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Congress is out until after the elections, with the House and Senate scheduled to return on November 12. The presidential race continues and the vice-presidential debate between Republican candidate Sen. JD Vance (R-OH) and Democratic candidate Gov. Tim Walz (D-MN) is scheduled for Tuesday, October 1 at the CBS Broadcast Center in New York City. Tax policy and trade remain top-tier campaign issues.

At a Town Hall in Warren, MI September 27, Republican candidate Former President Donald Trump again made the case for tariffs, saying they were useful to the nation long ago and should be revived, especially against carmakers who leave the US and then import automobiles back into the country. "They think they're going to make the cars and sell them … And it's not going to happen because we're going to put very heavy tariffs on those cars coming across the border." He suggested Congress needs to be more open to tariffs, perhaps referencing the focus on free trade agreements in recent decades. "The Senate and the House have to get really smart on this because, purposely, over a period of years, they've given it a bad name," he said.

The Town Hall was hosted by Senator Marsha Blackburn (R-TN), a Finance Committee member, who said, "another thing with great power was the 2017 Trump tax cuts. And we need Republicans in the Senate and the House to make the Trump tax cuts permanent." Former President Trump said Democrats "want to raise your taxes" and highlighted the law's estate tax relief that expires at the end of 2025. "Part of our tax cuts, nobody even talks about it, but the people that that are involved in this stuff really say that's one of the best things," he said.

A particular focus as Trump and Democratic presidential candidate Vice President Kamala Harris have rolled out their tax proposals is how much they will cost and if and how they will be paid for. VP Harris last week expressed support, at least a high level, for the type of international proposals advocated by the Biden administration, calling for deriving revenue for new tax credits for emerging technology from international tax reform "to prevent a global race to the bottom and to discourage inversions, outsourcing, or international tax strategies designed by corporations to avoid paying their fair share to the United States."

Paying for the TCJA expirations at the end of 2025 also continues to attract attention on Capitol Hill, including suggestions by some Republicans of using a current policy baseline. Punchbowl News last night reported, "Sen. Mike Crapo (Idaho), the top Republican on the Finance Committee, is getting a lot of attention for saying the Trump tax cuts are current law, not new policy, so their cost shouldn't have to be offset. That's not how congressional scorekeeping works, but Republicans could try to ignore the bean counters. If the GOP wins control, the tax fight will be a test of House Republicans' resolve when it comes to clamping down on government debt."

Politico Morning Tax said today, "This isn't exactly new ground for Crapo, who's at the ready to be Senate Finance chair if Republicans take control in November. Crapo has long said that he doesn't think that the deficit impact of pro-growth tax cuts needs to be offset, including over and over during the debate over the bipartisan tax bill that he opposed this year."

Bill introductions — Before leaving session until after the elections, House and Senate members introduced a large number of bills, several of which reflect proposals discussed by the presidential candidates. Below is a list of select bills.

September 24

Senate Budget Committee Chairman Sheldon Whitehouse (D-RI) introduced S. 5156, to enhance the low-income housing tax credit. The Affordable Housing Construction Act specifically would:

• Make permanent the temporary 12.5% boost to LIHTC;
• Triple the LIHTC state allocation of $2.90 per capita to $9.79 and triple the small state minimum from $3.36 million to $11.34 million beginning in 2025;
• Set aside one-third of each state allocation for boosts to projects that meet special requirements, such as paying a prevailing wage, using renewable energy sources, proximity to public transportation, providing accessible units, or allocating at least 20 percent of the units for extremely low-income renters;
• Lower the private activity bond threshold for the rehabilitation credit from 50% to 15%; and
• Extend the required affordability period for LIHTC buildings from 30 to 50 years.

Senate Finance Committee Chairman Ron Wyden (D-OR) introduced S. 5144, to provide a tax credit for investors in certain start-up businesses, to provide a credit for wages paid by start-up businesses to their first employees.

September 25

Senators Mark Warner (D-VA) and Shelley Moore Capito (R-WV) introduced S. 5167 to amend IRC Section 45Q to establish the mine methane capture incentive credit. "The new credit would credit taxpayers based on the amount of qualified methane that is captured and injected into a pipeline or is otherwise used for producing heat or energy," a release said.

Senator Bob Casey (D-PA) introduced S. 5187, to establish a tax credit for Qualified Community College Bonds. "The Community College Infrastructure Financing Act would create a bond program to provide interest-free financing for community colleges, which will allow existing community colleges, States, local governments, and municipalities, to issue 'Qualified Community College Bonds' to establish or expand community colleges and programs to underserved areas, as well as address existing infrastructure needs to help them serve students," a release said.

Senator Marco Rubio (R-FL) introduced S. 5188, to amend the tax code to incentivize the divestiture of certain foreign securities. The bill would encourage divestment by removing the beneficial capital gains tax rate for these investments, a release said.

Senator Deb Fischer (R-NE) introduced S. 5189 to waive certain distance requirements for certain hospitals electing to be designated as critical access hospitals. "The Supporting Access to Rural Community Hospitals Act of 2024 grants rural hospitals flexibility when choosing reimbursement models so they have greater financial sustainability," a release said.

