On The Hill

Tax Update (March 4)

Mar 4, 2019 | SHARE  


Tax Rates


The forthcoming budget resolution from House Democrats will include a proposal to raise federal revenue, and a hike in the corporate tax rate could be one-way lawmakers accomplish that. House Budget Committee Chair John A. Yarmuth (D-KY) said he thinks that “somewhere between 21 and 28 [percent] is the right number” for the corporate rate.




Transportation Secretary Elaine Chao had breakfast with House Ways and Means Chairman Richard Neal (D-MA). Chao didn’t elaborate on what they discussed, but any potential gas tax increase to fund a surface transportation bill would have to go through Neal’s committee. The Department of Education and Department of Labor marked up a $100 billion school construction package using their bonding authority; Ways and Means Committee intends to markup an infrastructure financing bill that is expected to be a major piece of legislation. Both Democrats and Republicans are introducing finance bills – but the Senate Finance Committee prefers that authorizers decide what constitutes as part of the infrastructure package, which the committee will then decide how to finance.


Carbon Tax


House Minority Leader Kevin McCarthy (R-CA) named six Republicans to the House Select Committee on Climate Crisis: Garret Graves, Ranker (LA); Morgan Griffith (VA); Gary Palmer (AL); Buddy Carter (GA); Carol Miller (WV); and Kelly Armstrong (ND).


Carbon pricing is sure to be a major topic of discussion. Graves said climate denial and over reliance on fossil fuels are an “unsustainable policy position,” but he thinks a carbon tax or cap-and-trade policy could have negative economic impacts, putting the United States at a competitive disadvantage. Graves, Carter, Miller, Griffith, and Palmer all voted in favor of a July 2018 concurrent resolution that stated a carbon tax would be detrimental to American families and businesses and is not in the best interest of the US. Armstrong is a freshman member of Congress.


Tax Counsel to Senate Finance Committee


At a Friday (Mar. 1) morning briefing, an unnamed Tax Counsel to the Senate Finance Committee stated Chairman Chuck Grassley (R-IA) plans to make the Tax Cuts and Jobs Act (TCJA) “work properly.”


The Treasury Department was burdened with a high volume of technical issues and was unable to correct the issues, along with a “no agreement” for technicals with “Big 4”. Ways and Means Ranking Member Kevin Brady’s (R-TX) technical corrections bill introduced at the conclusion of the 115th Congress has “zero chance” of passage. Also looming is the June 22 deadline for TCJA regulations due to the 18-month rule, although it is not considered a hard date from the Treasury’s viewpoint. The department’s approach to regulatory interpretation is “strict construction” – only the words on the page – to ensure the regulations will withstand a “no deference” judicial standard. Congressional Republicans have sought to counter the “we have no regulatory authority” with the Internal Revenue Code (IRC) sec 7805, which outlines broad grant of regulatory authority generally and specific grants in many cases.


The staffer continued by saying Grassley wants to move the extenders package soon, which was introduced on Thursday (Feb. 28) and “may be relied upon by taxpayers.” With the final “hard deadline” for tax filing passed, the date changes shouldn’t be an issue and these provisions “need to be done”. According to the staffer, Senate leadership did not say the committee needed to refurbish the old extenders package nor go to regular order, meaning introduction may be the final act by the committee.


Retirement Income Security Act (RISA) and pensions were also discussed, with intentions to update RISA with new dates for provisions and offsets that were keyed off by the TCJA. House Ways and Means Chairman Richard Neal (D-MA) inserted an auto-IRA, which produced interest from both parties. The committee would like to get RISA passed but is also seeking a conversation “beyond RISA”. It’s likely Senate Democrats will proceed to vote on RISA, tax administration, and extenders without having to hold more hearings.


House Democrats have also yet to send any tax bills to the Senate, although appropriations measures involving revenue did pass. It’s believed debt limit increase legislation is a “revenue bill” but it isn’t due until summer, with Treasury Secretary Steve Mnuchin suggesting July as a possible deadline. Interplay of Gephardt rule – which encompasses debt limit hike passes within the House and Senate – passed concurrent budget resolutions. Senate Finance currently has no stance on the issue.


The Alternative Fuel Tax Credit (AFTC) was never intended to include gasoline but the extenders package will aim to fix this. Short line railroad and bio-diesel lobbyists staffers are having discussions with committee staff, but few other extenders seem to get anywhere near as much publicity.


[1] Skibell, Arianna. “House is ‘more dysfunctional than it appears’ – GOP freshman.” E&E News. 26 Oct 2016. https://www.eenews.net/stories/1060044822


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