Republicans in the House of Representatives will seek to rush through a new bill with their end-of-year tax priorities, introduced just Monday night, before the end of the week.
The speedy timeline, if met, will set up last-minute negotiations in the Senate over major tax provisions in the twilight of the current 115th Congress and the Republican majority in the House.
“The policy proposals in this package have support of Republicans and Democrats in both chambers,” House Ways and Means Chairman Kevin Brady, R-Texas, said in a Monday release heralding the new bill. “I look forward to swift action in the House to send these measures to the Senate.”
Sen. Ron Wyden, D-Ore., the top Democrat on the Senate Finance Committee, which has jurisdiction over tax policy in that chamber, blasted Monday’s bill release as negotiating through the press.
“When the first time the other side hears about a bill [is] in the press[,] it’s going to be about messaging and political gamesmanship, not real policy,” Wyden said in a statement emailed by a spokesperson.
The bill introduced last night includes a major fix to last year’s tax law, several changes to tax treatment of retirement savings, extension of various tax breaks, including those related to clean energy, and a new $20,000 startup deduction.
One of the bill’s most significant technical corrections to the GOP-passed tax overhaul would be a clarification to define which expenses businesses can immediately deduct as qualified improvements. Republicans’ desire for the provision could be a political leverage point for Democrats.
The measure applies to a problem with one of the new tax benefits created by last year’s law, namely the change that allows businesses to immediately deduct major new purchases from their taxable income. Different drafts of last year’s law contradicted each other, and the current law leaves some businesses worse off. Republicans now seek to retroactively change the flawed language before the end of the year.
Democrats may balk at fixing the language without major concessions.
“The expensing provisions are actually worse than what they were last year,” said Nicole Kaeding, director of federal projects at the Tax Foundation. “It’s more of that context of, do Democrats want to be seen as helping Republicans ‘fix the tax bill.’”
Some Senate Republicans, including Senate Finance Committee Chairman Orrin Hatch R-Utah, also support clean energy tax credits, and an extension of those credits lends urgency to the bill. The bill also includes an extension of a biofuel tax credit favored by Chuck Grassley of Iowa, presumed to be the Finance Committee chairman next year.
“That’s definitely a way to try to get votes they need in the Senate,” Kaeding said. In addition to quickly building bipartisan support in the Senate, where 60 votes are needed to end debate on legislation, the bill needs a groundswell of support in order to receive consideration on the Senate floor.
Majority Leader Mitch McConnell has little time left before the end of the year to have the Senate consider Trump administration nominees while also scheduling votes to fund the government, pass a so-called farm bill, and extend the national flood insurance program, to name a few looming tasks expected to be completed before Congress ends.
House Republicans will also hope to cut a deal over the bill with Democrats and their own party members in the Senate on changes to the retirement portions of the tax code. The changes stop short of the more sweeping proposals Republicans introduced earlier this year and are instead aimed at simplifying the myriad of tax-privileged retirement savings accounts such as 401(k)s, 529s, and 403(b)s, but include provisions from a bill passed with bipartisan support by tax writers in the Senate in 2016.
House Republicans also propose lifting the current age cap on IRA contributions, which precludes anyone over 70 years and six months from contributing to those types of retirement accounts and would allow individuals to pull up to $7,500 from retirement accounts, without penalty, upon the birth or adoption of a child.
The bill would also reform the Internal Revenue Service, a long-term goal of Republicans, although that target comes with its own political baggage. If the bill were passed into law, the IRS would have to submit plans on how to overhaul itself and improve service to taxpayers.
