House Republicans weigh 5-year extension of TCJA to manage costs. Politico reports that House Republicans are debating whether to extend some provisions of the Tax Cuts and Jobs Act (TCJA) for five years instead of permanently to lower the ten-year revenue cost of the legislation. House Budget Chair Jodey Arrington (R-TX) supports making the cuts permanent if spending cuts can be found, while House Majority Leader Steve Scalise (R-LA.) argues that economic growth from tax cuts will help cover costs. The Congressional Budget Office (CBO) estimates that extending the 2017 Tax Cuts and Jobs Act would cost $4.6 trillion. Republican leaders are also considering Trump’s proposed tax changes from the campaign trail, such as exempting tips and overtime pay from taxation.
House tax leader criticizes ‘fraudulent’ approach to tax scoring. TaxNotes reports (paywall) that Rep. David Schweikert (R-AZ), chair of the House Ways and Means Oversight Subcommittee, is rejecting calls to score the upcoming tax package using a current-policy baseline. Such an approach would consider extending the TCJA provisions on the books as costless and part of the anticipated budget baseline. He argues that this approach is "intellectually a fraud." Schweikert also said the revenue projections from CBO and the Joint Committee on Taxation have been largely accurate despite external economic factors. Senate Finance Committee Chair Mike Crapo (R-ID) is among those who support the current-policy approach, claiming it better reflects reality.
A budget reconciliation strategy needs to be finalized. Politico also reports that House Republicans remain divided over their approach to passing tax legislation. Speaker Mike Johnson urged members to "keep the faith" on using one bill as a vehicle for Trump’s agenda, but CNN reports he faced renewed criticism from Rep. Byron Donalds (R-Fla.), who prefers a two-bill approach and wants House leadership to get things moving.
Minnesota considers tax exemption for school supplies. CBS News Minnesota reports that the Minnesota Senate is reviewing a proposal to exempt school supplies from sales tax. The bill, introduced by Sen. Julia Coleman (R), would eliminate sales tax on items such as notebooks, backpacks, and calculators. Coleman noted that families spend about $300 per child on school supplies, and the exemption would save over $20 per student at the state’s 6.875 percent sales tax rate. The bill will be considered for possible inclusion in a larger tax package.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky.
