A Senate vote to begin consideration of the Tax Relief for American Families and Workers Act (H.R. 7024) package addressing the Child Tax Credit, TCJA pre-cliffs (R&D, interest deductibility, and expensing), housing, disaster relief, and Taiwan had been under discussion since the House passed the bill January 31, and prospects had dimmed as the August recess approached. But Senate Majority Leader Chuck Schumer (D-NY) opted to hold the vote, as a boost for Democrats, like Sherrod Brown (D-OH), who are up for re-election this year who have advocated for a CTC expansion, and to respond to Republican vice-presidential candidate Sen. J.D. Vance (R-OH) saying Democratic presidential candidate Vice President Kamala Harris is calling for an end to the CTC.

The August 1 vote failed, as expected, as most Republicans opposed the bill after some GOP leaders argued that a better deal could be struck on tax issues in 2025 if the GOP gains greater control in Congress and, perhaps, the presidency. The vote was 48-44 with 60 votes required and only three Republicans voted in favor: Senators Markwayne Mullin (R-OK), Josh Hawley (R-MO), and Rick Scott (R-FL). Punchbowl News reported August 1, "Sen. Todd Young (R-Ind.), who expressed support for the bill before voting against it today, said the scale of the negotiations [next year] could help leave room for necessary 'horse trading.'" Senator Vance was on the campaign trail, at the US border in Arizona, and absent for the vote. Senators Bernie Sanders (I-VT) and Joe Manchin (I-WV), who caucus with Democrats, voted "no." Leader Schumer voted "no" for procedural reasons, allowing him the option to move later this year to try for another vote on the bill. With this vote on August 1, it is unlikely that the Senate will pass the bill, at least before the election, though Leader Schumer has expressed some hope for reconsideration after the August recess.

The $78 billion bill would expand the Child Tax Credit and the Low-Income Housing Tax Credit (LIHTC); address the TCJA pre-cliffs on IRC Section 174 five-year R&D amortization, 163(j) interest deductibility, and bonus depreciation; and provide disaster relief and tax treaty benefits with Taiwan. It is nearly fully paid for with Employee Retention Credit (ERC) enforcement provisions.

EVs — During the July 31 Senate Budget Committee hearing, "Charging Ahead: The Future of Electric Vehicles," Chairman Sheldon Whitehouse (D-RI) extolled the virtues of EVs but said they need to be supported by a stronger and more modern electric grid. He also said that lawmakers must "also find a way to reconcile the surging EV market with a Highway Trust Fund that provides 80% of federal highway spending with a majority of its revenue from federal gas taxes." Some witnesses said electrical infrastructure improvements to handle EVs are underway or being planned.

Ranking Member Chuck Grassley (R-IA) said "EV technology is impressive and works well for some," mostly those in suburban and urban areas, but he expressed concern that critical minerals for battery production are predominately mined elsewhere. Senator Grassley also said he has "yet to hear a comprehensive plan to make EV owners pay into the Federal Highway Trust Fund," aside from some states charging extra fees. He noted that the trust fund is projected to be exhausted in 2028.

Senator Lindsey Graham (R-SC), from an auto industry-heavy state, said there needs to be a way to make up lost HTF revenue (collected from the gas tax) to pay to maintain the roads, and to come up with an answer about how to improve power grid. He said processing facilities to make a battery don't really exist here. Senator John Neely Kennedy (R-LA) asked why, if EVs are such a good idea, they require subsidies.

2025 tax cliff — In the July 31 New York Times story previewing the "Super Bowl of Tax" when TCJA provisions expire at the end of 2025: "We're studying and preparing," said Senator Michael D. Crapo of Idaho, who as the top Republican on the Senate Finance Committee has been holding meetings and gathering ideas about next year. "It's preseason."

Amid expected continuity with Biden but some uncertainty, VP Harris "has pledged to raise taxes on the wealthy and corporations, yet her campaign has not detailed all of her tax-policy views. People who have previously worked for her said she would likely stick to many of the Biden administration's positions." The story noted that Biden has proposed raising the corporate tax rate, raising the highest marginal income rate, and "making ultrawealthy Americans pay taxes on investment gains on assets they have not yet sold." However, "when Democrats last controlled both chambers of Congress, in 2021 and 2022, lawmakers rejected much of Mr. Biden's tax agenda, making it uncertain where the party could land next year." Further, "House Democrats on the Ways and Means Committee have held a series of dinners to discuss next year's expiration, and they have also met with nonpartisan tax experts from the Joint Committee on Taxation."

Social Security — Former President Trump said at a rally on Wednesday (July 31) in Harrisburg, PA, "Seniors should not pay taxes on Social Security, and they won't." A Congressional Research Service (CRS) report on Social Security Benefit Taxation is available here.

Tip income — Regarding another Trump campaign proposal, CRS published a July 31 report that "explores the tax treatment of tips and the potential consequences of excluding tip income from taxation."

Congress — The Senate has gone out of session until September 9, like the House did last week, and both chambers will return to a looming government funding deadline on September 30, with consideration of a continuing resolution to keep the government funded until after the elections likely.

Even with the House out of session until after Labor Day, Republicans are expected to continue during the August recess laying the groundwork for addressing the TCJA provisions that expire at the end of 2025, with the Ways & Means GOP tax teams active and at least one Committee field hearing expected.

What to Expect in Washington won't be published while Congress is away.