TAX TAKE: Back in the Saddle – Congress Returns to Work
The House and Senate return to work this week under a tight summer schedule. The House plans to be in session for three solid weeks before adjourning for the summer on July 28 and if all goes according to plan, the Senate will leave town that same day (though it's possible the Senate may stay in session into early August).
What can Congress do in three weeks on tax policy? In the House, the Committee on Ways and Means has released the committee-passed legislative text of the Build It in America Act (H.R. 3938). This bill includes provisions to reinstate the deduction for research and development (R&D) expenses, fix the section 163(j) interest expense deduction limitation calculation to take into account earnings before interest, taxes, depreciation, and amortization (EBITDA), extend 100% bonus depreciation, and override the foreign tax credit regulations in certain circumstances. The Committee has also prepared a report to the bill (H. Rept. 118-127) that should be released soon.
All these administrative steps would usually indicate a coming floor vote this month, but House Republican leaders are still sorting through some internal caucus divisions over spending priorities. This dust-up may slow floor action on major legislation, as several GOP House members continue threatening to break ranks on routine party-line votes on rules that govern floor debate on bills. (A bill can't reach the floor for a vote without an authorizing rule for debate.) Even if House Republicans settle their internal issues, limited floor time (particularly with the need to consider the National Defense Authorization Act (NDAA)) and pressure from some Republican members to add relief from the state and local tax (SALT) deduction limitation may prevent consideration of the Build It in America Act before the August congressional recess.
Republican leaders are also dealing with demands for impeachment votes and potential votes to vacate the speakership. Speaker Kevin McCarthy (R-CA) is working with a six-seat majority and needs almost every vote, every time to pass legislation.
In the Senate, the Finance Committee is expected to continue vetting Marjorie Rollinson's nomination as Internal Revenue Service (IRS) Chief Counsel and a hearing this month is still possible. The committee also plans to hold a hearing this week on the child tax credit (CTC). Expanding and extending the CTC is a top priority for Democrats and their key negotiating demand from Republican taxwriters seeking to advance the Build It in America Act.
We may not see progress on an expanded CTC and business tax relief provisions this month, but we remain optimistic that they will get across the finish line before the end of the year. #TaxTake