We made it through the debt limit's renewal, so of course the focus now is on tax cuts. Or at least the House Republican majority's focus.
That's understandable, at least if you're familiar with how Capitol Hill works. The GOP wants to show that even with its slim House majority, it takes its position as the originator of federal tax laws seriously.
And it wants to lay down some policy and political markers for, respectively, upcoming budget talks and the 2024 elections. To that end, the House Ways and Means Committee will consider next week a package of tax breaks for individuals and businesses.
Areas of agreement…and not: A few issues have broad bipartisan support. Really. Notably there's research and development business tax credits and 1099-K reporting relief for casual online sellers.
There's also a bit of aisle crossing when it comes to tweaking the Tax Cuts and Jobs Act's (TCJA) $10,000 federal itemized deduction limit on state and local taxes (SALT).
More contentious is the Child Tax Credit. The monthly payments during the COVID-19 pandemic were very popular among families and Democrats. Most Republicans are so keen on the tax credit's renewal and expansion.
Then there's the plethora of TCJA's individual tax provisions. While the major 2017 tax reform bill made some major business breaks permanent, the benefits for Jack and Jill Taxpayer are set to expire at the end of 2025.
There obviously are major differences on which ending tax benefits should be retained, but there's general agreement on Capitol Hill that making decisions before the tax laws revert to pre-TCJA law is a good idea.
It's all about debt. Again: However, the debt limit deal between President Joe Biden and House Speaker Kevin McCarthy could create problems here.
During the debt fight, GOP budget hawks were all about reducing the national debt by cutting government spending. The Congressional Budget Office estimates making the TCJA individual tax cuts permanent will cost the U.S. Treasury around $3.5 trillion over the next 10 years.
That's a lot of tax talk that's about to get a lot of Congressional attention. That's why this weekend's Saturday Shout Outs go to several articles looking at what's ahead in the tax legislation arena.
- On heels of debt fight, House GOP rolls out tax-cut package, writes Brian Faler in Politico.
- Ways and Means GOP preps tax package for vote next week, says Laura Weiss in her Roll Call newspaper article.
- Tax Cuts High on GOP Agenda as House Looks to Revive Business Breaks, according to Wall Street Journal reporter Richard Rubin. (That's an accessible link even if you don't have a subscription.)
- Making The TCJA's Individual Tax Cuts Permanent Would Add More than $3 Trillion To The Federal Debt, Mostly Benefit High-Income Households, notes Tax Policy Center senior fellow Howard Gleckman in his piece examining the CBO numbers.
Tax trading time: Taxes are a great petri dish for deal making. Each side stakes its basic policy ground — right now, that's primarily business breaks for the Republicans, family-friendly tax benefits for the Democrats — from which to start negotiations.
Politically, those opposing positions and costs could pay off for both parties. That's because when the margin for success or failure is slim, like now, talks on Capitol Hill tend to follow, at least to some degree, my dear mother's dessert approach: every child (and childishness also is rampant in Washington, D.C.) gets an equal-sized piece.
By agreeing to business breaks, the minority House Democrats could make a better case for some concomitant support for their pet tax provisions from Republicans.
Plus, while businesses provide most campaign money, real human people — not just Supreme Court/Citizens United defined companies as people — actually go to the polls to vote. Members of Congress know that giving those people a reason to want to vote to keep the tax-writing lawmakers in office is always a good idea.
You also might find these items of interest:
- Federal income tax is now the most hated tax
- Survey says most of us think our tax bills are too high
- Biden, as promised, seeks billionaire & business tax hikes in his FY24 budget
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