CAN YOU SAY TAX SUPER BOWL: The work already started by the New Markets Tax Credit Coalition underscores just how much of a lobbying frenzy is going to surround the upcoming tax debate. Big-name business groups will be seeking to protect some key temporary provisions, like the 20 percent deduction for pass-through businesses, and to shield or even further reduce the 21 percent corporate rate — a permanent provision that nonetheless could easily be part of the upcoming broader tax discussions. Meanwhile, advocates for families surely will be seeking further boosts to the Child Tax Credit, even as the expansion that Republicans put into place as part of the Tax Cuts and Jobs Act will sunset at the end of next year. And on top of all that, a number of more targeted provisions, like the new markets credit, will also be expiring, and will have their share of champions. Bob Rapoza of the New Markets Tax Credit Coalition acknowledged that the incentive faced a variety of challenges next year, but that lawmakers and key staff on Capitol Hill didn’t tell the group that their main goal — making the incentive permanent — was a definite no-go. Now, about those challenges: First of all, Washington policymakers are sending signals that they’ll be more mindful of fiscal restraint during next year’s tax talks because of ballooning deficits, at least compared to how overlooked the issue was with the Tax Cuts and Jobs Act. Rapoza also noted that the new markets credit rarely has been attached to broader tax bills, instead more frequently riding with broader spending measures or other packages. “The situation we’re going into is much more competitive. The price tag is quite large to do everything,” Rapoza said, after CBO estimated that fully extending all the temporary provisions from the GOP 2017 tax law would cost around $4.6 trillion over a decade. “It’s quite challenging,” he added. (Worth noting: The NMTC quite often has been restored after expiring, so the end of 2025 is hardly a firm deadline for an extension.) Outside experts have also argued that the new markets credit, while funneling investment toward communities of need, isn’t particularly efficient or well targeted. Plus, there is definite overlap with the Opportunity Zone program that Republicans enacted in TCJA, which also offers tax breaks in exchange for development in underserved areas (and which also has faced questions about its performance). According to Rapoza, lawmakers and aides still say they see enough differences in the programs to keep them both around. Certainly, there is a distinct history of bipartisan support for the new markets credit, with key figures in both parties finding reasons to get behind it. “The New Markets Tax Credit has made a significant impact on our community,” said Rep. Claudia Tenney (R-N.Y.), a House Ways and Means members and sponsor of a bill to permanently extend the incentive. “It has allowed private investment to come in where government couldn’t do the job.” ABOUT LAST WEEK: Speaking of 2025, former President Donald Trump’s Thursday trip to Washington to brief congressional Republicans and business leaders — and toss out outside-the-box thoughts on tax policy — was still making waves over the weekend. Treasury Secretary Janet Yellen dismissed Trump’s idea to work to replace the income tax with more robust tariffs during an appearance on ABC’s “This Week.” “The impact would be to make life unaffordable for working class Americans and would harm American businesses,” Yellen said, via our Mia McCarthy. The math certainly is challenging on killing the income tax, and the couple trillion dollars per year that it raises, and replacing that lost revenue with more tariffs — though to be fair, the Trump campaign stressed that this was just one of an array of ideas that the former president was ruminating on. Still, Trump’s allies on Capitol Hill certainly didn’t reject the idea out of hand. Rep. Byron Donalds (R-Fla.) said on NBC’s “Meet the Press” that some of his more knowledgeable colleagues on the subject told him that “there's some merit” to Trump’s floated trade, “but there's some other things that have to be worked out.” WINNER, AND STILL CHAMPION: The National Foreign Trade Council is out with a new survey this morning, finding that the group’s members remain most interested in the U.S. striking a tax treaty with Brazil. That’s not new — Brazil was the top choice for respondents in last year’s NFTC survey, too. The country is in the midst of updating its transfer pricing frameworks, but that remains an area of concern for businesses. Ireland, Israel, Malaysia, Saudi Arabia and Switzerland also remain top choices for tax treaties — while, interestingly, Taiwan fell a bit in the survey even as legislation that would seek to tamp down double taxation between Taiwan and the U.S. is stuck in the Senate.
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