May 2024 Policy Pulse

With the election less than six months away, we’re seeing Congress begin to shift their focus from policy to politics.

Bipartisan tax bill

The bipartisan tax bill’s prospects have further diminished over recent weeks. The proposed legislation, which passed the House of Representatives back in January by an overwhelming margin of 357-70, has met consistent opposition by most Senate Republicans, led by Senate Finance Committee Ranking Member Mike Crapo (R – ID). Discussion of the bill has all but ground to a halt, and the conversation has shifted to 2025 tax policy.

In what appears to be one final effort to get the bill across the finish line, Senate Finance Committee Chair Ron Wyden (D – OR) has stated he intends to file the House-passed version of the bill as an amendment to the Federal Aviation Administration (FAA) reauthorization act. It’s very unlikely Wyden will succeed, as attaching the bipartisan tax bill would endanger the FAA legislation, a must-pass bill that expires on May 10.

Expiring provisions and the 2024 election

Recently, we’ve seen increased attention from lawmakers on the Tax Cuts and Jobs Act (TCJA) expiring provisions. Under current law, the TCJA’s individual, estate and gift tax provisions and the Qualified Business Income (QBI) deduction, a deduction that allows certain pass-through entities to reduce their taxable income, will sunset at the end of 2025. The Congressional Budget Office estimates a full extension of these provisions would cost $3.5 trillion over ten years. For reference, this would add 10% to today’s current national debt of almost $35 trillion.

Generally speaking, Republicans would like to extend all TCJA provisions while President Biden and Democrats are hoping to let the individual tax cuts expire for taxpayers making over $400,000 per year. Both parties have expressed concern about tax policy’s impact on the ballooning national debt.

House Ways and Means Chair Jason Smith (R – MO) has set up ten “Committee Tax Teams” to examine the TCJA’s expiring provisions and identify potential legislative solutions. The working groups will cover the following areas of tax policy:

• American manufacturing
• Working families
• American workforce
• Main street