Almost time for some policymaking — maybe

Delivered every Monday by 10 a.m., Weekly Tax examines the latest news in tax politics and policy.

Nov 07, 2022 View in browser   By Bernie Becker IT'S SO CLOSE: Election Day is now tomorrow — which means we will be able to speak with some more clarity pretty soon about the future of domestic tax policy. That's true in the short-term, with Republicans heavily favored to win the House on Tuesday and having a very strong chance to take back the Senate, too. As plenty of observers have noted, the midterm results likely will influence how ambitious the two parties are in the upcoming lame-duck session. That will in turn help decide both whether Congress passes yet another year-end tax bill, and how sweeping it might be. (For whatever it's worth, the expectation — or at least fervent hope — for many tax people is that some tax-related measures will pass before 2023.) But there are also longer-term questions to consider, too — like how tax policy might look in the next Congress, particularly if Republicans have full control of Congress. The GOP having both chambers would allow them to try to craft a budget reconciliation bill that could potentially seek to fully extend the individual tax cuts in the Republicans' 2017 tax law, which don't actually expire until the end of 2025. Republicans could also try to pass bills extending the Tax Cuts and Jobs Act as more of a messaging exercise ahead of 2025, outside of budget reconciliation. But the end result is probably the same: With President Joe Biden still in the Oval Office, getting a full TCJA extension into law is a heavy lift. And then one more thing to watch out for: As you might recall from 2011, Republicans might only need an aggressive House majority to use the debt limit to force policy concessions out of Democrats. So it's worth noting how Rep. Jason Smith (R-Mo.), perhaps the most insurgent of the candidates seeking to become the next top Republican at House Ways and Means, brought up that new $80 billion in IRS funding when discussing potential priorities for next year. Smith told Reuters in a statement that the GOP would " use every legislative opportunity – including the debt ceiling" — to, among other things, "repeal the 87,000 new IRS agents Democrats are hiring to target American families." (One more time: That 87,000 new agents figure falls far short of telling the whole story.) MORE ON EVERYTHING IN A BIT, but first thanks for coming to the "hello darkness, my old friend" version of Weekly Tax. Speaking of the light — that's just how barbecue looks , everybody. I mean, what's so funny? Today marks 57 years since the birth of a 20th century advertising hall of famer — the Pillsbury Doughboy. It would tickle us pink if you sent your best scoops. Email: bbecker@politico.com , bfaler@politico.com , bguggenheim@politico.com and teckert@politico.com . You can also reach us on Twitter at @berniebecker3 , @tobyeckert , @brian_faler , @ben_guggenheim , @POLITICOPro and @Morning_Tax . Want to receive this newsletter every weekday? Subscribe to POLITICO Pro . You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories.   NEW AND IMPROVED POLITICO APP: Stay up to speed with the newly updated POLITICO mobile app, featuring timely political news, insights and analysis from the best journalists in the business. With a fresh look and improved features, the sleek and navigable design offers a convenient way to access POLITICO's scoops and groundbreaking reporting. Don't miss out on the app you can rely on for the news you need, reimagined. Already a POLITICO app user? Upgrade today! DOWNLOAD FOR iOS  – DOWNLOAD FOR ANDROID .     LOOKING TO THE FUTURE, OVERSEAS EDITION: 2023 might bring a flurry of action on global tax matters as well — specifically, on that agreement negotiated through the Organization for Economic Cooperation and Development that was initially signed on to by some 140 countries. Except: That was well over a year ago, and action on implementing the global tax deal has been stalled all over the world. Perhaps no country has been more frustrated by the lack of movement than France, which has been a key player in the global tax process — starting with its push years ago to collect more revenues from largely U.S.-based digital companies. Now, the French finance minister, Bruno Le Maire, is saying that Paris will implement the second pillar of the OECD deal, a global minimum tax, on its own if movement is still stuck at the end of the year, as Bloomberg noted. As it stands, 26 of the 27 countries within the EU are ready to move forward with the global minimum tax. Unfortunately for those 26, you need all 27, and Hungary hasn't shown any willingness to make it unanimous. Le Maire told Le Parisien that France would implement the 15 percent global minimum tax as a national law early next year if nothing changes — and added that Germany, Italy, the Netherlands and Spain "will apply this tax within the same time frame." If that does happen, one of the big questions will be how exactly France "will apply this tax." Specifically, the big question is whether France or any other country might try to implement what's known as the top-up tax, which would give them more power to tax multinationals based elsewhere, like the U.S., and potentially grab some revenues that might otherwise be collected in Washington. There's also some question of whether an individual country adopting such a tax would violate existing treaties. And if individual countries don't implement a top-up tax, there are other questions about how much pressure it might bring on other countries to move forward with the minimum tax. SPEAKING OF BRUSSELS…: And while we're on the subject — the EU just broadly criticized the new clean energy tax breaks that Democrats enacted through the Inflation Reduction Act, as Pro Trade's Doug Palmer reported. Brussels and other countries have been making it clear for months that they have problems with that law's electric vehicle incentives, which requires that final assembly of those vehicles happen in North America. In fact, Tokyo just lashed out again over that tax credit over the weekend, hinting that the preference might depress new investment in the U.S. from Japan. But from the EU's perspective, at least four other incentives are also problematic and potentially in violation of World Trade Organization rules, which include credits that would benefit facilities using wind, solar and other clean energy sources. Around the World The Guardian: " Jeremy Hunt to outline £60bn of tax rises and spending cuts." Reuters: " Canada's share buyback tax could backfire , energy sector warns." Also Reuters: " Colombian $4 billion tax reform becomes law , duties on oil and coal hiked." Around the Nation Los Angeles Times: " Newsom urges California lawmakers not to tax forgiven federal student loans." Virginia Mercury: "Virginia's highest tax bracket starts at $17K. Some say it's time for an update ." The Desert Sun: " Haven't received your California Middle Class Tax Refund ? Here's what's happening." Also Worth Your Time NYT: " Fact-Checking the Misleading Claim About 87,000 Tax Agents." Bloomberg: " State Taxes on Student-Debt Relief Would Hit Black Borrowers Hardest." The Hill: "Online secondhand sellers balk at new tax reporting threshold ." Did You Know? American soldiers were frequently called doughboys during World War I.   DON'T MISS POLITICO'S 2nd ANNUAL DEFENSE SUMMIT ON 11/16: The United States is facing a defining moment in the future of its defense, national security and democratic ideals. The current conflicts and developments around the world are pushing Washington to reshape its defense strategy and how it cooperates with allies. Join POLITICO for our second annual defense summit, "At a Crossroads: America's Defense Strategy" on November 16 in person at the Schuyler DC or join online to hear keynote interviews and panels discussing the road ahead for America's national security. REGISTER HERE .       Follow us on Twitter Toby Eckert @tobyeckert Bernie Becker @berniebecker3 Brian Faler @brian_faler   Follow us

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