Senate Majority Leader John Thune (R-SD) is setting in motion a process for revising and advancing the One Big Beautiful Bill Act (H.R. 1) to clear the Senate in a form ultimately acceptable to virtually every single GOP member of the House. Toss in a July 4 deadline and you can get a picture of how aggressive and optimistic that timeframe is. Republican leaders want a holiday bill signing, but will they get it?

Senate Finance Committee Chairman Mike Crapo (R-ID) has not said when or if his panel will convene a markup on the bill's tax provisions, with the alternative being that the tax title is included in an amended House bill that goes directly to the Senate floor. While we wait for a decision on a potential markup, Leader Thune has indicated the legislative text of the tax title should be released later this week, though of course, delays are possible.

In the meantime, some Senate panels have started releasing legislative text in preparation for markups, including the Committees on Environment and Public Works, Commerce, and Armed Services. Going the committee route, especially through the Committee on Finance, probably appeals to Leader Thune's promised return to regular order, but it also presents a political and policy minefield. Start with the fact that Republicans hold a one-seat majority on the panel, meaning there are close votes on all amendments. Proposed committee changes could complicate later negotiations at the leadership level if GOP taxwriters have already cast votes in favor of or against amendments that must be undone or rewritten to gain wider support. Lawmakers don't like taking the pain of tough votes if the policy gains are quickly tossed aside. 

A Committee on Finance markup also gives opponents the ability to force a marathon session of tough votes on GOP taxwriters twice – both in committee and on the floor during the so-called vote-a-rama. Last month's 17-hour, 40-amendment markup in the House Committee on Ways and Means is instructive on this point.

Skipping a Finance markup has its own drawbacks. Some GOP members may lose leverage they would otherwise have on important topics if they can't press the issue by offering changes in public. Many senators also like to use high-profile markups to offer (and then immediately withdraw) an amendment to speak about a legislative priority or to vent frustration. Unfortunately for us, skipping a Finance markup also means no official committee report for taxpayers and tax policy wonks to mine for clarifying information.

Whether made in committee or behind closed doors, the potential Senate GOP changes to the bill include lowering the $40,000 state and local tax (SALT) cap, revising the retaliatory tax, modifying the phase-outs of many Biden-era clean energy incentives, and making permanent the big three business tax extenders: the section 174 research and development (R&D) amortization fix, the use of earnings before interest, taxes, depreciation, and amortization (EBITDA) for purposes of the section 163(j) interest expense deduction limitation, and 100 percent bonus depreciation.

Also, the Byrd Rule vetting process will undoubtedly slice away parts of the bill. The bill's artificial intelligence (AI) regulatory restrictions and its Regulations from the Executive in Need of Scrutiny (REINS) Act regulatory approval language are among the provisions that could fail the Byrd Rule prohibition of indirect revenue changes. 

Time is a big factor. Right now, Congress has three weeks — closer to four, if GOP leaders delay the early July recess — to get the bill to the president. Keep in mind, the July 4 deadline is a self-imposed public relations goal, nothing more. We still think the bill will probably reach the president in late July or early August, with the looming August "X-date" for addressing the debt limit and the threat of members missing the August congressional recess acting as the mechanisms to force action. #TaxTake

In the News

Marc commented on H.R. 1 and prospects for a bipartisan tax bill this week in Tax Notes: 

• Now or Later: GOP Bill Addresses Tax Cliff with More Drop-Offs
• GOP Hopes for a Bipartisan Tax Bill May Be Tempered by Dems

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