to in my life. But we're getting there," Chairman Smith said.
It has long been thought that the bill might best move through Congress attached to a long-term appropriations measure. It isn't clear how the new March funding deadline scrambles that calculation given lawmakers were previously aiming to complete consideration by the start of the tax filing season on January 29. Punchbowl News last night cited unnamed sources in reporting that members feel as if they have into February to get the bill done. The strong Ways & Means vote, with only three Democrats opposed, makes a strong case for advancing the bill, and sets the tax package apart from other issues on which there is a wide gulf of difference between the parties.
Politico: "The big vote lends momentum to the bill … and puts new pressure on top congressional leaders to move it through the House in the coming weeks and get it enacted before tax filing season is fully underway."
While the focus is on the coming weeks, much of the commentary has been through the lens of next year, when Tax Cut & Jobs Act (TCJA) provisions for individuals and pass-through businesses expire. The bill would add the CTC expansion and TCJA pre-cliffs to a slate of 2025 expirations that would cost $3.5 trillion-$4 trillion to extend. Chairman Wyden has promoted this as a selling point for the bill. "If you improve the child tax credit, you really strengthen your hand for the big tax negotiations that are going to go on [in] 2025 because you'll be starting from a higher" ground, Wyden said in Law360.
Others see it as just adding to the already high 2025 price tag. A Wall Street Journal (WSJ) editorial said, "The tax deal will also complicate Republican efforts to extend many more tax cuts that expire at the end of 2025, including individual tax rates. They'll need leverage to do it if Mr. Biden remains in the White House or Democrats run the House or Senate. If they give Democrats their top priority now, they'll have to agree to an even bigger child-credit expansion later."
A Bloomberg Government story, "Lobbyists See Tax Bill as Appetizer for Meatier Debate in 2025," said, "This tax fight will test the muscle of a mostly unified business community and may offer guidance about what strategies and pressure points work on lawmakers, with the caveat that the November elections could significantly shake up control of Congress."
A Congressional Research Service report on "Business Tax Provisions in the Tax Relief for American Families and Workers Act of 2024" is available here.
Congress — The Senate will return for business at 3 p.m. today, January 22, with a procedural vote at 5:30 p.m. related to the nomination of Christopher Koos to be a Director of the Amtrak Board of Directors. Republican leader Mitch McConnell (R-KY) has said the Senate could vote as soon as this week on a Ukraine-Israel national security supplemental bill with significant border security provisions.
Congress has passed a continuing resolution (CR) to extend government funding until March 1/March 8 respectively. Appropriators now have until March to agree to the full slate of 12 appropriations bills, though a significant amount of that time was planned as recess, with the House and Senate in session together for only a handful of days before March. Per a Friday announcement, the House will now be in session the week of the first rung of the new CR ladder (from Wednesday, February 28 through Friday, March 1). The Senate already was scheduled to be in session that week.
An analysis in the Sunday Washington Post said the full slates of appropriations bills may not even be able to be completed in the allotted time: "Veteran lawmakers of both parties see another train wreck coming and the need for possibly another short-term bill — three of which have been approved since Sept. 30 — to punt the final decisions deeper into the spring. 'I think that's where we're headed, unless something dramatic happens,' Sen. Dick Durbin (D-Ill.)" said. Senate Appropriations Committee Ranking Member Susan Collins (R-ME) was hopeful, but said, "It would be helpful if there were better coordination on the schedule."
Retirement — On Friday, the Department of Labor announced that its Employee Benefits Security Administration released a proposed regulation on automatic portability transactions under the SECURE 2.0 Act approved in the year-end 2022 omnibus bill. The proposed rule would implement Section 120, which allows an automatic portability provider to receive a fee in connection with executing an automatic portability transaction for certain distributions into Safe Harbor IRAs, through an added exemption to Internal Revenue Code Section 4975.
Elections — Tax policy will inevitably be a major issue in the 2024 presidential election with the TCJA 2025 cliff around the corner, and maybe even beyond those issues. President Biden has at several points this year advocated a billionaire's tax. And as a 2020 candidate, he proposed expanding payroll taxes on those with incomes over $400,000 annually to shore up the Social Security program.
A January Washington Post story said, "In private conversations over the past several weeks, aides to President Biden have discussed proposing new taxes on the wealthy this year to help fund Social Security benefits as the presidential election looms … " The story continued, "The discussions over whether Biden should unveil a plan to shore up Social Security, previously unreported, reflects a growing effort by the Democratic Party's leading economic thinkers to craft a populist message to counter Trump, who appears likely to win the GOP nomination easily and head into the general election with a substantial lead among voters on pocketbook issues." It said the election message may emerge more clearly after the State of the Union Address and FY2025 budget proposal "both of which are expected in March."
Senate Budget Committee Chairman Sheldon Whitehouse (D-RI) said on social media last night, "Republicans can't help themselves. They look at debt and see opportunity to cut Social Security. I look at rigged tax code and see opportunity to protect Social Security forever."