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TAX TAKE: Can Congress Give Taxpayers a February Valentine?

Tax Alert

This week, we should find out how fast – or slow – the Tax Relief for American Families and Workers Act (H.R. 7024) will advance in Congress. The goal is to get the bill, which includes several business tax extensions, to the president in early February to minimize disruptions to the tax-filing season.

First, it must get through the House. One likely option for Speaker Mike Johnson (R-LA) is to use a special House procedure that suspends the rules and allows a vote on the floor without amendments or points of order. A two-thirds majority vote is required for passage, and with a 40-3 vote of support from the Ways and Means Committee, H.R. 7024 looks like a good candidate for the suspension calendar.

However, using the suspension calendar would leave 10 or so GOP lawmakers empty-handed in their efforts to ease the cap on the deduction for state and local taxes (SALT). These members, who can cite commitments from the Speaker to address the issue, obviously want to amend the bill and could cause problems down the road if ignored.  The Speaker leads a thin majority and is engaged in negotiations inside and outside of his caucus on fiscal year (FY) 2024 spending and border enforcement legislation, as well as Ukraine and Israel assistance. He needs almost every Republican vote to pass major legislation. The threat of another motion to vacate, which led to the ouster of former Speaker Kevin McCarthy (R-CA), also looms in the background.

Speaker Johnson could also move the bill through the Rules Committee, which presents a different challenge, given the number of conservative Republicans on it. Amendments are possible by the Rules Committee, which also considers whether to allow amendments on the House floor. Shutting out any SALT amendments by the Rules Committee could just as easily leave SALT-minded GOP members with sore feelings. If SALT changes were added, an acceptable revenue offset would be needed, which obviously can be a challenge.

A strong bipartisan vote in the House would build momentum for Senate action, but speed bumps are everywhere. While Senate Finance Committee Chairman Ron Wyden (D-OR) is leading the charge for the bill, the panel's top Republican, Senator Mike Crapo (R-ID), isn't on board yet. He shares some of the same concerns other GOP senators have with the bill's expansion of the child tax credit and warns that more than 100 amendments could be filed if the bill reaches the floor. Senate Minority Whip John Thune (R-SD) also predicts that amendments will be considered, with or without a Senate Finance Committee markup.

Getting this bill to the president isn't impossible, but getting it through Congress by Valentine's Day may be a wish that leaves us all heartbroken. #TaxTake

In the News

Marc was quoted in InvestmentNews and Law360 on the obstacles facing lawmakers in the House and Senate regarding the future of the Tax for American Families and Workers Act. What could ease the path forward is overwhelming support for the proposal during the House vote: "If you have a very strong bipartisan vote in the House, that obviously puts pressure on the Senate to act."  

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