Most of DC has not yet recovered from the roller coaster debt ceiling debate that ended in a bipartisan agreement last week after months of fighting. House Republicans will now move down an even more difficult legislative path…. Taxes.
House Republicans are expected to soon unveil an economic package that is centered around tax policy. This could include advancing a wide variety of Republican tax priorities, including an extension of expiring provisions from the Tax Cuts and Jobs Act (TCJA) signed into law during the Trump Administration. It also could (and likely will) include provisions to end some priority tax policies for Democrats.
Kicking off a new tax debate will bring a new point of division between Republicans and Democrats and reignite a seemingly never ending debate around taxes, spending, and how both help or hurt the economy.
Any bill introduced by only Republicans is unlikely to make it through the full legislative process, but it is likely to still have some impact. Both sides of the aisle have big priorities that require changes to the tax code - for example, Republicans want to extend TCJA provisions and Democrats want to enhance the Child Tax Credit. Regardless, Congress is due to advance a tax extenders package, and the combination of bipartisan interest from policymakers and active pushing from stakeholder groups could lead Congress to advance tax legislation.
No tax law happens overnight. While a new bill reaching President Biden’s desk will be panned as impossible, a tax proposal will launch a new debate and energize tax writers on both sides of the aisle to build support for their own priorities. For anyone who has been waiting for the door to slightly open for tax legislation, this is their moment.