Key Takeaways
- Vote as soon as Wednesday?
- Holdouts 'threaten delay.'
- SALT holdouts: just talk?
- Senate Parliamentarian trims the Senate bill.
- If we're spending it now, it's free if we spend it next year too.
- SALT cap workaround clampdown.
- Supreme Court won't hurry tariff case.
- NYPD chief loses vacation days for tax dodge via ID theft.
- National Onion Ring Day.
GOP’s tax cuts head to Senate floor - Burgess Everett, Semafor. "Senate Republicans will receive an update on their tax-cuts plan on Monday evening, according to people familiar with the meeting, and they could take the bill to the floor as soon as Wednesday. Monday will be a key gut check for GOP leaders after a whirlwind of changes and ongoing negotiations aimed at passing the bill before the impending recess."
Senate Readies Tax Bill for Vote With Holdouts Threatening Delay - Erik Wasson, Bloomberg via MSN:
Meeting that ambitious deadline will require senators to quickly negotiate resolutions to a series of thorny policy issues that have divided Republicans for weeks.
The Byrd Bath Reducing Plan
11 days until July 4: Byrd Bath and policy fights on deck - Jake Sherman, Andrew Desiderio and Laura Weiss, Punchbowl News:
...
Still lingering out there is the massive chasm between the House and Senate on SALT. Sen. Markwayne Mullin (R-Okla.), a former House member, has been trying to negotiate with Rep. Mike Lawler (R-N.Y.).
The SALT crew has said they won’t go below $40,000 or renegotiate their deal. But it seems the income threshold could be the focal point of any possible agreement. Again, blue-state House Republicans have incentive to hold out here. But we doubt they have the mettle to do so.
So far no GOP legislators have been willing to kill a Trump-backed bill. Despite the obstacles, I think past performance foreshadows future results here.
Trump’s ‘Big, Beautiful Bill’ Gets Slimmed Down in Senate - Siobhan Hughes, Wall Street Journal:
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Senate Republicans in theory could attempt to overrule the parliamentarian, but Senate Majority Leader John Thune (R., S.D.) has already said that his party wouldn’t attempt such a maneuver, which could effectively end any special restrictions for reconciliation bills. Neither party has been eager to do so. When Democrats’ proposal to raise the minimum wage in a reconciliation bill was rejected by the parliamentarian in 2021, party leaders took it out of the bill.
The Byrd Rule Snags Tax Bill Offsets - Renu Zaretsky, Daily Deduction. "Byrd Rule nixes two potential revenue raisers. A plan by Senate Republicans to require states to share the cost of the Supplemental Nutrition Assistance Program (SNAP) has been ruled out of bounds by the Senate parliamentarian. POLITICO reports that this development will force Republicans to search for new offsets to fund their $67 billion farm bill priorities."
Eyes on Senate referee ahead of tax bill vote - Chris Cioffi, Bloomberg ($):
Senate Finance Committee Democrats planned to assert challenges to dozens of provisions in a process that goes full force Monday.
...
The Senate referee already ruled that the Republican megabill can’t strip all funding from the Consumer Financial Protection Bureau or cut salaries for many Federal Reserve employees, and that it can’t restrict the ability of judges to hand down initial rulings against the federal government. She also rejected provisions eliminating the Public Company Accounting Oversight Board and vehicle air-pollution standards set by the EPA. But the GOP effort to block states from enforcing new artificial intelligence regulations will remain for now.
Fun With Congressional Accounting
Senate Bill's Tax Provisions Cost $441 Billion, JCT Says - Brett Ferguson, Tax Notes ($):
The Senate's version of the bill (H.R. 1) is also likely to increase in cost if a deal is made to lift the cap on the state and local tax deduction from its current level of $10,000. Leaving the cap unchanged raises $37 billion in the Senate bill. The House bill calls for increasing the cap to $40,000 at an estimated cost of nearly $787 billion over 10 years.
Senate GOP slashes megabill’s tax costs with new accounting method -Benjamin Guggenheim, Politico:
The contrast with the traditional method of fiscal scoring, accounting for tax policy as currently enacted into law, is profound: Similar tax legislation that passed the House in May was estimated by JCT to cost $3.8 trillion under the old method.
A little history is in order. The 2017 tax bill passed as a "reconciliation" bill, like the current tax bill. To fit within the reconciliation rules, many tax benefits in the 2017 bill had expiration dates. These dates reduced the revenue loss resulting from those tax provisions. The new bill ignores those expirations by calling the expiring items "current policy." Voila - there is no revenue loss from continuing "current policy." Pro tip: this is a move only for professional Congressional budgeteers. Don't try the "current policy baseline" move with your spouse, or your banker.