Senators Jeanne Shaheen (D-NH) and Tammy Baldwin (D-WI) introduced the Health Care Affordability Act (S. 5194) to make permanent the Affordable Care Act's (ACA) enhanced premium tax credits (PTCs) for Health Insurance Marketplace coverage as extended through the Inflation Reduction Act, which are currently set to expire at the end of 2025. A Bloomberg Daily Tax Report (DTR) story said Senator Shaheen "floated the possibility that the legislation could be included in a lame duck tax package as lawmakers clear the decks ahead of the next Congress when they return in November."

Senator Martin Heinrich (D-NM) introduced S. 5196 to establish the New Homes Tax Credit, offering incentives for developers to build single-family homes intended for new homebuyers.

Senator Jacky Rosen (D-NV) introduced S. 5204, to increase the limitations for deductible new business expenditures and consolidate provisions for start-up and organizational expenditures. "The Tax Relief for New Businesses Act would increase the startup tax deduction from $5,000 to $50,000 and allow businesses to write off more expenses to compensate for the increasing cost of starting a business," a release said.

Senators Elizabeth Warren (D-MA) and Rubio introduced S. 5206, to require a report on foreign investment in the pharmaceutical industry of the United States.

Senator George Helmy (D-NJ) introduced S. 5219, to increase the limitation on the deduction for State and local taxes.

Senator Joe Manchin (D-WV) introduced S. 5225, to require the Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget, to examine the ability of the Federal Government to respond to potential fiscal shocks.

Chairman Wyden introduced S. 5229, to reorganize the Federal judiciary. "The legislation by [Sen. Wyden] is one of the most ambitious proposals to remake a high court that has suffered a sharp decline in its public approval after a string of contentious decisions and ethics scandals in recent years," the Washington Post reported. "It has little chance of passing at the moment, since Republicans have generally opposed efforts to overhaul the court"

Senator Pete Ricketts (R-NE) introduced S. 5233, to treat certain gains and dividends derived from countries of concern as ordinary income. He also introduced S. 5234, to impose an excise tax on certain investments of private colleges and universities.

Chairman Wyden introduced S. 5236, to enhance financial support for rural and safety net hospitals providing maternity, labor, and delivery services to vulnerable populations. "The bill, titled the Keeping Obstetrics Local Act (KOLA), would increase Medicaid payment rates for labor and delivery services for eligible rural and high-need urban hospitals, provide 'standby' payments to cover the costs of staffing and maintaining an obstetrics unit at low-volume hospitals, create low-volume payment adjustments for labor and delivery services at hospitals with low birth volumes and require all states to provide postpartum coverage for women in Medicaid for 12 months, among other steps," a release said.

Senator Rubio introduced S. 5249, to deny certain green energy tax benefits to companies connected to certain countries of concern.

Senator Michael Bennet (D-CO) introduced S. 5254, to enhance the employer-provided childcare credit. This legislation would expand the employer-provided childcare credit and increase the existing credit to: 60% for businesses in eligible rural areas, for a maximum total credit of $1.2 million annually; 50% for small businesses, for a maximum total credit of $1 million annually; and 40% of the first $2 million in qualified child care expenses for a maximum total credit of $800,000 annually.

Senator Mitt Romney (R-UT) introduced S. 5256, to enhance the child tax credit. "The bill is fully paid for by consolidating existing federal spending, increases the Child Tax Credit to $4,200 for each young child and $3,000 for each school-aged child, and creates a new $2,800 tax credit for expecting parents," a release said. "While prior iterations have been released as a framework, this marks the first time that the Family Security Act has been introduced with bill text."

House Budget Chairman Jodey Arrington (R-TX) introduced H.R. 9798, to change the title of the "Inflation Reduction Act" to the "Lied About Inflation and Energy Dependence" (LIED) Act.

Rep. Don Bacon (R-NE) introduced H.R. 9799, to amend the tax code to establish a deduction for certain overtime payments. Rep. Bacon also introduced H.R. 9800, to amend the tax code to establish a deduction for certain amounts received as a bonus.

Rep. Steven Horsford (D-NV) introduced H.R. 9831, to exclude certain dependent income when calculating modified adjusted gross income for the purposes of eligibility for premium tax credits. The bill would adjust the household income calculation used to determine eligibility for Affordable Care Act (ACA) premium subsidies, which would ease financial burdens and expand health coverage, a release said.

Rep. Ro Khanna (D-CA) introduced H.R. 9838, to provide for an end date for the credit for certain qualified carbon oxide. The End Polluter Welfare for Enhanced Oil Recovery Act would end the Tax Credit for Carbon Sequestration (IRC Section 45Q) available to the fossil fuel industry for using carbon capture for enhanced oil recovery (EOR), by which carbon dioxide is injected into oil wells to extract more oil.

Rep. Ritchie Torres (D-NY) introduced H.R. 9856, to establish an exception to the volume cap for certain bonds to finance the preservation, improvement, or development of affordable rental housing buildings.

Wednesday, October 2 (1 p.m.) is the EY Webcast, "Corporate alternative minimum tax: what the proposed regulations could mean for companies."

With Congress away, What to Expect in Washington will be published less frequently, though WCEY Alerts will be issued as events warrant.