Tax Priorities and Possibilities

Update 393 — Tax Priorities and Possibilities:
Congress’ 2019 Tax Dash; Warren’s 2020 Plan 

Today, Sen. Elizabeth Warren released a $20.5 trillion proposal consisting of revenue raisers to pay for her Medicare for All plan.  The comprehensive proposal would make substantial changes to an array of tax titles, ruling out a direct tax increase on the middle class and relying heavily on capital taxation. In our next update, we will reprise and weigh the progressivity and viability of the options laid out in the Warren proposal.  

Next week and for the remaining two months of the year, Congress will confront several key tax policy choices involving retirement, the extenders, corrections to the error-riddled cut of 2017, and maybe even another Trump tax cut.  We preview the tax bill road ahead to year-end…

Good weekends all,

Best,

Dana

————

On November 21, the current Continuing Resolution funding the government expires. Members of Congress are turning to end-of-year tax legislation priorities that could attach to a new CR or another FY 2020 budget package. With Senate Republicans eager to pass corrections to their rushed 2017 tax bill, Democrats will have a chance to bargain for significant concessions and have a wish-list of their own. What can and will get done?

TCJA Corrections: Must-Pass?

Many but mostly Republicans in Congress consider “technical corrections” to the 2017 GOP tax law (TCJA) must-pass legislation. In their haste to pass the bill, GOP and K Street drafters made mistakes and omissions necessitating supplemental legislation to function. What qualifies as a technical correction rather than a substantive policy change is debatable, but Democrats are not eager to help the other side fix their own mess of a bill. 

First came the “grain glitch,” a TCJA loophole whereby farmers could pay much lower tax rates when selling grain to co-operatives as opposed to standard C-Corps. In exchange, Democrats secured an expansion of the Low-Income Housing Tax Credit. Republicans are hoping to address other mistakes as well, including: 

  • Changes to QIP and Bonus Depreciation: Traditionally, businesses that made certain improvements to their property could take advantage of favorable tax treatment. TCJA introduced Qualified Improvement Property (QIP) rules, replacing existing, similar structures. Due to drafting errors, TCJA did not align QIP’s lifespan to rules on bonus depreciation, and as a result, QIP is not eligible.
  • Carry Forward of NOL: TCJA changed NOL rules so that companies may not adjust any past year’s tax filings to “carry back” losses, but may now “carry forward” their business losses indefinitely. The problem? Bill drafters wrote the law to to say that the change applies to tax years ending after Dec. 31, 2017, rather than beginning at that time.
  • Church Parking Lots: TCJA subjects churches and other nonprofit transportation fringe benefits (such as reserved employee parking spots and maintenance to lots) to a 21 percent federal income tax levy. The revenue-raising provision equalizes tax treatment between nonprofits and C-Corps. It also adds administrative complexity, so Republicans are hoping to fully repeal it. 
  • The “Widows’ Tax” and “Kiddie Tax”: Gold Star families are enrolled in two programs, the Dependency and Indemnity Compensation program and the Survivor Benefit Plan. Both programs pay out a yearly stipend, and families are subjected to an offset —  an insurance forfeiture known as the “widows’ tax.” This offset costs them around $1000 a month in payouts. To avoid these offsets, gold star spouses often put the benefits in the name of their children. TCJA treats these benefits as a trust or estate, taxing them as high as 37 percent. Republicans seek to remedy this tax code provision 

With Democrats now in control of the House of Representatives, attempts by Republicans to make TCJA corrections will be met with additional demands.

Achievable Tax Bills

  • Retirement: In May, the House of Representatives passed H.R. 1994, the “Setting Every Community Up for Retirement Enhancement Act of 2019” (SECURE Act) by a near unanimous 417-3 vote. The bill would enable workers to increase retirement savings through tax incentives, and is a worthwhile but modest approach to solving the retirement problem. Despite strong bipartisan support, it remains doubtful whether the Senate can approve the bill before year’s end. One issue is securing floor time — with so few days left on the legislative calendar, other priorities might crowd out lawmakers’ attention. 
  • Pensions: In July, the House passed H.R. 397, the Rehabilitation for Multiemployer Pensions Act, aka the Butch Lewis Act. 29 Republicans joined Democrats in sending the bill to the Senate.  Butch Lewis would authorize Treasury to make loans to pension plans in either critical or declining funding status. Despite some bipartisan support in the Senate, opponents criticize the bill as a “bailout” for pensioners and chances of Senate passage remain dim. Congress must also address the United Mine Workers of America pension fund covering 90,000 coal workers and their families, expected to become insolvent in 2022. Thereafter, the Pension Benefit Guaranty Corporation would provide relief, though beneficiaries would receive pennies on the dollar.
  • Tax Extenders: As budget negotiations stall, the temporary tax provisions narrowly tailored for certain industries known as “tax extenders” may fall victim to Congressional paralysis. In June, House Ways and Means approved a reauthorization of tax extenders. Senate Finance Chairman Grassley and Ranking Member Wyden have introduced their own extension bill. Without a short-term extension, most extenders will have been unauthorized for nearly two years, making it even more difficult to make the (already weak) economic case for reauthorization.

