It will be difficult, if not impossible, for Congress to enact major tax bills in 2023. TPC’s Howard Gleckman predicts “Congress still could adopt some tax legislation, driven as much by the state of the economy as by political control.” But big changes likely are off the table. Key fiscal issues to watch in the post-election session: bills to increase retirement savings incentives and restore expired business tax provisions and the expanded Child Tax Credit. Next year likely will be taken up with partisan fights over the debt limit and government funding.
Perhaps no debt limit bill until next year. Mitch McConnell, just re-elected as the GOP’s Senate leader, says, “I don’t think the debt limit issue is until sometime next year.” Unless some Republicans break ranks or all Democrats support a debt limit hike in the post-election session, the bill can’t pass this year. And some Democrats, including Sen. Joe Manchin, are unenthusiastic about passing a party-line debt bill in the lame duck. If the issue isn’t resolved this year, expect a bruising battle in a divided Congress in 2023.
George Callas will share his take on the future of tax policy on TPC’s Prescription webcast today at noon. The former top tax aide to then-House Speaker Paul Ryan and the Ways & Means Committee will discuss how the recent election results could impact the tax policy debate. Register and tune in here at 12:00 eastern.
Senate advances the Respect for Marriage Act. All 50 Democrats and 12 Republicans voted to end debate on a measure that codifies federal recognition of same-sex marriages that are legal in the state where they are performed. The bill does not require tax-exempt religious organizations to accommodate same-sex marriages. Final Senate passage could come as soon as today. The House must vote on the Senate bill before it goes to President Biden for signature.
Mind the gap—the tax gap, that is—with data. Former IRS Commissioner Charles Rossotti suggested at a TPC panel this week that increasing IRS auditing alone won’t close the gap between the money owed but not paid to the IRS. That amount has reached $428 billion according to the latest IRS data. Rossotti said that even doubling IRS audits “wouldn’t even make a dent in the tax gap. What really matters is the use of data to find places where there really is underreporting of income or noncompliance.”
Study: Germany’s windfall tax could hurt renewables. The proposed windfall tax on Germany’s power companies would cause significant short-term losses in revenue for renewable-energy producers, according to a study released Wednesday. However, the levy’s short lifespan and moderate upper limits mean its impact on long-term profitability is manageable, and those clean-energy investments still would make money, UK-based Aurora Energy Research said in the analysis.
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- © Urban Institute, Brookings Institution, and individual authors, 2022.