Devilish details
How Senate Republicans want to change the tax breaks in Trump's big bill - Kevin Freking, AP via Yahoo Finance. "While the two bills are similar on the major tax provisions, how they work out their differences in the coming weeks will determine how quickly they can get a final product over the finish line. President Donald Trump is pushing to have the legislation on his desk by July 4th."
Republicans Clamp Down on SALT Workaround for Business Owners - Richard Rubin, Wall Street Journal:
What happened, without clear direction from Congress, is that the SALT cap became a limit on wage earners and homeowners. Pass-through business owners, like corporations, have been able to get effectively unlimited SALT deductions.
...
The outcome could vary by business and by state, but broadly, the Senate rule would allow full SALT cap workarounds for many smaller businesses while limiting them for high-income business owners. And the Senate wouldn’t create an industry-based distinction.
Tech Industry Fights to Save Clean-Energy Tax Credits - Amrith Ramkumar and Jennifer Hiller, Wall Street Journal:
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The House bill would require solar, wind and other projects to begin construction within 60 days of the measure’s enactment to receive tax credits. It would also require the projects to come online by 2028, setting a hard cutoff for any projects placed in service after that year. Under current law, the tax credits phase out over four years, starting in either 2032 or when the U.S. power sector’s greenhouse-gas emissions fall to a quarter of their 2022 levels—whichever comes later.
Tax Bill consequences
‘Revenge Tax’ Would Slam Broad Swath of Companies, Industries - Michael Rapoport, Bloomberg ($):
All of the companies have invested heavily in US operations and hail from countries vulnerable to Congress’s retaliatory-tax plan, known as Section 899. They’re far from alone: Companies from dozens of countries and spanning a wide range of industries stand to be hit by Section 899, tax observers say.
Tax Administration News
Treasury Seeking Smooth Implementation of Tax Provisions - Alexander Rifaat, Tax Notes ($):
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“If you create a whole new line on the 1040 form, it basically screws up every other form, because every form calls on some line item on the IRS form,” Faulkender said. “Can we do this through a worksheet? Can we do this through guidance? Can we do it through a schedule? Do we really have to mess with the 1040 form? We are deep into the weeds in all of those things.”
It really doesn't help taxpayers if you have to do the work on another form instead of the 1040.
Tariffs
Supreme Court Won't Leapfrog DC Circ. Over Trump's Tariffs - Lauren Berg, Law360 Tax Authority ($):
In a docket order, the high court denied the request to fast-track a challenge from Learning Resources Inc. and Hand2Mind Inc., both run by CEO Richard Woldenberg, to the tariffs authorized under the International Emergency Economic Powers Act, after the toy makers argued that a pause on an injunction blocking duty collections is damaging their businesses.
A Toy Maker Sued Trump Over Tariffs and Won. Its Operations Are Still in Tatters. - Theo Francis, Wall Street Journal:
Tariffs on Chinese imports are down from stratospheric levels. Federal courts have ruled the duties were invalid in the first place. And trade deals could further ease import duties.
But on the ground, it is a different story. Crucial equipment has been disassembled, packed and trucked hundreds of miles on mountain roads only to be trucked back on short notice. Staff members are constantly re-evaluating a catalog of more than 2,000 toys and games, deciding which to keep producing and which to put on ice indefinitely. And the business recently had to raise prices.
Blogs and Bits
Justice Dept. budget cuts will eliminate special tax unit - Kay Bell, Don't Mess With Taxes. "It’s not a particularly good time to be a federal employee looking to ensure tax compliance."
IRS Can And Does Assess This 100% Tax Penalty—Over And Over Again - Robert Wood, Forbes. " If you’re a responsible person, the IRS can pursue you personally if the company fails to pay."
“Failing to Plan Is Planning to Fail”: Why Estate Planning Matters - Matt Gaylor, Matt's Tax Firm Insights. "Estate planning isn’t just for the wealthy. It’s for anyone who cares about what happens to the people they love and things they own."
Related: Eide Bailly Wealth Transition Services.
Internal Affairs Division
Chief of Department John Chell Used False Identity in Bid to Avoid Income Tax, NYPD Records Show - Gwynne Hogan, Yoav Gonen and Harry Siegel, The City:
The attempted tax dodge was reported to the department by an investigator for the Internal Revenue Service. Chell pleaded guilty to departmental charges of misconduct after a probe found he “willfully attemp[ted] to evade or defeat a federal tax” and was docked 10 vacation days in 2013, according to the records.
Oh no! Not 10 vacation days! If you are a New York nonresident who fails to report a few days of work in Manhattan to New York City tax authorities, your experience may be worse.
What day is it?
Put some oil in the fryer, it's National Onion Ring Day!
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