Last week, the House made quick work of the bipartisan Tax Relief for American Families and Workers Act (H.R. 7024), which includes several business tax extensions, Taiwan tax relief, and other tax cuts, paid for by terminating and policing the employee retention credit. The bill passed on a tally of 357-70.

To convince some in his caucus to get on board, House Speaker Mike Johnson (R-LA) promised quick action on separate legislation (H.R. 7160) to raise the $10,000 cap on the deduction for state and local taxes (SALT) to $20,000 for joint filers with adjusted gross income of less than $500,000. It may see a floor vote as soon as this week.

The Senate is in session this week before a two-week recess, so this may be a period of sorting out what changes might be needed to build GOP support for H.R. 7024 while maintaining the crucial backing of Democrats. Not many expect it to happen soon, but a markup in the Senate Finance Committee is one possible route for advancing the bill. Finance Committee Chairman Ron Wyden (D-OR) would probably prefer to negotiate any changes in sideline huddles, since a regular markup takes time and introduces the potential for changes that could tip the bill's political balance and sink its chances. Still, Senate Republicans could insist on a markup if they get challenged on their desired modifications to the child tax credit (CTC) as contained in the House-passed bill.

Let's say a bipartisan compromise gets drafted and picks up support from Finance Committee Ranking Member Mike Crapo (R-ID), who probably holds the keys to the engine for this bill, and all key Senate taxwriters. To get the bill on the floor, Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY) would need to hammer out a unanimous consent (UC) agreement that would set the parameters for the bill's consideration. A UC agreement would stipulate debate time, as well as the number and content of any amendments allowed. Of course, 60 votes would be required to pass the bill. 

Given that the odds of moving a stand-alone tax bill on the Senate floor are slim, there may be an effort to attach an amended tax bill to another legislative vehicle, such as the two government spending bills currently scheduled for March 1 and March 8, or the Federal Aviation Administration (FAA) reauthorization bill (also scheduled for March 8). Congressional leadership and the taxwriting committee leadership must, on a bipartisan basis, have agreed to an amended tax bill in advance of these March dates for it to be considered for inclusion on any of these legislative vehicles. 

Even with the strong House vote, the tax bill faces significant political and procedural challenges in the Senate. The next few weeks will determine whether it has a chance for enactment in the short-term, at the end of the year as part of a post-election lame duck bill, or not at all. #TaxTake

Upcoming Speaking Engagements and Events

Jorge and Loren will speak at the Federal Bar Association 2024 Tax Law Conference on March 1 and March 4-5, 2024. Jorge will participate in two panel presentations on March 1,"2024 Tax Legislative Update" and "IRS' Progress on Strategic Operating Plan/IRA Transformation Initiatives," and Loren will present, as a part of a panel, "The Interaction of Pillar Two and the Foreign Tax Credit" on March 5. 

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