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June 28, 2024

What to expect in Washington (June 28)

The CNN debate between former President Trump and President Biden June 27 touched on tax and other policy areas among many other issues. Asked to justify plans to extend TCJA individual and pass-through provisions that expire at the end of 2025 and further reduce taxes, potentially resulting in "top earners and corporations [paying] even less in taxes than they do now," former President Trump said, "Because the tax cuts spurred the greatest economy that we've ever seen just prior to COVID, and even after COVID. It was so strong that we were able to get through COVID much better than just about any other country."

He further highlighted the TCJA corporate tax rate reduction to 21% — which doesn't expire at the end of 2025 but is already part of the conversation about paying for provisions that do expire — and said, "we took in more revenue with much less tax and companies were bringing back trillions of dollars back into our country. The country was going like never before. And we were ready to start paying down debt." Then, he said, "We got hit with COVID."

President Biden focused on the cost of the TCJA. "He had the largest tax cut in American history, $2 trillion. He raised the deficit larger than any president has in any one term … " he said of President Trump. "He got a two trillion-dollar tax code, benefited the very wealthy. What I'm going to do is fix the taxes," including by increasing taxes on billionaires. Biden further said of Trump, "Now you want a new tax cut of $5 trillion over the next ten years, which is going to fundamentally bankrupt the country."

Former President Trump drew contrast with President Biden on tax and trumpeted the benefits of the TCJA. "He wants to raise your taxes by four times. He wants to raise everybody's taxes by four times. He wants the Trump tax cuts to expire so everybody, including the two of you are going to pay four to five times … " Trump said. "All my life I'd grow up and I'd see politicians talking about cutting taxes. When we cut taxes, as I said, we did more business … and all these companies, they were bringing money back into our country."

Tax — The Bloomberg Daily Tax Report (DTR) this morning reported on plans for the House Ways & Means Committee Republican Tax Teams announced in April to hold public-facing meetings across the country and deliver recommendations. "Republican lawmakers are hitting the road this summer to meet with businesses and members of the public, as they endeavor to lay the groundwork for legislation to address the expiration of much of the 2017 GOP tax law … " the report said. "The locations for public meetings on topics ranging from global tax to working families are being finalized but will likely include California's Silicon Valley, Atlanta, Pennsylvania, and Virginia, lawmakers who spoke to Bloomberg Tax said. The events are slated to happen throughout the summer." A previous report cited Rep. Kevin Hern (R-OK), who chairs the Ways & Means global competitiveness tax team, as saying June 25 that his group would hold an August 8 meeting with stakeholders in Atlanta and (likely later this year) "come out with a white paper with what we've learned."

Energy tax — An EY Tax Alert, "Final regulations on prevailing wage and apprenticeship requirements provide more details for taxpayers seeking bonus renewable energy tax credits," is available here.

Health — On June 26, the House Ways and Means Health Subcommittee held a hearing on "Improving Value-Based Care for Patients and Providers." During the hearing, there was consensus among members and witnesses that the current fee-for-service health care system generates higher costs and poorer patient care. Both Republicans and Democrats expressed frustration with the slow transition to value-based payment models, with several members critiquing the Center for Medicare and Medicaid Innovation (Innovation Center).

Witnesses and members spoke about the need to better align incentives toward care value and ensure more accurate benchmarking in models, with Ranking Member Lloyd Doggett (D-TX) and Dr. Robert Berenson of the Urban Institute emphasizing the need to correct the Medicare Physician Fee Schedule (MPFS). Several lawmakers and witnesses also spoke about ways value-based payment models can help mitigate workforce shortages by building out care teams of clinical and non-clinical providers and ensuring everyone operates at the top of their license.

Data privacy — The House Energy and Commerce Committee's much-anticipated markup of a sweeping, bipartisan data privacy bill, the American Privacy Rights Act (HR 8818), was abruptly canceled yesterday (June 27) just as it was scheduled to begin. The markup's sudden cancellation was a disappointment for Energy and Commerce Chairman Cathy McMorris Rodgers (R-WA), who first negotiated a discussion draft of APRA with her Senate counterpart, Commerce Committee Chairman Maria Cantwell (D-WA), then brought in House E&C ranking Member Frank Pallone (D-NJ) to address children's data privacy provisions and other issues. Punchbowl reported that the markup's cancellation "likely kills the chances of any such legislation passing this year, according to members and aides," adding that it had become clear by Thursday morning that McMorris Rodgers "wasn't going to get a majority of Republicans on the powerful panel to support the legislation, according to sources close to the issue." Speaking with reporters afterward, McMorris Rodgers said, "This is not how the House is supposed to operate … And this issue is too important. Parents have been waiting for a long time for Congress to act on behalf of kids and protect them, protect their privacy, protect our safety online. We're going to regroup and continue to fight to get this done." She continued, "There's been a lot of confusion and misrepresentation of the bill, unfortunately. We're going to need some more time to provide that clarity." McMorris Rodgers said she plans to revisit the bill text to address complaints and reschedule the markup as soon as possible.

According to Punchbowl, House Majority Leader Steve Scalise (R-LA) and Speaker Mike Johnson (R-LA) had a call with a dozen Energy and Commerce Republicans on Wednesday night in which they urged the members to oppose the bill. Scalise has pointed specifically to the bill's language giving individuals a private right of action to sue companies over privacy violations. After the markup was canceled, Johnson said in a post on X, "It is time for Americans to have greater control over their privacy online, especially for the safety of our children." Pallone released a statement saying, "It's outrageous that Republican leadership would interfere with the committee's bipartisan regular order process. I commend Chair Rodgers for her dedication to giving Americans back control of their data."

APRA would establish a suite of federal data privacy rights in a bid to standardize a proliferation of state-level data privacy laws. In addition to allowing consumers to sue companies over violations, the bill would minimize data collection by companies and strengthen users' control over their data. A number of business and technology groups announced their opposition to the bill in the days leading up to the markup, faulting its pre-emption of state laws as incomplete and arguing that it could leave small businesses vulnerable to lawsuits. Civil rights groups have also criticized the bill for not including anti-discrimination language. Congress — The House is out next week, and the Senate remains out for a second week, for the Independence Day recess. What to Expect in Washington won't be published while Congress is away.

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Washington Council Ernst & Young