This week (June 22-26)

Congress: The House and Senate are in session.

On Wednesday, June 24 (3 p.m.), the Senate Finance is holding a hearing on, "The Future of Social Security." On Thursday, June 25 (10 a.m.), the Committee is holding a hearing on United States International Trade Commission (USITC) nominations.

On Thursday, June 25 (10 a.m.), the House Ways and Means Work & Welfare Subcommittee is holding a hearing on "The Maternal, Infant, and Early Childhood Home Visiting (MIECHV) Program: Early Support, Lifelong Impact."

Last week (June 15-19)

Big picture: Only the Senate was in session this week and members left town amid some controversy over timing of the confirmation for the nation's next top intelligence official, which was entwined with the issue of expired Foreign Intelligence Surveillance Act (FISA) surveillance authority. House Republican leaders and committee chairs have discussed the potential for another budget reconciliation bill but didn't make any reported progress as House members were away this week. Doubts about whether such a bill could pass continued to be aired by top Senate Republicans. President Trump was seen as boosting the effort by directly calling for such a bill to deliver higher defense funding beyond annual spending bills, but that insistence is roiling the regular appropriations process as Democrats want a commensurate increase in non-defense funding. The proposed anti-weaponization fund, which the Administration has said it has backed away from, and IRS immunity deal reached by the President are also creating friction between the parties. There have been multiple thought leadership events hosted by groups in Washington over the past week that featured discussions of recommended changes on corporate and international tax issues. And tax policy continues to play into the nation's treatment of new technologies, with the recent push for greater certainty of rules on cryptocurrency and now proposals addressing Artificial Intelligence (AI).

Podcast: Episode 25 of DC Dynamics examines the Trump administration's tax deregulatory agenda, focusing on how Treasury and the IRS are using regulatory authority to simplify or roll back complex tax rules rather than pursuing new legislation.

Reconciliation: Senate Majority Leader John Thune (R-SD) June 15 punctuated a point made recently by some of his members, that it will be difficult to reach even a simple-majority vote in favor of a third budget reconciliation bill, to follow last years' "One Big Beautiful Bill Act" (OBBBA) and the recent Secure America Act (S. 2) that funded the Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) agencies. Punchbowl News reported Thune as saying, "You've got to have something that gets 50 and 218, and I'm not sure exactly at this point what that is." Some members envision that a third Republican-only bill could include affordability proposals possibly offset with provisions to combat waste/fraud/abuse in federal safety net programs, though there is some disagreement among members over whether to pursue such provisions and a murky outlook for reconciliation generally. A June 17 Politico story, "Senate Republicans in no hurry to deliver Trump's next reconciliation bill," included comments from GOP Senators:

• Senator Ron Johnson (R-WI): "Everybody has a different concept of what they want, which is going to be the problem."
• Senator John Cornyn (R-TX): A third bill "doesn't look to me like it's got a lot of life in it."
• Senator John N. Kennedy (R-LA): Republicans need to "saddle up and ride hard, because we're running out of time" before the midterm elections.
• Senate Finance Committee Chairman Mike Crapo (R-ID): "I would like to do a Reconciliation Three, but we are not crafting one or anything like that."
• Leader Thune: Beyond defense funding, "You'd have to have it offset and paid for … which implicates other committees of jurisdiction and creates unique challenges in terms of the vote count here in the Senate."

Senate Budget Committee Chairman Lindsey Graham (R-SC) posted on social media following a meeting with Defense Secretary Pete Hegseth that he "would be pushing for a supplemental appropriations bill with funds for the military and other needs of the country. Any shortfall between the supplemental and the $355 billion could be made up in reconciliation 3.0." He further said, "As Senate Budget Committee Chairman, I will be working with Senate leadership, @BudgetGOP, the Department of War and the White House to see if we can get this process moving as expeditiously as possible."

Anti-weaponization fund/IRS immunity deal: Senate Democratic Leader Chuck Schumer (D-NY) June 16 offered a unanimous consent request to consider a measure to formally abolish the Justice Department's anti-weaponization fund, which the Administration has said it has backed away from, and nullify the IRS immunity deal reached by the President. The UC request was blocked by Republicans. "I gave them a chance today to show who they stand for, American taxpayers or Donald Trump? … Republicans blocked it. All they had to do was let our resolution go through," Senator Schumer said. Democratic members' insistence on offering an amendment blocking the IRS immunity agreement is also holding up Senate Finance Committee plans to consider a bipartisan tax administration package, according to Chairman Crapo. "Sen. Wyden and I have worked very hard to keep this bill very bipartisan, to have no partisan amendments on it," he said in a June 16 Punchbowl report. "It appears that there may have been an effort to do that. So until we can get that ironed out, I'm not going to hold the markup."

Tax conferences: The American Enterprise Institute (AEI) hosted a two-day event June 15-16 on "The Future of International Tax Reform," with panels on general principles for reform, the foreign tax credit, and controlled foreign corporation (CFC) regimes. During a panel on "What is the Role of Minimum Taxes on Business?", EY's Barbara Angus noted that the base erosion and anti-abuse tax (BEAT) has been the subject of criticism and proposed revision in the years since its inception. (The Biden administration proposed to repeal the BEAT and replace it with an undertaxed profits rule (UTPR) consistent with the UTPR described in the Pillar Two Model Rules.)

The panel, which also included Andrew Lyon and the University of San Diego's Adam Kern, is preparing a paper that will look at the various minimum taxes affecting US businesses (CAMT, BEAT, GILTI/NCTI, and Pillar Two) and consider the extent to which they achieve the tax policy goals that cannot be accomplished through other means, whether they are complementary or duplicative, and potential reduction of the number of minimum taxes.

The Brookings Institution and the Hamilton Project on June 16 hosted an event, "Taking on Tax: The Future of Corporate Taxation," in conjunction with papers on topics such as international tax and taxing large pass-throughs as corporations. Former Biden Treasury official Kimberly Clausing, now at UCLA, authored the paper, "The future of US international corporate tax reform," that calls for a higher corporate rate of 27% for a small portion of corporations plus an additional surtax for some (98% of corporate taxpayers would have no increase). Additional elements of the plan described in the paper are a 15% deduction relative to the domestic rate, resulting in rates of approximately 23% or 25% on nearly all foreign income; various ideas proposed by the Biden administration Treasury; and Pillar Two reforms.

AI bill: On June 18, Senator Bernie Sanders (I-VT), a member of the Finance Committee, introduced a bill (S. 4825) to impose an excise tax on systemically important AI activity. The American AI Sovereign Wealth Fund Act would require a one-time 50% tax on the stock of the largest AI companies, which would be deposited into a sovereign wealth fund with the intention of providing direct payments. The Washington Post reported, "Although unlikely to become law, Sanders's proposal adds to recent interest from across the political spectrum in the idea that economic disruption from AI could be offset by the U.S. government holding stakes in firms developing the technology."

Cryptocurrency: An EY Tax Alert, "Tax Court confirms staking rewards are taxable upon receipt," is available here.

Energy tax: An EY Tax Alert, "IRS updates guidance for energy communities on qualifying for bonus IRC Section 45 and 48 credits," is available here.