 Democratic Tax Wish List

  • Tax Credits: Democrats will likely seek expansions of refundable and partially-refundable tax credits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), as well as to the Child and Dependent Care Credit. House Ways and Means approved legislation in July expanding the EITC for childless workers, making the CTC fully refundable and increasing the CTC amount for young children. Sens. Brown and Bennet are leading the charge on enhancing EITC and CTC respectively, but GOP opposition to tax breaks for the non-millionaire class has proven unified. 
  • O-Zone Reporting Requirements: The TCJA established a program that provides tax breaks for investments in lower income areas known as Opportunity Zones. TCJA was passed through reconciliation, so non-budgetary portions, such as OZ reporting requirements, were stripped from the final bill. Sens. Booker and Scott and Reps. Kind and Reed have introduced S.1344 and H.R. 2593 to add reporting standards for OZ fund managers and require Treasury to report to Congress on the effectiveness of OZs and manadates collection of transaction-level data on OZ investments.  Sens. Young and Hassan, as well as Reps. Kelly, Sewell, Filemon, and Wenstrup are co-sponsors of the respective Senate and House bills.
  • Carried Interest: The Carried Interest loophole permits investment fund general partners and managers to call income capital gains and pay the lower tax rate. The Carried Interest Fairness Act, reintroduced this Congress by Sen. Baldwin and Rep. Pascrell, would close the loophole. The TCJA included small changes to carried interest, codifying the break. The Pascrell bill may get a symbolic vote by House Democrats, à la H.R. 1, despite the Republicans in Congress and Trump who have campaigned against the loophole. 

Lots to Do, Little Time 

With the 2020 campaign entering full-swing, it will be increasingly difficult for lawmakers of both parties to set aside adversarial impulses and work together. The ongoing impeachment inquiry in the House also figures in the calculus, adding even more fuel to partisan fires. But many in the GOP are doubling down on tax cuts and floating trial balloons for a TCJA 2.0. Of course, this would be DOA in the House. Should any tax-related legislation pass before the calendar year ends, it will likely by tacked onto must-pass CRs or other budget bills, or an end-of-year tax package. More on this later in the month. 

64 thoughts on “Tax Priorities and Possibilities”

  1. Howdy superb website! Does running a blog like this take a large amount of work?
    I’ve virtually no understanding of coding but I
    had been hoping to start my own blog soon. Anyways, should you have any recommendations or techniques for
    new blog owners please share. I know this is off topic but I simply
    wanted to ask. Many thanks! 0mniartist asmr

  2. My relatives every time say that I am killing my time here at web, except I know I am getting know-how all the time by reading thes nice content.
    0mniartist asmr

  3. Wow, this article is good, my younger sister is analyzing these things, thus I am going to tell her.
    0mniartist asmr

  4. After going over a few of the blog posts on your site, I seriously like
    your way of writing a blog. I saved it to my bookmark webpage list and will be checking back
    in the near future. Please visit my web site too and tell me your opinion.

    My web blog – wm casino demo id

  5. Great post. I was checking constantly this blog and I
    am impressed! Very useful information particularly the remaining part 🙂 I take care of such information much.
    I was seeking this particular information for a very long time.
    Thanks and best of luck.

    Feel free to visit my web-site; 918kaya company

  6. Hmm it appears like your website ate my first comment (it was extremely long)
    so I guess I’ll just sum it up what I wrote and say, I’m thoroughly enjoying
    your blog. I too am an aspiring blog blogger but I’m still new to the whole thing.
    Do you have any suggestions for inexperienced blog writers?

    I’d really appreciate it.

    Here is my blog post … king855 slot game list

  7. whoah this weblog is excellent i like studying your articles.
    Stay up the good work! You understand, a lot of people are hunting round
    for this information, you can aid them greatly.

    My web site – Gema aaa1188

  8. I like the helpful information you provide on your articles.
    I will bookmark your blog and test once more right here frequently.
    I am quite certain I’ll be told lots of new stuff right right here!
    Good luck for the next!

    Here is my website :: rollex11apk – 918kiss-m.com

  9. Please let me know if you’re looking for a writer for your weblog.

    You have some really great posts and I believe I would be a
    good asset. If you ever want to take some of the load off,
    I’d really like to write some material for your blog in exchange
    for a link back to mine. Please shoot me an email if interested.
    Thank you!

    Feel free to surf to my blog: 918kiss 2 malaysia, 918kiss-m.com,

  10. Hi, I do think this is an excellent blog. I stumbledupon it
    😉 I will return yet again since i have book-marked it.
    Money and freedom is the greatest way to change, may you be rich and continue to
    guide other people.

