Trying to move the tax bill to the runway

Presented by The American Investment Council: Delivered every Monday by 10 a.m., Weekly Tax examines the latest news in tax politics and policy.

May 06, 2024 View in browser   By Bernie Becker Presented by  LET’S JUST KEEP TRYING: Senate Finance Chair Ron Wyden (D-Ore.) is set to try to attach the bipartisan tax bill that he helped write to the upcoming FAA reauthorization measure, according to his office. Wyden is expected to officially propose the tax plan, which passed the House all the way back in January, as an amendment to the FAA bill on Tuesday. The Finance chair and his office have been saying in recent days that they’re checking into any potential avenues for getting the bipartisan tax bill, which Wyden crafted with House Ways and Means Chair Jason Smith (R-Mo.), across the finish line. And yet: There isn’t much reason for supporters of the Wyden-Smith plan, which would expand the Child Tax Credit and restore key tax breaks for businesses, to be optimistic about this particular route to enactment. It might take a while to play out — the FAA needs to be reauthorized by May 10, but top senators have already openly discussed a potential short-term extension to give lawmakers more time to work through the broader bipartisan proposal. But when the moment comes, Senate Minority Leader Mitch McConnell and Sen. Mike Crapo of Idaho, the top Republican on the Finance Committee, would almost certainly object to any effort to add the tax bill to the FAA legislation, as even Wyden’s office acknowledges. Meanwhile, Senate Majority Leader Chuck Schumer didn’t show any inclination to make a big push for the tax bill while the tax season was happening, and hasn’t made any suggestions that might be changing. MORE ON THAT IN A BIT, but first thanks for joining another installment of Weekly Tax. Also: On, Wisconsin. In case you’ve somehow forgotten: Today marks an even two decades since the series finale of the NBC comedy “Friends,” which was on the air for 10 seasons and departed with an episode viewed by some 52.5 million people in the U.S. You can reach us at bbecker@politico.com, bfaler@politico.com, bguggenheim@politico.com and teckert@politico.com. You can also reach us on X, formerly Twitter: @berniebecker3, @tobyeckert, @brian_faler, @ben_guggenheim, @POLITICOPro and @Morning_Tax. A message from The American Investment Council: The private equity industry invests in every Congressional district across America – directly backing over 12 million jobs and supporting thousands of small businesses. As Congress considers changes to the tax code, learn how private investment fuels manufacturing, drives innovation, strengthens supply chains, and is helping to build the new economy. Whether you live on Main Street or in Rural America, private equity is investing in your local community.   HOW ABOUT OTHER AVENUES: Wyden and his team are still holding out hope that the tax plan could come to the Senate floor as a standalone bill, even as some observers have finished writing eulogies for the measure. At the same time, supporters of the Wyden-Smith plan are also wondering why Schumer hasn’t been more aggressive in pushing the tax bill. Schumer basically said last month that he’d be willing to bring the tax bill to the floor when he was confident it could pass. But even some Republican senators who support the Wyden-Smith plan want the majority leader to further push the envelope, like Sen. Markwayne Mullin of Oklahoma (as told to The Washington Post last week). Bringing the bill to the floor could both highlight GOP divisions over the tax bill and potentially force Republicans to fully own the defeat of the measure. But some GOP senators have openly talked about preferring to tackle these issues next year, when they might have full control in Washington, and it’s not fully clear whether the Wyden-Smith plan has unanimous support among Senate Democrats. GOT A MEMO FOR YOU: The IRS keeps trickling out the good news on its Direct File pilot program. As promised, the agency released a fuller report on the government-run filing portal on Friday, after IRS chief Danny Werfel put out some initial thoughts a week before. Werfel called Direct File “a key component of our modernization efforts” in this latest report, as all signs point to the IRS bringing the program — which was only available in a dozen states for taxpayers with relatively simple returns — back for 2025. Outside supporters are also preparing for that very step. “This report provides clear evidence that the agency needs to build on the success of the Direct File pilot by expanding access to Direct File in more states and making sure that more people in different tax situations, such as contract workers, can use Direct File,” said Adam Ruben of the Economic Security Project. Among the findings from this newest report: — About 15,000 Direct File users completed a survey after using the pilot, and about nine in 10 of those said they had a positive experience with the program. A similar number said the program also made them more confident in the IRS. — The report also fleshed out the $24.6 million that the IRS says it spent on the pilot program. Almost half of that money went to last year’s report laying out the feasibility of a government-run portal, and the IRS says it would be able to make the program more cost-effective as it expanded. Still, there are plenty of questions about how much Direct File is costing taxpayers. GAO called out the IRS last month for having insufficient documentation to back up its cost estimates for Direct File, while also noting that the agency did not include start-up costs in those calculations. Outside skeptics of Direct File have also pointed to the IRS’s acknowledgment of other costs that weren’t included, like the use of employees from the U.S. Digital Service. (The new report says it would cost a bit more than $7 million a year to use help from the digital services.) — Finally, the report said that Direct File issued more than $90 million in refunds to taxpayers, while bringing in some $35 million. Keep an eye on those figures: Private-sector preparers have suggested that the amount of refunds handed out by Direct File seems low, after charging that an IRS-run portal wouldn’t have the incentive to maximize a taxpayer’s refund.   Pro Analysis intel helps you understand the members, committees, and interplay influencing policy debates. Download a complimentary look at Analysis here to help you navigate legislative decision-makers. Already a Pro Analysis subscriber? Visit the Analysis library now.     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. Around the World Associated Press: “South Sudan removes newly imposed taxes that had triggered suspension of UN food airdrops.” Financial Times: “Windfall tax weighs heavy on North Sea producers.” Bloomberg: “Australia Warns of Smaller Revenue Upgrade in Upcoming Budget.”   DON’T MISS POLITICO’S ENERGY SUMMIT: The future of energy faces a crossroads in 2024 as policymakers and industry leaders shape new rules, investments and technologies. Join POLITICO’s Energy Summit on June 5 as we convene top voices to examine the shifting global policy environment in a year of major elections in the U.S. and around the world. POLITICO will examine how governments are writing and rewriting new rules for the energy future and America’s own role as a major exporter. REGISTER HERE.     Around the Nation Nebraska Examiner: “Pillen’s property tax road show targets possible yes votes.” Denver Post: “As Colorado legislative session winds down, property tax reform is still in the air.” San Francisco Chronicle: “California doesn't have an 'exit tax' — but can tax some who move away.” Also Worth Your Time Pro Energy: “Biden’s final EV tax credit rules please automakers, anger China hawks.” Pro Tax: “IRS notches big win in foreign business penalty case.” Pro Trade: “Auto Workers blast tax 'loophole' for foreign EVs.” Wall Street Journal: “Reclassifying Marijuana Could Unlock Billions in Tax Savings for Cannabis Companies.”   A message from The American Investment Council:   Did you know? The "Friends" series finale was the most-watched episode of a television series during the first decade of the 21st century. A message from The American Investment Council: The private equity industry invests in every Congressional district across America – directly backing over 12 million jobs and supporting thousands of small businesses. As Congress considers changes to the tax code, learn how private investment fuels manufacturing, drives innovation, strengthens supply chains, and is helping to build the new economy. Whether you live on Main Street or in Rural America, private equity is investing in your local community.     Follow us on Twitter Toby Eckert @tobyeckert Bernie Becker @berniebecker3 Brian Faler @brian_faler Benjamin Guggenheim @ben_guggenheim   Follow us

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