The Speaker of the House bows out. Speaker Paul Ryan announced yesterday that he will not seek reelection in the fall. He said passage of the Tax Cuts and Jobs Act was one of his biggest accomplishments, although its individual tax provisions fell far short of his efforts to substantially cut tax rates and eliminate tax preferences. Will Rep. Kevin McCarthy or Rep. Steve Scalise become the next Speaker? Will Republicans even hold on to the House majority?
Another retiring GOP lawmaker is not so proud. Senator Bob Corker shared his thoughts at a Senate Budget Committee hearing on the CBO’s fiscal outlook, which projects the TCJA will add another $1.9 trillion to deficits over a decade. He said of the tax cuts, “If it ends up costing what has been laid out here, it could well be one of the worst votes I’ve made.” And of the recent bipartisan spending bill: “None of us have covered ourselves in glory. This Congress and this administration likely will go down as one of the most fiscally irresponsible administrations and congresses that we’ve had.”
Yet the House will vote on a balanced budget Constitutional amendment today. Even sponsors acknowledge the amendment has no chance of getting out of Congress, where it needs a two-thirds majority of both the House and Senate. And the timing…. could be better. Two days ago, CBO reported that Congress has added $2.6 trillion to the deficit since last June, mostly from the TCJA and the recent omnibus spending bill. The amendment, however, will provide fodder for late night comics.
Meanwhile, the House Ways & Means Committee approved bills to improve the IRS. The panel approved the bipartisan package of legislation designed to improve taxpayer services, cybersecurity, enforcement and appeals. The committee’s top Democrat Rep. Richard Neal said the effort was “a good example of what we can do when we work together on a bipartisan basis to develop good policy.”
Look for draft 2018 tax forms this summer. Acting IRS Commissioner David Kautter told a House Appropriations subcommittee that the agency hopes to complete draft forms and instructions for the 2018 tax year by this summer. The agency will be looking for comment from practitioners and others. Kautter also acknowledged the agency will be working on TCJA regs for years to come.
A shareholder sues Netflix over TCJA-driven compensation restructuring. Netflix stopped awarding performance-based cash bonuses to managers and raised salaries for those making more than $1 million right after the new tax law prohibited companies from deducting those bonuses. A shareholder claims that this is evidence that Netflix bonuses were part of a “rigged” compensation process that did not reward performance. Rather, the shareholder argues in a lawsuit that Netflix made cash payments only to secure tax deductions, and that “performance” was a fait accompli.
Today on the Hill. The House Ways & Means Committee will hold a hearing this morning on the effects of tariff increases on the US economy. The panel’s Subcommittee on Human Resources will hold a hearing this afternoon to examine the community impact of local employers’ demand for workers.
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