    Look into my site – id lionking888

  11. Thanks for your personal marvelous posting!
    I seriously enjoyed reading it, you could be a great author.
    I will be sure to bookmark your blog and will often come back
    later on. I want to encourage you to ultimately continue
    your great posts, have a nice morning!

  12. Howdy would you mind letting me know which webhost you’re working with?
    I’ve loaded your blog in 3 completely different web browsers and I must say this blog loads a lot quicker then most.
    Can you recommend a good hosting provider at a honest price?
    Thanks, I appreciate it!

  13. Hmm is anyone else experiencing problems with the pictures on this blog loading?
    I’m trying to determine if its a problem on my end or if it’s the blog.
    Any responses would be greatly appreciated.

  14. I have learn several excellent stuff here. Definitely value bookmarking for
    revisiting. I surprise how much effort you place to make one of these wonderful informative website.

  15. It’s appropriate time to make some plans for the long run and it’s
    time to be happy. I have learn this post and if I
    may I desire to counsel you few fascinating issues or
    tips. Perhaps you could write subsequent articles referring to this article.
    I desire to learn more issues approximately it!

  16. Hey just wanted to give you a quick heads up. The text in your article
    seem to be running off the screen in Firefox. I’m not sure if this
    is a format issue or something to do with web browser compatibility but I thought I’d post to let you know.
    The style and design look great though! Hope you get the issue resolved soon. Kudos

  17. Awesome blog! Is your theme custom made or did you download it from somewhere?
    A theme like yours with a few simple tweeks would really make my blog jump
    out. Please let me know where you got your theme. Thanks a lot

  18. It’s going to be end of mine day, except before ending I am reading this enormous piece of writing to improve my know-how.

  19. I feel this is one of the such a lot significant information for me.
    And i’m satisfied reading your article. But should statement on few
    basic issues, The web site style is ideal, the articles is actually great : D.
    Good task, cheers

  20. scoliosis
    you are truly a excellent webmaster. The site loading pace is incredible.
    It kind of feels that you’re doing any unique trick. In addition, The
    contents are masterwork. you have done a wonderful process
    on this topic! scoliosis

  21. scoliosis
    You’ve made some decent points there. I looked on the internet for
    more information about the issue and found most individuals
    will go along with your views on this web site. scoliosis

  22. dating sites
    Do you have a spam problem on this website; I also am a blogger, and I was wondering your situation; we have created
    some nice procedures and we are looking to trade techniques
    with others, why not shoot me an e-mail if interested.
    dating sites

  23. Everything is very open with a really clear description of the issues.
    It was definitely informative. Your website is
    very helpful. Many thanks for sharing!

  24. This is the perfect website for everyone who hopes to find out about this topic.
    You understand a whole lot its almost hard to argue with you
    (not that I really will need to…HaHa). You certainly put a brand
    new spin on a topic which has been written about for
    many years. Excellent stuff, just wonderful!

  25. Hello, i read your blog occasionally and i own a similar one and i was just wondering if you get
    a lot of spam comments? If so how do you prevent it, any plugin or anything you can recommend?
    I get so much lately it’s driving me crazy so any support is very much appreciated.

  26. I’m amazed, I have to admit. Seldom do I encounter a blog that’s equally educative and interesting, and let me tell you, you’ve hit the nail on the head.
    The problem is something not enough folks are
    speaking intelligently about. Now i’m very happy that
    I stumbled across this in my hunt for something regarding this.

  27. Have you ever considered creating an e-book or guest authoring on other
    sites? I have a blog based upon on the same information you discuss and would love to have you share some
    stories/information. I know my subscribers would enjoy your work.

    If you are even remotely interested, feel free to shoot me an e-mail.

  28. My developer is trying to persuade me to move to
    .net from PHP. I have always disliked the idea because of the expenses.
    But he’s tryiong none the less. I’ve been using WordPress on various websites
    for about a year and am worried about switching to another platform.
    I have heard good things about blogengine.net. Is there a
    way I can import all my wordpress posts into it? Any kind of help would
    be really appreciated!

  29. What’s up it’s me, I am also visiting this web page daily, this web page is truly pleasant
    and the visitors are truly sharing nice thoughts.

  30. Nice post. I used to be checking continuously this weblog and I’m inspired!

    Extremely helpful information particularly the final section 🙂 I maintain such
    info much. I used to be looking for this particular info
    for a long time. Thanks and good luck.

    Look at my web blog: aaa1188 11

  31. Pingback: keto pills shark tank

  32. Currently it looks like Movable Type is the best blogging platform out there right now.
    (from what I’ve read) Is that what you’re using on your blog?

Leave a Reply to bitly.com

Your email address will not be published. Required fields are marked *