Tax Update (November 16)
|Lame Duck Tax Policy
In conversations with both House and Senate staff, there is agreement that something will be done on taxes during the lame duck. House Ways and Means Chairman Kevin Brady (R-TX) insists he does not want to just rubber stamp extenders – or kick the can – for another year. He has a comprehensive list of technical corrections he wants to enact. Senate negotiators have made it clear that technical corrections will not get done without certain policy changes. Given the limited bandwidth for protracted tax policy negotiations, the most likely scenario is an extenders package (one year back and one year forward), perhaps elements of the Retirement Enhancement and Savings Act, and some of the emerging pension package. This would clear the deck on a largely bipartisan issue and set up robust negotiations over technicals once the Democratic House is sworn in.
New Ways and Means Members
There will be a lot of new faces on the House Ways and Means Committee in the 116th Congress. Assuming the ratio of members on the committee remains 24-16, Republicans will have two openings, while Democrats will have 10. On the Republican side, it is believed Rep. Jodey Arrington (R-TX) and Rep. Drew Ferguson (R-GA) are the frontrunners for the open spots. For Democrats, Minority Leader Nancy Pelosi (D-CA) has indicated that the primary factors for consideration will be regional representation and diversity. Gwen Moore (D-WI) will likely join the panel, but with 10 slots to fill, there could be some surprises in store.
IRS Releases Inflation Adjustments
This week, the Internal Revenue Service issued Rev. Proc. 2018-57(1) which contains the inflation adjustments for more than 60 tax provisions, including tax rate schedules and other changes. This annual list includes increases to certain arcane excise taxes including the tax on arrow shafts, which will increase to $0.52 per shaft.
Sen. Chuck Grassley (R-IA) has announced he will forego his Senate Judiciary gavel and reclaim the Senate Finance gavel. He will replace Chairman Orrin Hatch (R-UT), who is retiring at the end of the 115th Congress.
(1) “Rev. Proc. 2018-57.” Internal Revenue Service, 15 Nov 2018. https://www.irs.gov/pub/irs-drop/rp-18-57.pdf