This week (March 16-20)

Congress: The House and Senate are in session. Senate Majority Leader John Thune (R-SD) has announced that the chamber will debate the SAVE America Act voter ID bill that President Trump has demanded be enacted before he will sign any other legislation. Some members have said that the proposal could also be a candidate for reconciliation, though it would have to be crafted to meet reconciliation rules.

On Tuesday, March 17 at 10 a.m., the House Ways and Means Trade Subcommittee is holding a "Hearing on Advancing America's Interests at the World Trade Organization's 14th Ministerial Conference."

Last week (March 9-13)

Big picture: Only the Senate was in session this week, as House Republicans held a policy retreat at President Trump's Doral resort in Florida, where he addressed members and Committee leaders made presentations related to a second reconciliation bill. While Republican leaders have appeared more intent on pursuing another party-line bill, there is still no clarity on if such a package will come together and what it will entail. The President's FY27 Budget is expected in coming weeks, and a top Treasury Department official signaled it is unlikely to include many new tax proposals or be accompanied by a Green Book. Democratic Senators have now introduced three income-based tax bills to either impose a wealth tax on billionaires to fund middle-class priorities or exempt a greater share of lower-income Americans from paying tax, funded by tax increases on higher-income individuals and corporations. These are seen as indications of where the party platform may turn not only for the November 2026 midterms but also the 2028 presidential and congressional elections, and members involved are potential presidential candidates. Additionally, the nation's fiscal situation prompted calls for an examination of and reforms to the tax system at a Senate Finance subpanel hearing this week, as federal debt held by the public is at 100% of GDP and rising, annual budget deficits are hovering around $2 trillion and forecast to grow to $3 trillion, and there is a wide gap between revenues and outlays.

Reconciliation: There was discussion of a potential follow-on bill to 2025's "One Big Beautiful Bill Act" (OBBBA) at the House Republican retreat. Punchbowl News reported House Budget Committee Chair Jodey Arrington (R-TX) as saying another reconciliation bill is uncertain but necessary because, heading into the midterm elections, "Our base needs to be extra motivated this time." He said the Budget Committee may hold a markup of a budget resolution in the next 30 days but that reconciliation instructions may not be part of the initial product and won't be added "unless consent is there from the conference." A March 10 Politico story, "House Budget chair eyes more safety-net cuts for second megabill," cited Arrington as saying "fraud prevention" in federal and state safety-net programs should be the main target of a new Republican reconciliation bill. He called for revisiting Medicaid spending cut provisions omitted from the OBBBA, arguing that Senate Republicans didn't spend "a lot of time" last year reworking them to pass under the reconciliation rules. For some members, spending cuts seem to be the main impetus for a second party-line bill. In a March 12 Washington Post story, "House Republicans struggle to craft legislative agenda ahead of midterms," Freedom Caucus Chairman Andy Harris (R-MD) called for targeting fraud in social services programs. "I firmly believe that we should do a reconciliation bill targeting fraud, waste and abuse," Harris said, adding that $100 billion to $200 billion in savings is possible.

Notably, both House Ways and Means Committee Chairman Jason Smith (R-MO) and Appropriations Committee Chairman Tom Cole (R-OK) have doubts over whether a second bill can pass. In a March 10 story, "House GOP Seeks 'Art of The Possible' For Second Tax Megabill," Bloomberg Government cited Cole as saying, "It's an election year, and you run out of runway sometime in late spring to early summer on things that are new, unless it's a crisis situation." Chairman Smith said on CNBC this week that he is focused on bipartisan tax, trade, and health priorities.

Green Book prospects: Treasury Assistant Secretary for Tax Policy Ken Kies suggested March 10 that there is a low likelihood of a General Explanations of the Administration's Revenue Proposals document (known colloquially as the "Green Book") to accompany the FY27 Budget document release. Speaking at the U.S. Chamber of Commerce 2026 Tax Policy Summit, Kies suggested that whether such a document is included is impacted by whether the Administration is going to put out many new tax proposals. Given that the focus will remain on OBBBA implementation, Kies said he is "not sure there's going to be a need for a Green Book." He prefaced the remarks by saying a Green Book was not produced last year because Treasury was overwhelmed with providing technical assistance to the Hill on the reconciliation bill. The comments follow President Trump stating on February 10 that through the OBBBA Republicans "have gotten everything passed that we need," and that the remaining task was "perfecting a little bit of what we did." Press reports suggested the Administration may release a budget at the end of March or beginning of April.

