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May 17, 2024

What to expect in Washington (May 17)

Finance Committee Chairman Ron Wyden (D-OR) said May 16 that he is still working with Majority Leader Chuck Schumer (D-NY) to get a time schedule to bring up the House-passed Tax Relief for American Families and Workers Act (H.R. 7024) child tax credit and TCJA pre-cliffs bill in the Senate, after his amendment to add the package to the FAA reauthorization and taxes bill languished (along with all other FAA amendments). Speaking at a Tax Council Policy Institute (TCPI) conference fireside chat with WCEY's Evan Giesemann, Wyden said the treatment of the bill, which hasn't been embraced by Senate Republicans for a variety of stated reasons, has implications for next year's TCJA individual provisions cliff, as it's "hard to build confidence" for a significant bill in 2025 if you can't get a smaller, broadly supported, and paid-for bill done in 2024.

Chairman Wyden said the recent Congressional Budget Office (CBO) increase in the cost estimate for extending TCJA provisions was a blow to those who just want to re-up the tax cuts. He also said international tax and Pillar Two of the OECD-led agreement will be an important part of the 2025 debate, seeking to stop the race to the bottom for global tax rates and reduce tax avoidance. Chairman Wyden also said he would need to protect energy tax credits — Republicans have already targeted the repeal of some credits to raise revenue — and mentioned proposals on grantor retained annuity trusts (GRATs) and life insurance reforms.

On one proposal that is folded into H.R. 7024, Punchbowl News reported May 16 that Ways & Means member Greg Steube (R-FL) has 218 signatures for a discharge petition on disaster relief that could be used to bring the measure to the floor. The bill (H.R. 5863) would extend rules for the treatment of certain disaster-related personal casualty losses and provide tax relief for losses due to wildfires and the 2023 train derailment in East Palestine, Ohio.

Tax-exempts — The House Ways & Means Committee May 15 approved a series of bills on tax-exempt issues and disclosure of taxpayer information, some of which had bipartisan support and others that revived debates over the handling of the 2020 elections and the pandemic. The bills that were bipartisan were:

  • H.R. 8290, the Foreign Grant Reporting Act by Rep. Lloyd Smucker (R-PA), would require public disclosure of grants made by tax-exempt organizations to foreign entities and was approved 38-0.
  • H.R. 8314, the No Foreign Election Interference Act by Rep. Nicole Malliotakis (R-NY), would impose penalties with respect to contributions to political committees from certain tax-exempt organizations that receive contributions from foreign nationals and was approved 39-1.
  • H.R. 8292, the Taxpayer Data Protection Act by Chairman Jason Smith (R-MO), would increase penalties for unauthorized disclosure of taxpayer information and was approved 40-1.

H.R. 8291, Rep. Claudia Tenney's (R-NY) bill to prohibit certain tax-exempt organizations from providing funding for election administration, was approved 23-17. Republicans highlighted a case of what they say was a high-profile individual channeling funds through a nonprofit to election departments during the 2020 election. Democrats criticized Republicans for sowing doubt about election integrity, and said additional funding allowed safe and efficient Election Day administration, like 24-hour voting for night-shift workers and drop boxes. H.R. 8293, the American Donor Privacy and Foreign Funding Transparency Act by Rep. Dave Schweikert (R-AZ), would provide for the public reporting of data on certain contributions received by tax-exempt organizations from foreign sources and increase penalties for disclosure of US donor information and was approved 23-16.

Energy tax — Treasury/IRS May 16 released additional guidance on the Inflation Reduction Act's (IRA) domestic content bonus, which applies to facilities and projects built using the required amounts of domestically produced steel, iron, and manufactured products.

Reps. Carol Miller (R-WV) and Jared Golden (D-ME), and Senators Joe Manchin (D-WV) and Deb Fischer (R-NE) introduced a Congressional Review Act (CRA) Resolution that disapproves of the Clean Vehicle Credit rule making from the Department of Treasury.

Tax Court — Chairman Wyden was cited by the Bloomberg Daily Tax Report (DTR) as saying the Finance Committee would hold a hearing in early summer on the three U.S. Tax Court judge nominations put forward by the Biden administration February 1, including Kashi Way, Legislation Counsel at the Joint Committee on Taxation. Three additional Tax Court nominations were announced May 9, including Jeffrey Arbeit, also Legislation Counsel with the staff of the Joint Committee on Taxation.

Health - On Thursday (May 16), the Bipartisan Senate AI Working Group comprised of Leader Schumer, Mike Rounds (R-SD), Martin Henrich (D-NM), and Todd Young (R-IN) released their bipartisan Roadmap for Artificial Intelligence Policy in the U.S. Senate. Informed by hundreds of stakeholder meetings and nine AI Insight Forums, the roadmap summarizes their findings and lays out policy topics that the group believes merits bipartisan committee consideration in the 118th Congress. Policy priorities include: increasing funding for AI innovation to propel U.S. leadership; developing new standards for testing and requirements for transparency and explainability; bolstering national security through adoption of emerging technologies; addressing challenges posed by deepfakes and examining the impact on content creators; identifying ways to ensure companies of all sizes can compete; and establishing a strong comprehensive federal data privacy framework.

Congress — Hearings scheduled for next week include:

  • Monday, May 20 at 4 p.m., Ways & Means Tax Subcommittee, Field Hearing in Erie, PA on "Creating More Opportunity and Prosperity in the American Rust Belt"
  • Tuesday, May 21 at 10 a.m., Senate Finance Committee, "Child Savings Accounts and Other Tax-Advantaged Accounts Benefiting American Children"
  • Tuesday, May 21 at 2:30 p.m., Senate Finance Subcommittee on International Trade, Customs, and Global Competitiveness, "Examining Trade Enforcement and Entry of Merchandise at U.S. Ports"
  • Wednesday, May 22 at 10 a.m., Senate Finance Committee, "The Family First Prevention Services Act: Successes, Roadblocks, and Opportunities for Improvement"
  • Thursday, May 23 at 9 a.m., Ways & Means Health Subcommittee, "The Collapse of Private Practice: Examining the Challenges Facing Independent Medicine"
  • Thursday, May 23 at 10 a.m., Senate Finance Committee, "Front Lines of the Fentanyl Crisis: Supporting Communities and Combating Addiction through Prevention and Treatment"

Banking — At a hearing this week, the headline issue was the regulators' proposal to finish the "Basel III" global bank capital regime, which has prompted intense opposition from banks and Republicans. The Fed's vice chair of supervision, Michael Barr — an academic who helped draft the Dodd-Frank reforms at President Obama's Treasury Department in the wake of the financial crisis — testified repeatedly that while the final Basel III rule would "materially" differ from the original proposal in many ways, the Fed has not yet decided whether to re-propose the rule altogether, which would likely delay the rule for at least another year. But Republicans such as Rep. French Hill (R-AR) wondered why, if the final Basel III rule is going to include such significant changes from the proposal, the Fed has not already made the decision to abandon it and re-propose it, especially given court rulings that have struck down regulations "where the final rule was not a 'logical outgrowth' of the proposed rule."

In other news, the Supreme Court on Thursday affirmed the constitutionality of one of Obama's signature achievements, the Consumer Financial Protection Bureau (CFPB).

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