Key Takeaways
- Faced with continued divisions in the party, Republicans delayed a planned tax markup for next week.
- They will still likely aim to finish a tax bill under reconciliation over the summer.
- Divisions over green energy credits, starting to spill out into the public, are likely one of the remaining hangups.
- Sports owners are pushing hard against proposals to change their tax treatment.
- Using IRS data for other purposes within the government? Richard Nixon tried it first.
A line I often use in presentations is that Congress is like a lazy teenager—it can normally be counted on to do what's necessary, but only at the last possible second.
That's not because individual members are lazy, although some surely are. But generally speaking, you have to be hard-working to get to Congress in the first place.
Rather, it's because getting a large and often rowdy body of lawmakers on the same page is close to impossible, and it normally takes an incoming deadline to make it happen.
That's something to keep in mind given the recent news that the House Ways and Means Committee, as well as the other Congressional panels tasked with drawing up tax and spending legislation under the recently passed budget resolution, are delaying markups planned for next week. The delay is mostly about spending cuts that the House resolution mandates, reportedly, but the tax-writing committee is also still working to resolve some issues among its members and the Republican caucus at large. (The budget resolution only applies until Sept. 30, but the U.S. Treasury Department may provide an earlier deadline if it finds that the federal debt limit needs to be raised over the summer. Aside from new tax cuts, the resolution also allows a $5 trillion hike in the debt limit, making the reconciliation bill a prime vehicle to avoid a default on U.S. debt.)
One issue is surely what to do about the green energy credits enacted by the 2022 Inflation Reduction Act. Repealing them would give Ways and Means more money for its other priorities, such as extending the Tax Cuts and Jobs Act and implementing President Trump's proposals for tax relief on overtime and tips. But despite the party's criticisms of the IRA as a wasteful Democratic boondoggle, many Republican members have balked at reversing credits that have spurred new economic activity in their districts. The tension is a difficult problem for tax-writers to unwind.
On Thursday, 38 hardline Republican House members signed a letter to House Ways and Means Committee Chairman Jason Smith, R-Mo., urging the party to overcome "parochial interests and short-sided political calculations" and fully repeal the IRA. The same day, 26 Republicans also signed a letter to the committee, defending credits which they claim are crucial for reviving the nuclear power industry in America. These dueling letters demonstrate how the IRA is provoking divisions in the party as it heads into crunch time—and with barely any votes to spare, House leaders will need to find a way to square the circle before proceeding.
Is all politics still local, as former House Speaker Tip O'Neill famously opined? We may soon be getting a big test.
Tax Pieces From the Past Week:
Revise or Repeal? Commercial Clean Vehicle Credit Awaits Its Fate – Marie Sapirie, Tax Notes ($):
NFL, MLB Lobby to Safeguard Billionaire Team Owner Tax Breaks – Zach Cohen, Bloomberg Tax ($):
GOP seeks to sell lack of tax hikes ahead of midterms – Zach Cohen, Bloomberg Tax
But the vast majority of the GOP tax bill being negotiated behind closed doors will likely just extend the 2017 law, meaning most Americans may not see a change in their take-home pay or annual refund.
Tax Breaks For Offshore Production Could Thwart Tariffs' Goal – Natalie Olivo, Law360 Tax Authority ($)
Nixon Gave USDA Access to Tax Returns; Farmers Decried ‘Snooping’ – Joe Thorndike, Tax Notes ($)
We're Here to Help
