The voices of Tax Policy Center's researchers and staff
Congress is back. Fiscal deadlines loom. Presidential candidates have tax plans to propose. It isn’t clear how much lawmakers will accomplish in the next four months, but it will be a busy and interesting fall. Here are five stories to watch:
International Tax Reform: House Republicans insist they want to try to rewrite the tax code for US-based multinational corporations, with a plan built around the idea of “innovation boxes” or new low effective tax rates for intellectual property. The White House has left the door open to international reform. House Ways & Means Committee chair Paul Ryan (R-WI) would tie the package to an extension of the Highway Trust Fund. Trouble is, Senate GOP leaders appear as enthusiastic about this as they are about Donald Trump’s presidential run. But the real reason it won’t happen is time. Such a tax package would be enormously complicated. Even if everyone is rowing in the same direction, which they assuredly are not, it would be hard to pull off given all the other drama that is likely to consume Washington this fall.
The Highway Trust Fund: While Senate Finance Committee chair Orrin Hatch (R-UT) is uninterested in a big international tax reform/highway bill package, he does want to get a multi-year road and transit package done this year. Hatch has got enough pay-fors to fund a three year bill. None will raise the gas tax. Without a viable alternative, the House will eventually go along.
The Tax Extenders: Yes, these four dozen evergreen tax subsidies will be restored and extended again. House GOP leaders, who all year have been pushing to make some of these mostly-business preferences permanent, will lose this fight too. Instead, figure Congress will yet again mindlessly extend both the worthy and unworthy for another year (or maybe two).
Presidential tax plans. GOP candidates will continue to flesh out their tax plans. Jeb Bush promises to roll out his tomorrow. Donald Trump says he’ll unveil his this month. Candidates such as John Kasich and Scott Walker will be under pressure to describe their tax planks. So will Ben Carson, who is polling in the GOP’s top tier but has been unwilling to say much beyond his vow to restore a version of biblical tithing.
The IRS Budget: Congress will cut it. Again. The only question is, by how much. Final numbers won’t get resolved until lawmakers wrap-up whatever omnibus spending bill they settle on in December. But Republicans will insist on more cuts and neither congressional Democrats nor the White House will do much to bail the agency out.
Keep in mind that all of this will happen in what is likely to be an increasingly toxic fiscal environment. Budget talks, which have not even begun, will have to resolve overall defense and domestic spending levels, the fate of the nation’s debt limit, and controversial but largely symbolic issues such as funding for Planned Parenthood and implementation of the Iran nuclear deal. Long-time budget watcher Stan Collender thinks there is a 67 percent chance of a government shutdown this year. And even if lawmakers do reach a last-minute deal, the drama leading up to whatever deadline Congress creates for itself will only distract from what little serious tax policy is on the table.
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