Senior tax staff on the Senate Finance and House Ways and Means Committees seem to doubt Republicans’ catch-all tax and IRS package’s chances of success. Whether the roadblock will come down to time or votes, the package currently faces an uphill battle in the Senate.
House Ways and Means Committee Chairman Kevin Brady, R-Tex., unveiled the 297-page measure late on November 26. Generally, the broad legislative package, an amendment entitled the Retirement, Savings, and Other Tax Relief Bill of 2018 (HR 88), addresses year-end tax extenders, retirement savings, disaster relief, IRS reform, and technical corrections to last year’s tax reform legislation, among other things.
Time is Not on Your Side
“Leadership has to decide if they want to spend time processing a tax bill at a time when they hadn’t plan to do that,” Tiffany Smith, chief tax counsel for Senate Finance Committee (SFC) ranking member Ron Wyden, D-Ore., said at a November 29 National Press Club event in Washington, D.C. Smith participated in a discussion panel along with Aruna Kalyanam, democratic tax counsel and democratic staff director for House Ways and Means Subcommittee on Tax Policy and Jennifer Acuña, senior tax counsel and policy advisor for the SFC (majority).
Processing a bill on the Senate floor is “not a short process,” Smith said. “We don’t have much time,” she added. Additionally, Congress is in a “funding fight,” according to Smith. Democrats and Republicans are reportedly struggling to reach an agreement on a year-end government spending bill that is needed to avoid a government shutdown. Funding for federal agencies is on track to expire at midnight on December 7.
“Usually when there is a funding fight, that’s the focus. If tax becomes a part of it, it’s the last thing,” Smith said. To that end, there has been talk among lawmakers on Capitol Hill that the tax and IRS oversight package could be shortened and attached to the spending bill to ease the procedural dilemma in the Senate.
Additionally, Kalyanam, a longtime and well-versed Hill staffer, does not see the Senate taking the tax package on before the end of this Congress, and certainly not in its entirety. “I don’t know what the appetite is to do major surgery [on the tax package] here. Our joke is that it takes the senate 30 hours to clear its throat,” Kalyanam said. “My understanding is that they [lawmakers] are not close on a spending bill; there are a lot of problems there.”
Democratic Support Needed
Adding to the stumbling blocks on the package’s rocky road in the Senate is Republicans’ struggle to garner enough Democratic support. The package needs at least nine Democratic votes in the Senate to reach the chamber’s 60-vote threshold.
While Democrats are largely supportive of the IRS reform provisions and are generally supportive of tax extenders, Democratic lawmakers do not seem eager to help Republicans’ fix the GOP-crafted and enacted Tax Cuts and Jobs Act, (TCJA) (P.L. 115-97). Last year’s tax reform came as a product of a Republican controlled Congress, but Democrats will take the House majority in January. Current House Ways and Means Committee ranking member Richard Neal, D-Mass., is expected to chair the committee next year. Although the package contains some bipartisan measures for which Neal supports, he has expressly denounced the package as a whole. Specifically, Neal has said he would like to focus on technical corrections to the new tax law in the next Congress.
“Neal feels strongly about having public hearings on TCJA – [is it] working or…not, and that includes technical corrections,” Kalyanam said. Although Brady has said the corrections are minor and uncontroversial, Kalyanam suggested that in addition to minor drafting errors, Republicans are eager to correct both intended and unintended consequences of the TCJA.
To that end, Brady introduced a manager’s amendment to the tax package on November 28 that would repeal the TCJA’s new business income tax of 21 percent on certain transportation expenses incurred by nonprofit organizations. However, the technical corrections provisions have a “low” chance of passing [in the Senate] with the package, according to Kalyanam. There is “talk” on Capitol Hill that the IRS reform and tax extenders provisions may be the only part of the package to survive. However, the package is expected to easily clear the House in its entirety on November 30.
Update – November 30: House leadership pulled the tax package from the floor late on November 29. Although the House voted 219-to-181 on November 29 in favor of bringing the package to the floor for a vote, leadership subsequently pulled the measure. At this time, it is thought on Capitol Hill that the package was pulled because of absent members as well as controversy surrounding certain provisions and its over $54 billion estimated price tag. Reportedly, the package was not expected by House leadership to have enough votes for an end-of-the-week approval during the lame-duck session.
Name of the Game
According to Acuña, there is no other path for the package through the Senate than by regular order, unlike the TCJA, which was approved by a reconciliation process requiring only GOP votes. Therefore, the package must achieve 60 votes, she acknowledged. “Building consensus is the name of the game.”
By Jessica Jeane, Senior News Editor