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March 11, 2024

What to expect in Washington (March 11)

Following the State of the Union Address last Thursday and the Senate late Friday clearing the first six-bill government funding package covering appropriations that had been set to expire after March 8, today (March 11) is the release of the President's FY2025 Budget proposal. The Budget, a traditionally aspirational document that in this case represents a roadmap of what a second Biden term could look like on tax if the Democrats have the requisite control in Congress to make the proposals a reality, is expected to include tax items outlined in the State of the Union and related materials such as:

  • increasing the corporate alternative minimum tax (CAMT) to 21% (from 15%)
  • quadrupling the stock buyback tax to 4% (from 1%)
  • raising the corporate income tax rate to 28% (from 21%)
  • a 25% billionaire's tax
  • ending corporate deductions for the compensation costs for any employee (not just top executives) of more than $1 million per year
  • longer depreciation of, and higher fuel taxes on, private jets
  • a new tax credit for first-time homebuyers and people who sell their starter homes

Politico this morning: "Don't expect any earth-shattering new policies today. Better to think of it as an appendix to last week's State of the Union address, an opportunity to further emphasize the contrasts Biden laid out in the joint session. The topline message, a White House official tells us, is that the Biden blueprint will 'lower costs for families, protect and strengthen Social Security and Medicare, and reduce the deficit by about $3 trillion over 10 years by making big corporations and the wealthy pay their fair share.'"

On what has been omitted, a story in today's Wall Street Journal reported, "In the run-up to Monday's budget proposal, the president's advisers also debated and ultimately decided not to move forward with key tax policy proposals … One option that administration officials have discussed for years: a financial transaction tax, which would impose a low-rate tax on the buying and selling of stock, bonds and other financial assets. Some senior officials in the administration worried that the proposal would violate Biden's pledge to not raise taxes on any American making less than $400,000 a year, even though some of the proposal's advocates in the administration said the tax could be restricted to high earners."

Additionally, "Biden also chose not to outline a detailed plan for Social Security, despite pledging in his State of the Union speech to block any efforts by Republicans to cut the program. During his 2020 presidential campaign, Biden proposed increasing Social Security payroll taxes for people making more than $400,000 a year in a bid to bolster the program. But that proposal hasn't been included in any of Biden's budget proposals since he took office, and it isn't expected to be mentioned in the one the White House will release Monday."

As a candidate in 2020, Biden proposed to impose Social Security payroll taxes on incomes greater than $400,000 per year, in addition to the first $137,000 in annual income, with no additional tax on income in the doughnut hole in between. (In 2024, the Social Security wage base limit rose to $168,600.)

The Budget could also further define the parameters of how President Biden will approach the 2025 TCJA individual and pass-through tax provision expirations, which he said in his address last Thursday he supports continuing as they apply to those earning less than $400,000. Last year's Budget defined parameters for extension as a focus on rewarding work not wealth, no tax increases on those earning less than $400,000 annually, and opposition to "cutting taxes for the wealthy — either extending tax cuts for the wealthy or bringing back tax breaks that would benefit the wealthy."

Health care — A story in the March 10 Washington Post said, "Federal health officials on Saturday said they would offer emergency funding to physicians, physical therapists and other professionals that provide outpatient health care, following a cyberattack that crippled the nation's largest processor of medical claims and left many organizations in financial distress."

Additionally, according to an agency press release, "The Centers for Medicare & Medicaid Services (CMS) is continuing to monitor and assess the impact that the cyberattack … has had on all provider and supplier types. Today, CMS is announcing that, in addition to considering applications for accelerated payments for Medicare Part A providers, we will also be considering applications for advance payments for Part B suppliers."

Congress - After the Senate cleared the first six-bill appropriations package late Friday, Majority Leader Chuck Schumer (D-NY) said, "Because both sides cooperated today, we've taken a major step towards our goal of fully funding the government. Today's bipartisan agreement gives us momentum and space to finish the remaining appropriations bills by March 22nd. Of course, it's going to take both sides working together to keep that momentum alive. To folks who worry that divided government means nothing ever gets done, this bipartisan package says otherwise: it helps parents and veterans and firefighters and farmers and school cafeterias and more."

The Senate will convene at 3 p.m. today, March 11. At 5:30 p.m., the Senate will hold a procedural vote on the nomination of Jasmine Hyejung Yoon to be United States District Judge for the Western District of Virginia.

Today, the House will meet at noon for morning hour and 2 p.m. for legislative business. Votes will be postponed until 6:30 p.m. Suspension votes are planned on Transportation and Infrastructure Committee bills. Later in the week, the House plans to vote on the Protecting Americans from Foreign Adversary Controlled Applications Act "to protect the national security of the United States from the threat posed by foreign adversary-controlled applications."

On Tuesday, March 12 at 10:15 a.m., Office of Management and Budget (OMB) Director Shalanda Young will testify before the Senate Budget Committee.

The Senate Finance Committee has scheduled a hearing for Tuesday, March 12 at 10 a.m., titled, "American Made: Growing U.S. Manufacturing Through the Tax Code." JCT released a related report on "Tax Incentives for Domestic Manufacturing."

On Tuesday, March 12 at 11 a.m., the House Ways & Means Committee will hold a hearing on "Enhancing Access to Care at Home in Rural and Underserved Communities"

On Thursday, March 14 at 10 a.m., the Senate Finance Committee will hold a hearing on "The President's Fiscal Year 2025 Health and Human Services Budget" with HHS Secretary Xavier Becerra.

Customary post-Budget tax committee hearings with Treasury Secretary Janet Yellen haven't been publicly noticed. However, during a March 7 House Ways & Means Tax Subcommittee hearing, Chairman Mike Kelly (R-PA) suggested Secretary Yellen would be before the Committee at the beginning of April, presumably to testify on the President's budget. A Senate Finance Committee hearing with Sec. Yellen could precede her appearance at Ways & Means.

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Contact Information

For additional information concerning this Alert, please contact:

Washington Council Ernst & Young