To mark Tax Day, Congress talked a lot about taxes last week across both chambers. This week, the House of Representatives is planning to consider tax policy as part of an attempt by Speaker Kevin McCarthy (R-CA) to get his caucus behind a proposal to raise the debt limit and largely erase the green energy tax incentives and Internal Revenue Service (IRS) funding boost enacted by the Inflation Reduction Act (IRA).

Last Thursday, House Ways and Means Committee Chairman Jason Smith (R-MO) set the stage for repealing the IRA's green energy tax incentives with a hearing that took sharp aim at the policies' purported unintended beneficiaries. Following the Chairman's lead, Republican taxwriters charged that the new law's green incentives will disproportionately benefit large corporations, big banks, financial institutions, and China. They also pointed to outside analyses that predict the revenue impact of the new legislation will be exponentially higher than originally estimated.

The Speaker's debt limit package claims at least $271 billion in savings by repealing and scaling back more than 20 of the IRA's green incentives.

IRS funding is also in the mix. Of course, the House has already checked that box, voting on day one along party lines to rescind the 10-year, $80 billion IRS funding stream. The Speaker's plan would raise $71 billion in savings from unspent IRS funds.

These and other spending caps and cuts are included in exchange for increasing the debt limit through March 2024 or by $1.5 trillion, whichever comes sooner.

It's no surprise that Democrats in Congress and President Biden oppose the Speaker's plan. And it may take some arm-twisting in the Republican cloakroom to get it through the House this week with sufficient support. But if it passes the House, the bill will at least serve as an opening bid in the coming showdown over how to raise the debt limit. Additionally, even if rescinding the IRA green energy tax incentives and IRS funding doesn't make it across the finish line in the upcoming debt ceiling negotiations, it is clear House Republicans are targeting those items as revenue raisers in future legislation. #TaxTake

Upcoming Speaking Engagements and Events

On May 11, Loren will speak at the Tax Council Policy Institute 2023 Annual Symposium on a panel titled "Building a Better Mousetrap: Future of Cross-Border Dispute Resolution."

Loren will present "Pillar Two and Potential U.S. Response," a panel discussion at the 2023 Texas Federal Tax Institute Annual Conference on June 7. 

On June 20, Loren will present, "U.S. Tax Update - Global Trends with Local Impacts," at the TP Minds International 2023 Conference in London.
 

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