Since its March 9 release, the Treasury Greenbook has received a lot of attention in Congress. As is customary, Treasury Secretary Janet Yellen testified before the House and Senate tax-writing committees to discuss the president's FY 2024 budget and the tax proposals therein. This week we highlight how these hearings went and what is next for the Greenbook. But before we get there, since last week we focused on international tax provisions, here are some key domestic tax provisions in the Greenbook.

Domestic Provisions

This year's FY 2024 Greenbook includes several key proposals that were in last year's version, which is important to note since they are likely to remain a priority for the Biden Administration and Congressional Democrats for the foreseeable future. These proposals (as described in the Greenbook) include: 

• Increasing the corporate tax rate to 28 percent 
• Preventing basis shifting by related parties through partnerships
• Conforming the definition of "control" with the corporate affiliation test 
• Repealing expensing of intangible drilling costs
• Increasing the top marginal income tax rate for high-income earners 
• Reforming the taxation of capital income 
• Taxing carried (profits) interests as ordinary income

New proposals include: 

• Increasing the excise tax rate on the repurchase of corporate stock
• Limiting tax avoidance through inappropriate leveraging of parties to divisive reorganizations 
• Strengthening limitation on losses for noncorporate taxpayers
• Accelerating and tightening rules on excess employee remuneration 

These proposals underscore the Administration's tax policy priorities. It's important to recall that some provisions that were included the Inflation Reduction Act (IRA) and Build Back Better (BBB) legislation were originally included in earlier Greenbooks, showing how these budget proposals can become law if the right political circumstances arise. The above list is just a select few proposals, so we encourage you to review the complete list in this year's 219-page Greenbook.  

Secretary Yellen Hearings

Treasury Secretary Yellen testified on the president's budget before the House Committee on Ways & Means on March 10, and before the Senate Committee on Finance on March 16. During the Ways & Means Committee hearing, a key topic was the Internal Revenue Service's (IRS) $80 billion in additional funds and the prospects for increased taxpayer audits. Another hot topic was the Treasury's role in the Organisation for Economic Cooperation and Development (OECD) process, particularly as it relates to Pillars One and Two. 

The OECD was also an area of interest for Finance Committee members, particularly the global minimum tax proposal. Senators also focused on topics ranging from affordable housing to the implementation of IRA energy tax incentives.

You can review our more detailed summaries for both hearings here and here.

What is the Next Episode?

As we have hinted at before, the Treasury Greenbook is not likely to get significant traction in Congress this year, especially since it will be met with general skepticism in the House Republican majority. That said, the political dynamics in Congress are everchanging. We know that if a tax legislative package is to develop later this year, there will be pressure for it to be fully or partially paid-for. This means revenue raisers could come at a premium, especially if members of Congress push for tax relief proposals that come with substantial revenue cost. If that scenario occurs, policymakers, regardless of political party, will review proposals in the Greenbook as they assess what could be palatable politically. 

We recommend you review the Greenbook carefully, determine how particular proposals may impact your organizations, and stay engaged with policymakers before any proposal gets traction in Congress. The earlier you become engaged with the tax-writing committees, the more likely you will have an opportunity to educate them on the impact of proposals and offer modifications. #TaxTake

Upcoming Speaking Engagements and Events

On March 31, Loren will co-chair the government panel at the 23rd Annual U.S. and Europe Tax Practice Trends Conference in Zurich.

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