Tax Update (January 28)
|This week, House Ways and Means Chairman Richard Neal’s (D-MA) new Chief Tax Counsel, Andrew Grossman, outlined the priorities for Ways and Means Democrats.
Chairman Neal is interested in holding hearings of previous bi-partisan retirement packages that make it easier for Americans to save and plan for retirement. There will likely be some conversations around pension stabilization in this context as well. He did not say whether the chairman will also address the multi-employer pension plan issues.
The Democratic members of the committee are “open for business” when it comes to infrastructure. Grossman did say that infrastructure should be paid fro but that revenue raisers might not be married to the transportation package. Grossman also stated the committee may waive “pay-go” (which was part of the recently passed rules package) or infrastructure, perhaps as a way to get support from Senate Republicans. Infrastructure hearings are likely to be the first held by the committee, perhaps in late February, and will likely focus on encouraging and financing infrastructure improvements. Grossman noted that the Democratic view of infrastructure is very broad, encompassing more than just highways, bridges, airports, and waterways.
In response to a question from a frustrated practitioner related to problems with the hastily-drafted Tax Cuts and Jobs Act (TCJA), Grossman said technical corrections to the TCJA are “poison” given Democratic unhappiness with being “excluded” from the W&M committee’s actions on it in late 2017. There is also no agreement from the “four corners plus Joint Tax and Treasury” yet. Still, Grossman said that “fixing the tax code is our job” on the committee and that one way to get member attention might be to point out problems caused by the TCJA, such as the Net Operating Loss (NOL) date and retail glitch issues. He also said there may be potential for an agreement with the Senate but Finance Republicans “would have to throw us a little something…” to get their acquiescence (as with the “grain glitch” of Section 199! for the expanded child credit)
The hearing schedule will be robust and both forward and backward looking. Forward looking hearings will highlight the chairman’s priorities, specifically infrastructure, while backward looking hearings will focus on the TCJA. Grossman said he expects the committee to examine whether a $1.5 trillion tax cut was wise, what the impact has bee on wage growth, capital investment, revenue loss, and charitable giving. He also stated that he expects at least two hearings on the very complex international provisions.
Grossman acknowledged that raising the corporate rate has been proposed as a pay-for by many Democrats, but that it is not a fait accompli (given Republican control of the Senate, among other issues).
Grossman downplayed the prospects of extenders given the lack of a natural vehicle. Perhaps a shutdown deal could get big enough to include extenders, but he was not optimistic.
In response to a question, Grossman said that members are discussing carbon pricing but that there is no clear indication of whether that will result in legislation that can get a presidential signature. That being said, he also acknowledged that it is important to the progressive caucus.
Finally, when asked what the new 11 Members on W&M were most interested in, he answered by stating they hate the cap on the State and Local Tax (SALT) deduction.
Skillman Comments on Tax Objectives
David Skillman, who serves as Deputy Chief of Staff to W&M Trade Subcommittee Chairman Earl Blumenauer (D-OR) outlined energy and tax objectives at the breakfast as well.
Blumenauer has been a strong advocate for renewable energy. He said that the various technologies are reassessing their positions on tax incentives. Previously they were in a “phase-out posture” with reversals on the Clean Power Plan, rejection of the Paris Climate Accord, and solar tariffs. However, he said their new posture is “better monetizing their credits” as they phase-out. He suggested that the “extenders cats and dogs deserve the wind phaseout” (similar to what Finance Chair Chuck Grassley (R-IA) has said).
On infrastructure, Blumenauer was pushing to have an infrastructure finance and tax subcommittee created in W&M, to reassert jurisdiction that was ceded to the Transportation and Infrastructure in the House and Environment and Public Works in the Senate (which contains a number of Senate Finance members). That was scuttled when there was a freshman Democrat push for a climate change committee (with full legislative authority), which angered senior members on changing committee jurisdiction. However, Blumenauer still thinks that surface transportation improvements within a larger infrastructure package should be paid for with funds from a revised gas tax, including provisions that tax electric vehicles for miles traveled.
Friction between House Democrats, Mnuchin
Chairman Neal cancelled a hearing for Thursday (Jan. 24th) after Treasury Secretary Steven Mnuchin declined to testify on the shutdown’s impact on the Internal Revenue Service (IRS).
“One of the most sensitive areas of this happens to be the politics of it,” Neal said Wednesday evening, referring to calling back employees without pay to process refunds. He added that he was putting forth more dates to formally ask Mnuchin to appear.
Mnuchin told Neal that he would be willing to testify in front of the committee once President Donald Trump releases his fiscal year 2020 budget request. Presidents are required by law to release their budget proposals by the first Monday in February, but this year’s could be delayed because many of the Office of Management and Budget (OMB) staff members have been furloughed during the government shutdown.
 Davison, Lauri. Basu, Kaustuv. “House Democrats Cancel Tax Refund Panel as Mnuchin Opts Out.” Bloomberg. 23 Jan 2019. https://www.bloomberg.com/news/articles/2019-01-24/house-democrats-cancel-tax-refund-hearing-after-mnuchin-opts-out?utm_medium=taxdesk&utm_source=twitter&utm_campaign=2019-01-25T12%3A03%3A08