TAX TAKE: Never Gonna Give You Up – Buchanan Releases Bill to Make TCJA Provisions Permanent
As the midterm election season heats up, Committee on Ways and Means member Representative Vern Buchanan (R-FL) is signaling the seriousness with which he's approaching his bid for chairmanship of the committee for the upcoming Congress (beginning January 2023). Last week, Rep. Buchanan unveiled a bill to make the individual provisions of the Tax Cuts and Jobs Act (TCJA) permanent. Focusing specifically on the 23 provisions that are set to expire in 2025, the bill would make the top individual rate of 37 percent permanent, as well as the section 199A deduction for pass-through businesses and the state and local tax (SALT) deduction cap.
Of note is Rep. Buchanan's signal that he is willing to make permanent TCJA's child tax credit (CTC). Recent reports have indicated that some Democrats are preparing for battle over any potential year-end lame duck package by digging in on an expanded CTC provision in exchange for the repeal (or at least delay) of the TCJA-enacted amortization of research and development (R&D) expenditures under section 174. The question is whether Rep. Buchanan's proposal goes far enough. Democrats are hoping to extend the CTC offered in 2021 under the American Rescue Plan – which topped out at $3,600, was fully refundable, and made via automatic monthly payments irrespective of working status – in exchange for R&D amortization relief in a year-end tax package. The TCJA provision is not as generous: it caps out at $2,000, is only partially refundable, and is not available until the claimant has earned income of at least $2,500. Whether they are able to compromise in some meaningful way will depend largely not only on the outcome of the midterms, but also the mood hanging over the Capitol after what is shaping up to be a fractious election cycle.
In other news, Minority Leader Kevin McCarthy's (R-CA) unveiled a GOP plan last week that he hopes to put into action should he take the Speaker's gavel come January. A cornerstone of the agenda is to "repeal" the $80 billion in additional IRS funding that was enacted under the Inflation Reduction Act. Should Republicans retake control of the House, a preview of the priorities of both Reps. Buchanan and McCarthy give us a clue about how the 2023 tax battle royale is shaping up. But we still have midterms and a lame duck season to deal with, so let's not get ahead of ourselves… #TaxTake
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Tax Take is pleased to announce that our fellow Tax Members George Hani and Jim Gadwood are now the co-authors of Federal Tax Accounting. Originally authored by our colleague Steve Gertzman, the treatise has become a leading authority on the topic and has been cited by the U.S. Tax Court, IRS, and other tax commentators. George and Jim have assumed responsibility for maintaining the treatise through semiannual supplements.