03 November 2024 This Week in Tax Policy for November 4 Congress: The House and Senate are out of session until after the November 5 elections, scheduled to return on November 12. 2024 elections: The narrative surrounding the presidential election race remains essentially the same as it has been for weeks, as polls in battleground states show Republican candidate Former President Donald Trump and Democratic candidate Vice President Kamala Harris essentially tied and within the margin of error. The direction of tax policy in 2025, and so many other issues, depends on the outcome of the presidential race, plus the also uncertain races to determine control of the House, and the uphill battle Democrats are facing to retain control of the Senate. Tax remains a focus as the candidates make their closing arguments and seek to appeal to the categories of voters each must court to win the presidency. VP Harris in Phoenix, AZ, October 31: "I will give a middle-class tax cut to over 100 million Americans … so much of my plan for me is about the dignity that all people deserve, which is why my plan includes lowering the cost of childcare, cutting taxes for small businesses and lowering health care costs … There's a contrast in this election on so many issues, including our plans for America's economy. Donald Trump's answer to the financial pressures you face is the same as the last time: Another trillion dollars in tax cuts for billionaires and the biggest corporations, and this time he will pay for it. And this time, his plan is a 20% national sales tax on everything you buy that is imported — clothes, food, toys, cell phones. A Trump sales tax." In Albuquerque, NM, October 31, Former President Trump said: "Kamala wants to raise the typical family's taxes by nearly $3,000 a year. And I'm announcing today a new step that I'll take to get emergency price relief to all Americans. On day one, I will sign an executive order directing every federal agency to immediately remove every single burdensome regulation driving up the cost of goods. They drive up the cost of goods … I will massively cut taxes for workers and small businesses, and we will also have no tax on tips. No tax on overtime. And no tax on Social Security benefits to your seniors … And I will also support a tax credit for family caregivers who take care of their parents or a loved one, a husband, a wife … We will cut taxes, end inflation, slash your prices … and bring thousands of factories back to America." 2025 tax cliff: An October 30 New York Times analysis of a potential Red Sweep in the elections said of Trump's additional tax proposals beyond TCJA extensions — he has proposed a family tax credit for caregivers who care for a parent or loved one, exempting tip and overtime income and Social Security benefits from tax, making auto loan interest tax deductible, providing tax relief for expats, and restoring the full SALT deduction — "those ideas would add to the already enormous cost of the tax bill and make approval more difficult. But if there is a single issue that unites Republicans across the spectrum, it is cutting taxes, and they would be in position to do so." Still, the analysis said, Republicans will be challenged with the debt legislation required in 2025 "when many Republicans have refused to back any debt ceiling increase," and with the need to confront the dozen annual appropriations bills when "many on the far right refuse to vote for spending bills without deep cuts or policy dictates that others in the party consider politically risky." Republicans continue to create expectation that they will attempt to act quickly next year on a very large and broad-ranging bill anchored by extensions of end-of-2025 expiring TCJA provisions should they win control of the House, Senate, and White House in a Red sweep and have the benefit of the budget reconciliation process. "GOP members of the Senate Finance and House Ways and Means committees met last week to discuss a possible reconciliation package, a House Republican aide said," according to an October 30 Bloomberg report. "The GOP's first shot at reconciliation would be broad, according to a House GOP aide close to leadership, and let the Senate parliamentarian decide what can and can't be included." House Speaker Mike Johnson (R-LA), who said in June that a GOP reconciliation bill would be broad in scope and address many issues including tax, made news this week with comments suggesting Republicans want to make major health care changes. As a reminder, a WCEY Alert, "Prospects for budget reconciliation in 2025," is available here. Taiwan: Treasury announced October 29 that the US will begin negotiations on a comprehensive agreement with Taiwan to address double taxation issues. "The Biden-Harris Administration recognizes the work done by committees in the House and Senate to address the issue of double taxation, including through the proposal of the United States-Taiwan Expedited Double-Tax Relief Act and United States-Taiwan Tax Agreement Authorization Act draft legislation," Treasury said in a news release. "The Administration is committed to engaging with relevant committees throughout the negotiation process and working with Congress on legislation to approve a final agreement and implement the agreement through the Internal Revenue Code." House Committee on Ways and Means Chairman Jason Smith (R-MO) and Senate Committee on Finance Ranking Member Mike Crapo (R-ID) issued a joint statement questioning the move, saying the pending legislative package "providing both expedited double-tax relief through the tax code and paving the way for future agreements on additional double-tax relief … remains the best path forward to address double taxation between the U.S. and Taiwan." The stalled Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) includes, among other things, the United States-Taiwan Expedited Double-Tax Relief Act (H.R. 5988), which would provide double tax relief under the Internal Revenue Code and, separately, authorize the President to negotiate and enter into a tax agreement with Taiwan. Partnerships & pass-throughs: IRS October 29 announced the selection of the first Associate Chief Counsel for the newly created Passthroughs, Trusts and Estates office "that will focus exclusively on partnerships, S corporations, trusts and estates." The new Associate Chief Counsel, Jeffrey Erickson, is expected to join the IRS in January 2025, the agency said. Most recently, he served as a Principal in Ernst & Young's National Tax Passthroughs Transaction Group. Global tax: Treasury intends to release guidance soon related to the transfer pricing framework under a portion of the OECD's Pillar One global tax agreement, known as Amount B, and how it interacts with US transfer pricing rules, according to Scott Levine, acting deputy assistant secretary at Treasury, in a Bloomberg Daily Tax Report story on his remarks at a PLI conference in New York. It's notable that global agreement on Amount B has yet to be reached as some countries have insisted that the transfer pricing rules under Amount B should be optional while other countries and a number of business groups have maintained that Amount B only works if all countries are agreeing to adhere to it. IRA: An October 28 Washington Post story on Republican threats to the Inflation Reduction Act (IRA) energy credits said, "Despite its major economic impact, the law's future remains in doubt. Most experts say it's unlikely that a future Congress will repeal it outright, even under a Republican sweep." Some see the possibility that the next president and Congress may want to divert unspent IRA funds to other priorities, the story said, and the law "also includes grants that could be scaled back by a future administration." In a September speech, Former President Trump said, "My plan will terminate the Green New Deal, which I call 'the Green New Scam' … It actually sets us back, as opposed to moves us forward — and rescind all unspent funds under the misnamed Inflation Reduction Act, which the Democrats agreed after it was approved that it wasn't for that purpose; it was for other purposes like giveaways." Investor and Trump ally John Paulson, in a Wall Street Journal story this week, called for getting rid of what he similarly called the Green New Deal to reduce spending. "All of these tax subsidies for solar, for wind, inefficient, uneconomic energy sources," said Paulson. "Eliminate that. That brings down spending." Referring to Trump's comments about rescinding unspent funds, the Journal story said his campaign hasn't been specific about what that would mean. IRA guidance tracker: This list describes select IRS guidance related to the Inflation Reduction Act (IRA).
Document ID: 2024-2012 | |||
