Congress approved a continuing resolution to temporarily extend government funding at existing levels through Nov. 21. The move gives tax writers in the Senate and House of Representatives additional time to work toward a compromise on a number of tax priorities to possibly include in an omnibus spending bill.
Tax extenders, a very limited set of technical corrections to the Tax Cuts and Jobs Act, and retirement incentives are the most likely priorities to be enacted, but Republicans and Democrats still have key difference to resolve. Technical corrections have proven most difficult to crack. Democrats on the House Ways and Means Committee have already passed extenders legislation, but there’s still some disagreement with Republicans about the scope and the cost. Democrats have expressed reticence to help fix a bill they had no part in drafting, but may ultimately allow a handful of fixes that share Democratic support in exchange for some of their own priorities.
A spending package is the last must-pass item on Congress’s agenda this year, making it the most viable vehicle for tax legislation. Congress could still pass the pending tax legislation as a stand-alone package, but would have just eight legislative days left in the year to do it assuming spending negotiations go up to the Nov. 21 deadline. The Senate has two tax bills they can work from, both of which passed the House with overwhelming majorities and enjoy strong bipartisan support in the Senate.
The outlook for tax legislation could also be complicated if spending talks stretch past Nov. 21. Congress would likely prioritize passing long-term spending package before the House adjourns on Dec. 12 and may even extend its time in Washington to get it over the line. However, it is doubtful that the pending tax legislation will be afforded the same urgency.
The recent impeachment inquiry opened by House Democrats against President Donald Trump also has the potential to derail legislative activity, including tax legislation. Ways and Means is among the six committees involved in the inquiry, but because the investigation is still in its early stages, it remains possible, for now, that other work can get done.
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