There is a continued focus on what tax proposals the next president and Congress will pursue in 2025, how much they will cost, and if and how they will be paid for, with at least one top Republican Senator reviving talk of a current policy baseline that doesn't count the cost of extending tax cuts that are in current law.

Roll Call September 18 reported Senate Finance Committee Ranking Member Mike Crapo (R-ID) as saying the cost of extending TCJA provisions due to expire at the end of next year should not be offset because they would simply continue current policy, and that "pro-growth" tax policies also don't need to be paid for. "If you look at history, extending current tax law has never been offset by Congress," Crapo said in the report, referencing the end-of-2012 extension of the Bush tax cuts. "If it's literally not changing tax policy, I'm just telling you what the precedent that Congress has set is."

The FY2013 Obama administration Budget released in February 2012 used a "realistic and fair" adjusted baseline that assumed permanent continuation of the 2001 and 2003 tax cuts (as modified by subsequent legislation) for all taxpayers, plus estate taxes at 2012 parameters and permanent extension of relief from the AMT. While the American Taxpayer Relief Act (ATRA) was estimated by the Joint Committee on Taxation (JCT) to cost $3.9 trillion, the Obama administration stated that the tax provisions would raise revenues by $618 billion relative to the $4.5 trillion baseline adjustment, by discontinuing some provisions for high-income taxpayers. Subsequent Obama budgets included in a current policy baseline permanency of temporary (through 2017) ATRA provisions on Child Tax Credit (CTC) refundability, the Earned Income Tax Credit (EITC), and the American Opportunity Tax Credit (AOTC) for education expenses.

A new EY publication, "Key tax issues business leaders are watching as 2025 nears," explains the candidates' positions on individual, corporate and international tax policies that may shape tax legislation in 2025.

For a broader discussion of policy issues US business leaders are focused on, "Public policy spotlight: 6 key issues for 2024 US elections" is also available.

Democratic hearing — The September 18 Senate Banking Economic Policy Subcommittee hearing on "The Macroeconomic Impacts of Potential Tax Reform in 2025" succinctly summed up Democratic tax positions in this year's elections and heading into next year's tax cliff: that the Child tax Credit (CTC), Earned Income Tax Credit (CTC), childcare assistance and other elements of the care economy should be bolstered, and paid for with higher taxes on corporations and high-income individuals. Rather than the broad range of Democratic tax increase proposals put forward in the 2020 election and by the Biden administration since then, the hearing reflected an apparent focus on an increase in the corporate tax rate — under the argument that the TCJA cut to 21% wasn't successful — and proposals to tax high-income individuals and generational wealth. (Republicans on the subcommittee didn't attend the hearing.)

Ai-jen Poo of National Domestic Workers Alliance and Caring Across Generations, called for increasing the corporate tax rate and tax rates on dividends and capital gains, taxing unrealized gains (such as through the Biden Billionaire's Tax or Wyden mark-to-market proposal), plus examining stepped-up basis and estate taxes. Kitty Richards of the Groundwork Collaborative, a former Biden advisor, encouraged lawmakers to consider raising the corporate tax rate and eliminating current preferences for foreign-source income.

Chair Elizabeth Warren (D-MA), who is a member of the Senate Finance Committee — Banking has no jurisdiction over tax issues — said Republicans led by Former President Trump want $7 trillion in additional tax cuts including reducing the corporate rate, while Democrats have proposals for "higher taxes on the rich." With the expiration of portions of the 2017 tax law, the next president and Congress will have a choice to make, she said, invoking prior comments from June, when she said, "The 2025 tax fight will create a huge opportunity to break with decades of tax-cutting political orthodoxy and reshape the tax code." She said wealthy Americans make tax-driven decisions, and taxing the ultra-wealthy is good for the economy, fair, and popular. "We need to be on offense by looking at the whole tax system" and deciding that better decisions can be made with the nation's tax dollars, Senator Warren said.

Senator Chris Van Hollen (D-MD) said in 2017 the message from Republicans was that big corporate tax cuts result in massive economic growth and pay for themselves. Witnesses said business investment did not skyrocket as a result of the TCJA, and instead there were more than $800 billion in stock buybacks in 2018 instead of companies growing their businesses or increasing wages. Van Hollen said that following enactment of the TCJA, prices went up, wages didn't, stock buybacks increased, the deficit increased and "these guys want to run that movie again."

