Supporters of a nearly $80 billion tax deal between key members of the House and Senate are aiming to secure enough support to hold a vote this week on the bill. A successful vote would be an important step toward potential enactment in the next several weeks, but some hurdles remain.
The bill would retroactively reinstate and extend 100% bonus depreciation, Section 174 expensing for domestic research, and a more favorable calculation for the limit on interest deduction under Section 163(j). The bill would also provide short-term, more generous versions of the low-income housing tax credit and child tax credit, while offsetting its cost by cutting off employee retention credit applications by Jan. 31, 2024.
The bipartisan, bicameral deal with around nearly $80 billion of tax credits and benefits picked up serious momentum with an overwhelmingly supportive vote of 40-3 at the House Ways and Means Committee on Jan. 19. Shortly after the White House officially endorsed the legislation. Senate Majority Leader Chuck Schumer, D-N.Y., who controls the Senate floor agenda, has also endorsed the deal and pledged to bring it up for a vote, but House passage is the next bar to clear.
The overwhelmingly bipartisan vote in the Ways and Means Committee offered a favorable indication of potentially robust support, but there has been some hiccups as leaders look to set up a vote this week. Election-year dynamics could affect much of what happens next, and the same intra-Republican Party dynamics that fueled the first-ever removal of a House Speaker present the most obvious potential problem.
Leadership would like to hold the vote under a suspension of the rules, which would require a two-thirds majority. Some House conservatives have expressed concerns about the legislative process, the cost of the bill, and the CTC provisions. Some Democrats feel the child tax credit expansion doesn’t go far enough, and members of both parties from high tax states want the $10,000 SALT cap raised or removed. If it fails to garner a two-thirds majority, the tax deal could still pass, but it would take longer to go through the standard House process rather than the fast-track procedure currently in play in the House due to the start of filing season.
If it passes the House, then the next step would be the Senate. Some Republicans and Democrats have pushed for a mark-up in the Senate Finance Committee, which could slow passage by days or weeks. There is also the possibility of robust amendment process on the Senate floor. While proposed amendments would be expected in the Senate Finance Committee Chair Ron Wyden, D-Ore., and Schumer would work to beat back any changes to try and secure quick passage. Large changes to the bill could slow its momentum and possibly change the calculus of support, as well as open it up to needing to pass through the House again.
Momentum is building and support from Schumer and the White House mean it could receive a full Senate vote as soon as February. However, in a Congress that has featured the unprecedented removal of a Speaker of the House, there is still time for unexpected political complications to arise.
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