Updated: Sources: House Tax Writers Seek Action on Tax Bill Next Week

Update: The legislative texts are available for the three bills that were introduced today by the House Ways and Means Committee:

• A link to the bill focused on individuals, which is titled the “Tax Cuts for Working Families Act” is here.

  • A section-by-section summary of the bill is here.

• A link to the bill focused on small businesses, which is titled the “Small Business Jobs Act” is here.

  • A section-by-section summary of the bill is here.

• A link to the bill focused on all businesses which is titled the ‘‘Build It in America Act’’ is here.

  • A section-by-section summary of the bill is here.

The House Ways and Means Committee will debate and possibly amend these bill on June 13th. Below are explanations of the bills, provided by the Joint Committee on Taxation:

• The explanation for the “Tax Cuts For Working Families Act" is here.
• The explanation for the “Small Business Jobs Act” is here.
• The explanation for the “Build It In America Act” is here.

Original post:

It has been widely reported that the House Ways and Means Committee is expected to debate and vote on tax legislation next week, possibly on Wednesday. The bill is currently not expected to become law.

The bill under committee discussion is expected to be split into three pieces of legislation. One will focus on individual tax issues. A second on small businesses. And a third is expected to focus on business tax incentives. At some point, it is expected that they will be combined into one bill.

The details in these bills have not been officially released, but lawmakers can’t keep their mouths shut about them.  Below is the scuttlebutt they have spread.

The bill is expected to include:

• Allowing for R&D costs to be expensed,
• Expanding the Section 163(j) interest deduction (from EBIT to EBITDA),
• Returning Bonus Depreciation to 100%.

These provisions are referred to as the “Big Three” by congressional staffers. The reason is because the effort to pass them from Congress has lasted well over a year. Their enactment is supported by lawmakers from both parties in both chambers of Congress. Rep. Greg Landsman (D-Ohio) recently dubbed their enactment a “no brainer.”

The bill is also expected to increase the income level requirement for 1099-K reporting to $20,000. Upping the standard deduction is also expected.

Providing tax relief to estates and pass thru businesses could also be included.

The pass-thru deduction was included in the 2017 tax reform bill. Other provisions from that piece of legislation could be modified in the upcoming bill as well – this could include the individual rate cuts, which are set to expire in 2025.

Modifications to the SALT cap are not expected to be in the bill. (Although there is talk of upping the $10,000 cap to $30,000.)

Inside Baseball Stuff:

The tax bill’s cost is not expected to be offset with tax increases or spending cuts.

Earlier this year, the House passed a rule called “cut go.” That rule requires cost offsets for bills that modify mandatory spending, like entitlements. Since the tax bill does not amend entitlements, its cost does not require to be offset.

That being stated, the legislation could still increase revenue. Committee Republicans introduced legislation that seeks to counter the undertaxed profits rule in the OECD’s global tax deal.

Republicans might also modify the green energy tax incentives in the recently enacted Inflation Reduction Act. These tax increases surfaced in the Limit, Save, Grow Act of 2023 that passed the House because of Republican support, but did not pass the Senate. There is talk that these provisions will be added to the upcoming tax bill.

They could also repeal the Superfund excise taxes included in the Inflation Reduction Act.

Certain House Republicans have characterized the OECD tax deal and the green tax incentives as “bad tax policy” and they would like to right that wrong in the upcoming bill.

Next Moves:

Everyone – and I mean everyone – in Washington with whom I have spoken with about this bill says it will not become law. They refer to it as a “messaging bill.” This means that the legislation will serve as a platform that lawmakers can talk about when speaking to constituents and the press. It will not become law.  

The current thinking is that the House will approve the bill in July. It will then travel to the Senate. The number of Senators who oppose the bill is expected to be large enough to block it from passage. If true, it cannot become law.  

One variable that might sway Senate support for the bill is the Child Tax Credit. Several Senate Democrats support extending the Child Tax Credit. If such a measure is in the bill – and it is one they can support – that might turn their ‘no’ vote into a ‘yes’ vote. If – a big if – enough of them switch positions, the bill could pass the Senate. If that happens, President Joe Biden would feel pressure to sign it into law. But for right now, the bill is not expected to become law.