Income-based proposals: Senator Cory Booker (D-NJ) March 9 introduced the Keep Your Pay Act (S. 4042), under which the first $75,000 in income would be tax-free for households filing jointly, with proportional tax relief for single-filers and heads of household. Senator Chris Van Hollen (D-MD) and other Democratic Senators, including Booker and Senator Mark Kelly (D-AZ), on March 12 introduced the Working Americans' Tax Cut Act (S. 4083) to exempt those under a $46,000 living-wage income threshold from income taxes, paid for with a surtax on millionaires. The bill would also provide a significant tax reduction to individuals making between $46,000 to $80,500, with proportionally higher rates for heads of households and couples. These are in addition to a bill (S. 3956) by Senator Bernie Sanders (I-VT) to establish a 5% annual wealth tax on billionaires to fund direct payments and policies beneficial to the middle class. Booker's bill is intended to be paid for with proposals like raising the corporate tax rate, "strengthening corporate tax rules," increasing taxes on stock buybacks, tightening limits on executive compensation deductions, and other measures.

The Van Hollen bill is paid for through a tiered surtax on millionaires, applying an additional:

• 5% tax to the first dollar an individual makes over $1 million, and the first dollar a married couple earns over $1.5 million annually
• 10% tax to the first dollar an individual makes over $2 million, and a married couple makes over $3 million annually
• 12% tax to the first dollar an individual makes over $5 million, and a married couple makes over $7.5 million annually

Senator Sanders is a member of the Senate Finance Committee and a former presidential candidate, and Senators Booker, Van Hollen and Kelly are viewed as potential Democratic candidates in the next presidential election. Similar tax increases were proposed during the prior Administration, including a 5% high-income surcharge in former President Biden's Build Back Better Act that passed the House in 2021 but stalled in the Senate. Such discussions subsided after President Trump took office and Republicans used the reconciliation process to enact OBBBA but are now resurfacing. Van Hollen has described his new proposal as something of an alternative to the no tax on tips and no tax on overtime OBBBA provisions, and just one plank of a potential Democratic platform on tax issues.

"Democrats are trying to flip the 2024 script after playing catch-up on tax policy … " said a story in the March 12 Wall Street Journal. "But the Van Hollen proposal and the significantly larger Booker plan are stirring consternation inside the party, particularly among fiscal-policy experts who warn of a thinned-out tax base, diminished capacity to fund crucial programs and the dangers of trying to outdo Republican tax-cutters."

Budget: The fact that Democrats didn't fundamentally increase taxes when they controlled both chambers of Congress under President Biden was a topic of discussion during a March 11 Senate Finance subcommittee hearing on the budget outlook. Maya MacGuineas of the Committee for a Responsible Federal Budget said it was "surprising and disappointing" that Democrats didn't raise taxes when they had full control in Washington, adding that in trying to control the nation's fiscal trajectory, revenues must be examined, including tax expenditures and "massively broadening the tax base there, and doing the fundamental reforms." Martha Gimbel of The Budget Lab at Yale said that while the 2017 Tax Cuts & Jobs Act (TCJA) had some positive effect on the economy, the OBBBA would not over the long run due to the drag from higher interest rates. Subcommittee on Fiscal Responsibility and Economic Growth Chairman Ron Johnson (R-WI) said the OBBBA prevented a "massive automatic tax increase" from TCJA provisions expiring, and, like MacGuineas, noted that "when they had two chambers and the presidency," Democrats did not change the TCJA. Still, he said he had wanted the OBBBA to be used for "simplifying and rationalizing" the tax system and that he opposed the no tax on tips proposal aside from cash tips. (In the lead-up to the OBBBA, Senator Johnson said he was doubtful of the growth prospects of the tips and overtime provisions and concerned that the bill was not really "addressing the major problem here in terms of massive growing deficits and debt.") A WCEY Alert has details.

Senate: On March 10, the Senate approved a bill by Senators Catherine Cortez Masto (D-NV) and John Cornyn (R-TX) to prevent businesses from claiming a foreign tax credit or deduction against taxes paid to the Russian Federation. "It's common sense that we should disincentivize funding our adversaries in Russia … " Senator Cortez Masto said in a news release.

Nonprofits: In an op-ed in the March 10 Washington Post, "Targeting this $2.8 trillion tax shelter could solve a big U.S. problem," former Tax Foundation President Scott Hodge called for "ending the tax exemption for America's massive nonprofit business sector." He questioned the treatment of nonprofit hospitals and health care plans, advocacy groups, sports organizations that are treated as a nonprofit "business league," and tax-exempt credit unions, but said "food banks, homeless shelters and organizations serving those in need should retain tax-exempt status."

IRS: On March 11, IRS released proposed regulations (REG-117298-21) that would update certain arbitrage rules and definitions applicable to tax-exempt and other tax-advantaged bonds.

EY Tax Alerts on IRS guidance posted this week include:

• "Proposed regulations would clarify elections for Trump accounts and pilot program contributions," available here
• "Proposed regulations would allow digital asset brokers to require customers to consent to electronically furnished payee statements," available here
• "Treasury moves to eliminate final regulations designating certain partnership basis-adjustment transactions as transactions of interest," available here