Just before recessing for the summer last week, the House of Representatives passed a budget resolution (H.Con.Res. 113) that would set up a follow-on $95 billion package for supplemental defense funding, aid to farmers, and state implementation of portions of the Safeguard American Voter Eligibility Act (the SAVE Act) – without a tax title. Attention now turns to the Senate, which is clouded with doubts and reservations among Republican Senators regarding the viability and content of this so-called "Reconciliation 3.0" package.

Further consideration of Reconciliation 3.0 could result in a tax title coming back into the conversation. If the Senate doesn't entirely shelve reconciliation, it could pivot in favor of a new package that seeks to address the $95 billion cost through a combination of "fraud, waste and abuse" spending cuts and tax provisions. And germane or not, tax-related floor amendments from Senate Democrats are almost certain to be offered to the budget resolution to make Republicans revisit tough political issues like the enhanced Affordable Care Act premium tax credit. Alternatively, House Speaker Johnson (R-LA) has even suggested that to secure the necessary support for Reconciliation 3.0, a fourth bill – "Reconciliation 4.0" – would be considered, which could also provide a vehicle for tax provisions. 

It is important to note, however, that under either scenario the risk of tax increases may outweigh the opportunities for new tax relief – particularly considering all the tax relief that was enacted last year as part of the One Big Beautiful Bill Act (OBBBA). Further, while a significant amount of tax relief proposals enjoy bipartisan support – extenders, tax administration, the U.S.-Taiwan "treaty" relief proposal, etc., those proposals are presumably targeted for a potential year-end bipartisan bill rather than a partisan reconciliation bill.
#TaxTake

Upcoming Speaking Engagements

Marc will present the American Staffing Association (ASA) webinar "Federal Tax Policy and the Impact of the Pending Mid-Term Elections" on August 20.

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