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The Tax Bill: Will This Ever Get to the Finish Line?

When the Tax Relief for American Families and Workers Act passed out of the House Ways and Means Committee by a vote of 40-3 and then passed the House floor by a vote of 357-70, a relatively smooth path forward almost seemed inevitable. After all, the bill is fully paid for (by eliminating the Employee Retention Tax Credit), it is generally much more difficult to get consensus in the House than the Senate, both Democrats and Republicans secured provisions they have prioritized, and the Senaten Finance Committee Chairman was already on board. Since then, concerns have emerged around a few provisions, which has effectively stalled any movement in the Senate. 

Here are six factors to consider when analyzing how likely it is that this tax bill gets signed into law this year. 

Risk: Time is Legislation’s Ultimate Enemy. The longer that legislation sits without action, the tougher it is to move the bill. New issues emerge. Intensity around support declines. The urgency goes away. Policymakers move onto other priorities. Politics changes the dynamic of the bill. In short, the more time that passes, the more the tax bill is at risk of being added to the long list of “maybe next year” bills. While there are avenues later in the year for this bill (see below), time remains a problem. 

Risk: More Votes, More Risk. Even though the House passed the bill with an unusually bipartisan majority, the Senate sending the bill back to the House with new changes only introduces new risk (although potentially unavoidable). The back and forth of the legislative process is not abnormal, but it does introduce new risk. If the House is presented with a different bill than the one they passed, it could open new issues and restart a process that will effectively “ping pong” the bill back and forth between the two chambers, which requires floor time, attention from policymakers, and more negotiation – all of which is difficult with limited legislative days for the remainder of the year. 

Risk: The Campaign Trail. Campaigns and consequential elections generally bring risk to policy. With the election around 200 days away, candidates feel different pressures and want to avoid votes that may either put them at odds with candidates higher on the ballot or brand them with a politically sensitive position. Fortunately, the tax bill has not yet made it to the campaign trail. If it does, the path to success becomes very difficult. Also, if one party feels as though they will be in a better position next year (i.e., in the majority) they may begin to think the bill could improve under their leadership post-election.   

Opportunity: Process Can Overcome Some Hurdles: It is very clear that Republicans in the Senate have some concerns with the current legislation. While some of those are around the policies themselves, a good portion of the concern revolves around the lack of Senate progress on the bill. The Senate does not want the House to dictate which bills they have to pass and they want opportunities to adjust the language.  A committee mark-up and floor amendments would go a long way to helping the Senate propose adjustments (whether they pass is another issue).  The current “take it or leave it” option is not sitting well with some members and providing some additional process will go a long way.

Opportunity: Lame Duck Session.  There are so many items that need to be wrapped up by the end of the year, we could be facing a robust lame duck session of Congress. Having a vehicle without the pressures and political risk of a looming election could be (and certainty has been) a game changer for tax legislation in the past. While this would still take the support of both chambers, things seem to get much easier after the elections are over.

Opportunity: Good Policy and Good Politics. Both sides of the political aisle have something to gain in this legislation. Republicans can talk about wins within the tax bill to industry (while highlighting the significant departure of this bill from the President’s recent proposed tax increases). Democrats can highlight the Child Tax Credit and the Low-Income Housing Tax Credit. Everyone can have a winning message with the passage of this bill…but it would need to pass for them to capitalize on it. 

The policy and political landscape around this bill provides some hope, some fear, and many complexities. There are certainly bigger efforts that have crossed the finish line this year. There is still plenty of opportunity to advance this bill and, despite some frustration in the Senate, nobody is trying to stop this bill altogether. With the potential for a government shutdown gone (for now), it opens up space for negotiation and discussion on how and when the tax bill could move. And, if for some reason it does not…2025 is going to be a big tax year too.         


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