The House approved the Senate budget resolution yesterday. By a vote of 216 to 212, the House cleared the Senate’s $4 trillion fiscal blueprint that advances the GOP’s effort to transform the tax code. No Democrats supported the measure. Twenty Republicans opposed it—a dozen from high-tax states who are resisting repeal of the state and local income tax (SALT) deduction and eight others who mostly wanted bigger spending cuts. Nonetheless, with a simple majority the Senate will be able to pass a tax bill that adds $1.5 trillion to the federal debt over a decade.
The first week of November will offer a wild tax ride. House Ways & Means Chairman Kevin Brady aims to release a tax plan on Nov. 1. The panel expects to begin its markup on Nov. 6, assuming smooth sailing with no bumps that might arise from tweets. House Speaker Paul Ryan joked that President Trump “will be in Asia, number one.” But seriously folks, he continued, the House is working “very very closely” with the White House so there will be “no surprises.” That would be… surprising.
Democrats are preparing their counter-offensive. Don’t expect to see a Democratic alternative in the House. Instead, they’ll hammer Republicans for raising taxes on middle-income households. Expect Democrats to focus on offsets in the bill, such as any limits on the SALT deduction, curbs on tax-advantaged retirement savings, or repeal of the personal exemption. Even before seeing the bill, House Democratic Leader Nancy Pelosi is calling it a “monumental assault on the middle class.”
The IRS will have an acting commissioner next month. IRS Commissioner John Koskinen ends his term on November 12 but the White House has not found a permanent replacement. So Treasury Assistant Secretary for Tax Policy David Kautter will step in as Acting Commissioner on November 13. TPC’s Howard Gleckman explains why having one person hold both jobs is a bad idea.
The Department of Justice has settled two lawsuits by conservative groups over IRS scrutiny. The Tea Party groups claimed the IRS unfairly scrutinized their applications for tax-exempt status. The agency will issue apologies but pay no money damages. The settlement agreements still require a judge’s approval.
Tax cuts here, tax cuts there… TPC’s Richard Auxier considers the gubernatorial races in Virginia and New Jersey, where GOP candidates are betting their tax cut promises will help them win their races. “Their success could boost GOP tax cut efforts in Congress,” Richard explains, “while their failure could suggest that tax relief will have limited appeal in the 2018 congressional races.”
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