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. A LITTLE MORE ON LEGISLATING: December was a blur for most of us, but did you know that the Senate passed a tax-related bill on Dec. 22? Well, they did — unanimously, even. Three days before Christmas, the Senate cleared a measure that would have offered reliefto car dealers who use the "last in, first out" accounting method, as Automotive News pointed out last week. Those dealerships can face a recapture tax if they don't meet certain inventory levels, and those thresholds became increasingly difficult to keep because of all the supply chain issues these last couple years. A bipartisan group of lawmakers in both chambers were pushing the relief legislation during the last Congress, after Treasury decided it wouldn't act on its own. But the late action in the Senate — remember Dec. 23 was the day that the House passed the omnibus spending bill and then packed it up for the year — didn't give the House much of a chance to get its act together. Which prompts the next question: Does that mean there's new momentum for offering car dealers' relief in this Congress? Understandably, groups like then National Automobile Dealers Association are arguing yes. Supporters at least hope that this is the sort of bill that could pass the House under the suspension of rules, something which requires a two-thirds vote and is usually reserved for less controversial measures. And, well — we already know what the best-case scenario is in the Senate. Still, it'd be easy to get ahead of yourself on this one — even in more normal times, the momentum a proposal might generate near the end of one Congress doesn't automatically transfer over to the new one. At the same time, there are still lots of questions about how this new House will decide to use its floor time and approach legislation in the months to come. MOVING TO THE STATES: No surprise that McCarthy's efforts to become speaker took up all the oxygen in Washington last week. But did you know that there was speaker drama going on elsewhere in the country last week, in places like Columbus, Ohio, and Harrisburg, Pa.? Yes, state legislative season is back — which means we'll be watching what kind of encore state lawmakers and governors will be looking for after last year's tax-cutting frenzy. Experts suggest that it would be difficult for states to match what they pulled off in recent years. "This year won't match the last two for tax cutting enthusiasm, both because many states have already adopted significant rate reductions and due to lawmakers exercising caution amid growing economic uncertainty," said Jared Walczak of the right-leaning Tax Foundation. Generally speaking, it was Republican-led states, like Indiana and Iowa, that enacted those sweeping rate cuts. But that's not to say that Democratic states shied away from tax cuts, even as their counterparts in Washington furiously worked for tax-the-rich legislation. Looking ahead, the health of the economy will be far from the only factor influencing whether states dabble in further tax cuts this year. For starters, lots of states are still recording strong revenue collections and surpluses, helped in no small amount by all the coronavirus relief aid that the federal government funneled toward states and localities. Richard Auxier of the Urban-Brookings Tax Policy Center said there are already rumblings about tax cuts in well over a half-dozen states — in Democratic-run states like New Mexico, states with split control like Virginia and GOP-led states like Mississippi. More on this as state legislative sessions develop, but Auxier also stressed that not all tax cuts are created equal — those big rate cuts, for instance, have a longstanding impact on a state budget, unlike more targeted relief like one-time tax rebates.
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