With help from Benjamin Guggenheim ONE OR TWO TAKES, CONT’D: Republicans are in the midst of a procedural debate over the best path to take to cut taxes next year. And if anything, key officials and advocates on both sides of that discussion only seem to be digging in further. A reminder: Some Republicans, including the top tax writer in the House, want to do one large fiscal package next year, tackling an extension of the expiring parts of the Trump tax cuts and a bunch of other GOP priorities in one fell swoop. But others in the party, including leading Republicans in the Senate, are advocating a two-step approach — using budget reconciliation to pass an early measure covering border security and possibly other issues, and then doubling back to deal with taxes. GOP lawmakers want to figure out their procedural path quickly, particularly given that all Republicans would like to clinch a big legislative victory early in President-elect Donald Trump’s second term. On the “let’s go for two” side: Securing the border became perhaps the signature issue for Republicans as they wrested control of the government back from Democrats over the last four years. So it shouldn’t be a surprise that some GOP lawmakers want a border bill done and dusted as early as possible next year. “The number one job for the Budget Committee in the United States Senate is to pass a border security bill on day one,” Sen. Lindsdey Graham (R-S.C.), who will lead that committee next year, said on NBC’s “Meet the Press” on Sunday. “I want to cut taxes, but that comes later,” he added. MORE ON THAT IN A BIT, but first thanks for joining your penultimate version of Weekly Tax for 2024 — where it would be fun to have a different kind of crowd size discussion on the National Mall. (Also, would the locker rooms be in the Capitol?) Does that mean it’s due? Today marks 317 years since the last eruption of Mt. Fuji in Japan — which remains, it should be noted, an active volcano. Help this newsletter spit some fire. Send your best tips and feedback. Email: bbecker@politico.com, bfaler@politico.com, bguggenheim@politico.com and teckert@politico.com. You can also reach us on X at @berniebecker3, @Brian_Faler, @ben_guggenheim, @tobyeckert, @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. NOT JUST A SENATE THING? In some ways, the one vs. two bill debate has largely been a House vs. Senate showdown. But the House Freedom Caucus weighed in on Friday, and on the side of the two-bill approach — though with at least a slight twist from what leading GOP senators are advocating. The confrontational conservative group wants a first budget reconciliation vote to focus solely on border security, with a second measure aimed at tax-cutting and other items on the Republican wish list, as our Anthony Adragna reported. That’s not quite the same as the vision laid out by Sen. John Thune (R-S.D.), the incoming majority leader, who’s called for an early bill next year focused on the border, energy and defense. Go big or go home: The Freedom Caucus’ preferred approach helps underscore why Republicans like House Ways and Means Chair Jason Smith (R-Mo.) are worried about trying to do two fiscal packages next year. Essentially, Smith has argued that all the GOP priorities need to be lumped together, to ensure there are enough sweeteners to get the necessary votes — particularly with Republicans staring down a 217-215 majority in the House in the early part of 2025. Or to put that another way: Let’s say Republicans pass a border-only bill early in 2025, as the Freedom Caucus wants. Does that take away any of that group’s urgency to pass a tax-cut bill later in the year, particularly given that at least one of their members has floated the idea of raising the corporate tax rate to get the federal debt more in order? But worth noting: The push for one bill is not merely a vote-counting exercise for some on the right. Grover Norquist, the founder of Americans for Tax Reform, argued in a new opinion piece that it’s critical that Republicans pass a tax bill early in 2025 — even though the lower individual rates, larger Child Tax Credit and special tax break for pass-through businesses don’t expire until the end of the year. Norquist argued that Republicans erred in waiting until almost the end of 2017 to enact the Tax Cuts and Jobs Act, a mistake that delayed the economic benefits of the law and cost the party in the 2018 midterms. Republicans risk the same outcome if they take a similar approach in 2025, Norquist maintains. (The flip side argument: Taking their time allowed Republicans to build a more durable tax law in 2017, and extending the temporary individual provisions wouldn’t pack the same economic punch as the corporate changes the GOP enacted seven years ago.) ONE MORE ON THE WAY OUT: Senate Finance Chair Ron Wyden (D-Ore.), who’s made battling tax avoidance and evasion by the rich one of his top priorities, is rolling out one more proposal before he gives up the gavel in January. Wyden’s draft legislation, which he’s releasing today, targets something known as private-placement life insurance. The proposal doesn’t deal with your run-of-the-mill life insurance policy, as Wyden notes. What happens with private-placement life insurance is that a client buys a policy, after which the company invests the proceeds in something like a hedge fund. But unlike with normal hedge fund investments, the profits generated via PPLI generally don’t get hit by capital gains taxes, and can also escape estate taxes. It’s nothing more than a $40 billion tax shelter, Wyden argues, even as it’s perfectly legal. Wyden’s proposal comes after he released a report early this year on PPLI. He said Monday that his proposal follows a tradition of congressional action “to prevent the abuse of the preferential tax rules for life insurance.” “Life insurance is too important to allow it to be twisted into another garden variety tax ripoff for the top,” he added. FILLING OUT THE COMMITTEE: Four House Republicans snagged a coveted Ways and Means slot on Friday — Reps. Aaron Bean of Florida, Max Miller of Ohio, Nathaniel Moran of Texas and Rudy Yakym of Indiana. And talk about good timing, getting on the committee just ahead of the 2025 tax talks. But there’s something else interesting here: Only three Republicans are departing the committee as those four are joining, as Pro Tax’s Benjamin Guggenheim noted. In other words, it looks like 26 Republicans will be on Ways and Means next year, instead of the current 25. That also suggests that Democrats might get more representation on the committee as well. And for whatever it’s worth: Two Democrats are departing Ways and Means after not seeking re-election this year: Reps. Earl Blumenauer of Oregon and Dan Kildee of Michigan. Three current Democratic members, however, were previously on the committee but currently don’t have a slot: Rep. Brendan Boyle of Pennsylvania, who’s also the top Democrat on the House Budget Committee; Del. Stacey Plaskett of the U.S. Virgin Islands; and Rep. Tom Suozzi of New York.
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