THE DEFICIT REDUCTION ANGLE: Brainard’s comments come as it’s becoming increasingly clear that fiscal restraint and ballooning deficits will play more of a role in the 2025 tax debate, at least compared with when Republicans enacted the Tax Cuts and Jobs Act more than six years ago. The Biden team has long called for raising the corporate tax rate from 21 percent to 28 percent, and they surely noticed when House Ways and Means Chair Jason Smith (R-Mo.) said last week that even some prominent Republicans have tossed around the idea of a corporate tax increase. And that also might be an idea that you hear prominent business groups start to push back against. In short, those groups and their supporters argue that not all means of deficit reduction are created equal, and that a corporate rate increase would be a particularly damaging way to go. “We can’t look at this just through the traditional scoring lens,” Neil Bradley, the chief policy officer for the U.S. Chamber of Commerce, told Weekly Tax after his group held a summit last week to prep for 2025. “You have to look at this through the lens of dynamism. If you kill the growth, you won’t get the revenues that you think you’re going to get,” Bradley said. Related note: Former Vice President Mike Pence and his Advancing American Freedom organization also edged into this escalating debate Monday, sending a letter to GOP lawmakers that aims to undercut CBO’s finding last week that a full extension of all the expiring provisions would cost some $4.6 trillion over a decade. Pence called the TCJA a “roaring success” and argued that CBO’s latest projections understate the growth spurred by the law’s tax relief, as Pro Tax’s Benjamin Guggenheim reports. And speaking of weighing in — “Instead of a Biden tax hike, I’ll give you a Trump middle class, upper class, lower class, business class big tax cut,” former President Donald Trump said at a rally in Wildwood, New Jersey, on Sunday night, via Bloomberg. TIME FOR THE HAIL MARY: It’s looking pretty dire now for that bipartisan tax bill negotiated by Smith and Senate Finance Chair Ron Wyden (D-Ore.). Smith and other supporters have urged Senate Majority Leader Chuck Schumer to just put the tax plan on the floor, believing it would gain the needed GOP support to pass. But Schumer hasn’t shown any interest in doing that yet, and the last big legislative vehicle of the year — the FAA reauthorization — has basically come and gone in the Senate without the tax bill really being in play. With that in mind, big-name corporations like Cisco, Ford, Intel and Lockheed Martin are reaching out to Schumer and Senate Minority Leader Mitch McConnell to plead for action on a top priority — immediate write-offs for research costs, one of the central elements of the Wyden-Smith plan. The R&D Coalition, in which those companies are members, say that research spending has taken a dive ever since 2022, when businesses were required to deduct those expenses over at least five years. “The consequences of inaction are clear,” the companies wrote to McConnell and Schumer in a letter dated today, asking for a path forward on the bipartisan tax bill by Memorial Day. “Failure to advance legislation reversing R&D amortization will result in a loss of high-paying jobs and a decline in America’s global competitive advantage as the leading innovator, giving way to countries like China,” the coalition added. It would be quite the upset if the Senate took quick action on the Wyden-Smith plan, which would also expand the Child Tax Credit, restore other key tax incentives for business and strengthen America’s tax ties to Taiwan, among other things. And to bring this all full circle: Supporters of the tax bill are also starting to express more concern that the issues that have dragged down the 2024 tax bill — which have largely been driven by Senate Republicans — will spill over into 2025. “If the current tax extender bill doesn’t become law, that definitely raises questions about how difficult it’s going to be in 2025. It’s not a confidence booster,” said Bradley.
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