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TAX TAKE: Put Me In, Coach: Tax Team Game Plans (Part One)

Tax Alert

As we discussed last week, House Ways and Means Committee Chairman Jason Smith (R-MO) and Tax Subcommittee Chairman Mike Kelly (R-PA) announced the formation of 10 Committee Tax Teams "to study key tax provisions from the 2017 Trump tax cuts that are set to expire in 2025 and identify legislative solutions that will continue to help families, workers, and small businesses struggling in the Biden economy."

The broad Tax Team titles do not provide a lot of detail regarding the issues that each team would have jurisdiction over, with some issues potentially being covered by more than one team. Based on subsequent press releases issued by many of the Tax Team chairs and our latest information, here is our understanding of what five of the 10 teams will be covering.

American Manufacturing: Chaired by Rep. Vern Buchanan (R-FL) 

In a statement issued by Rep. Buchanan, he notes that the team "will focus on expanding, revitalizing, and reshoring American manufacturing." Our sense is that this team will focus primarily on issues such as cost recovery and interest expense deductibility. The corporate tax rate and the section 199A pass-through deduction are likely also on the team's radar.

Working Families: Chaired by Rep. Brian Fitzpatrick (R-PA) 

In a statement, Rep. Fitzpatrick noted that the team "will develop legislative solutions that will protect and support our working families and ensure a strong American workforce with prosperous economic gains." We expect this team to concentrate on expiring provisions affecting individual marginal rates, the standard deduction, and personal exemptions.

American Workforce: Chaired by Rep. Darin LaHood (R-IL) 

Rep. LaHood has yet to publicly comment on the scope of issues being addressed by this team. From the title, we would expect that the team would focus on issues such as the child tax credit (CTC), the work opportunity tax credit, and the employer tax credit for paid family and medical leave. Rep. LaHood is also the lead sponsor on a number of bills that could be considered by the team, including H.R. 5716, The Health Savings for Families Act of 2023, and H.R. 3582, The Workforce Development Through Post-Graduation Scholarships Act of 2023

Main Street: Chaired by Rep. Lloyd Smucker (R-PA) 

In a statement, Rep. Smucker noted that the team will focus on proposals "to help small businesses grow, create jobs, and invest in their communities, by ensuring tax parity between corporations and small businesses." A cornerstone of this effort will be one of the most significant provisions set to expire at the end of 2025, the section 199A pass-through deduction. The team's focus on section 199A is not surprising, given that Rep. Smucker is the lead sponsor of H.R. 4721, The Main Street Tax Certainty Act, which would permanently extend the provision. Presumably, other pass-through issues impacting partnerships and subchapter S corporations will also fall within the team's jurisdiction. Rep. Smucker has also indicated that the team will also be responsible for "considering policies to improve small business access to capital."

New Economy: Chaired by Rep. David Schweikert (R-AZ) 

Rep. Schweikert issued a broad statement indicating the team will focus on improving "our nation's economic future by fostering innovative solutions that will unleash the full potential of the American economy." It is our understanding that the team will focus on a variety of topics including the gig economy, Form 1099 information reporting, digital assets, employee stock ownership plans (ESOPs), nonprofits, carried interest, master limited partnerships (MLPs), and real estate investment trusts (REITs).

We'll be back next week to discuss the issues being addressed by the remaining five teams: Rural America, Community Development, Supply Chains, U.S. Innovation, and Global Competitiveness. #TaxTake

Upcoming Speaking Engagements and Events

Loren will speak on the panel "The Brave New World of Profit Allocation Post-Pillar One" at the Tax Council Policy Institute's 25th Annual Tax Policy Practice Symposium "The Gathering Storm: 2025 and the Coming Tax and Fiscal Showdown" on May 16.

Marc will moderate the session "Tax Legislative Outlook" at the FBA 2024 Insurance Tax Seminar on May 30.

In the News

Jorge commented on the IRS's updated spending plan for the Inflation Reduction Act funds in a recent Tax Notes article. "I think it goes without saying that this update and these initiatives clearly have a political element to it."

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