SALT deduction cap — Former President Trump, whose signature TCJA law capped the state and local tax (SALT) deduction at $10,000, continued to promise to restore the deduction if re-elected. During a September 18 rally in New York, he promised to "cut taxes for families, small businesses and workers, including restoring the SALT deduction, saving thousands of dollars for residents of New York, Pennsylvania, New Jersey and other high-cost states."

A September 19 Wall Steet Journal editorial, "Trump Repeals His Own Tax Reform," said, "Without the $1.2 trillion in budget savings from extending the SALT cap, Mr. Trump will have to scrap other parts of his reform. This could include the 37% top marginal rate, 20% small business deduction and higher estate and gift tax exemptions. Extending those three items would cost about $1.2 trillion combined over a decade."

A September 18 Washington Post analysis on the 2025 tax cliff generally said Senate Republican leaders were noncommittal regarding Trump campaign ideas that go beyond TCJA extensions, which, in addition to restoring the SALT deduction, include exempting tip income, overtime income, and Social Security benefits from tax. "I'm not endorsing or not endorsing any of those ideas," said Ranking Member Crapo, referring to Trump's tax proposals. "I think that we are going to have a very broad, deep discussion." Senator John Thune (R-SD), the current second-ranking Republican and vote-counting Whip, said, "We'll take them very seriously and into consideration as we try and put this thing together."

Global tax — In a September 17 letter to the OECD, Speaker Mike Johnson (R-LA) and other members of House leadership plus Ways & Means Chairman Jason Smith (R-MO) and Republican members of the Committee expressed support for a lawsuit filed by the American Free Enterprise Chamber of Commerce in the Belgian Constitutional Court challenging the undertaxed profits rule (UTPR). They said the UTPR "would surrender U.S. tax sovereignty, allowing unelected foreign bureaucrats to dictate tax policy, and help foreign governments arbitrarily extract hundreds of billions of dollars from the U.S. economy." They lauded the global intangible low-taxed income (GILTI) tax as a "strong global minimum tax" and said, "Regrettably, the UTPR and other policies envisioned in the OECD global tax deal fail to adequately respect GILTI as the first and only proven global minimum tax in the world, which allows foreign governments to unfairly target Americans."

Tax Court — The Senate September 19 voted 76-15 in favor of a procedural motion in relation to the nomination of Rose Jenkins to be a Judge of the United States Tax Court. A confirmation vote is set for 5:30 p.m. on Monday, September 23.

Government funding — Following a failed September 18 House vote (202-220) on Speaker Johnson's continuing resolution (CR) through March 28, 2025, that included the SAVE Act bill to ensure only US citizens are registered to vote, House Republican leaders are reportedly preparing a CR into December, without the SAVE Act. Senate Majority Leader Chuck Schumer (D-NY) took procedural steps toward consideration of a CR in the event the House doesn't send over a bill that can pass.

Health — The top editorial in the September 18 Washington Post, "The struggle over Obamacare might be ending, Obamacare won," said: "Former president Donald Trump made what would once have been a shocking acknowledgment during last week's presidential debate: He has essentially accepted that the 2010 Affordable Care Act (ACA), also known as Obamacare, is here to stay. Meanwhile, Vice President Kamala Harris has repudiated her past advocacy of Medicare-for-all. Instead, the Democratic nominee promises to preserve private insurance markets and strengthen the ACA. The 2024 election still has big implications for health-care access and affordability. Yet both parties are moving away from their past extremes on the ACA."

On Wednesday (September 18), the House Energy and Commerce Committee advanced 16 bills, including 11 related to health care, and a children's online data privacy bill. The health bills advanced seek to improve access to Medicaid home and community-based services, improve research into pediatric cancer treatment, extend by two years expiring Medicare telehealth flexibilities, and more. The telehealth bill includes a number of offsets including provisions to "delink" pharmacy benefit manager (PBM) compensation from list prices in the Part D market.

A Senate Finance hearing related to Women's Health Care is set for Tuesday, September 24 (10 a.m.).

Trade — Today (September 20 at 9 a.m.), the House Ways & Means Trade Subcommittee is holding a hearing on Protecting American Innovation by Establishing and Enforcing Strong Digital Trade Rules.