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. YOU’VE GOT OPTIONS: The Bipartisan Policy Center, the Committee for a Responsible Federal Budget and the Tax Foundation, among other groups, have tossed out a variety of potential revenue-raisers that Republicans could use to help pay for a Trump tax cut extension. Even some of the key staffers who helped craft the 2017 tax law, like George Callas of Arnold Ventures, who was a top tax aide to then-House Speaker Paul Ryan, have argued that using a current policy baseline would essentially just allow Republicans to wave away real problems, and only for the time being. BPC, for instance, just released four new papers with offset options, suggesting new limits, for instance, on state and local tax deductions, charitable write-offs and fringe benefits like employer-sponsored health care. But those choices also underscore how difficult it might be for Republicans to find offsets within the tax code to extend the temporary TCJA provisions. It’s probably far more likely that a 2025 tax bill will have to lift the current $10,000 cap on SALT deductions, which was first put into place by the GOP in 2017, than reduce them further. Blue-state Republicans in the House have already said they won’t vote for a tax bill that doesn’t expand SALT benefits — and given the narrow advantage that Republicans will have in that chamber next year, they might easily need to be listened to. Meanwhile, nonprofits are pushing for expanded charitable deductions, after donations dropped off following changes made in TCJA — and they have their own prominent supporters in Congress. Still, these outside experts argue there would be real costs for taking what they’d say is the easy way out. “Many lawmakers would likely appreciate the opportunity to extend the tax cuts in legislation that doesn’t score as having any additional costs, but, really, that would just mean that higher deficits, interest costs, and long-term debt would already be baked into the projections for future years,” wrote the Tax Foundation’s Daniel Bunn and Garrett Watson. A further look-ahead: The question of one or two budget reconciliation measures next year still hangs over Republicans and has been an area of deep discussion in the House recently, as Benjamin also noted on Friday. The rub for many House Republicans, like Ways and Means Chair Jason Smith (R-Mo.), is that they’re not sure they’ll have the bandwidth to pass two reconciliation measures next year — and a tax bill would be in the second 2025 fiscal package under the plan laid out by the incoming majority leader on the other side of the Capitol, Sen. John Thune (R-S.D.). Even some Senate Republicans have said they have some sympathy for where Smith is coming from. But in the end, there’s no doubt that President-elect Donald Trump’s thoughts will carry a lot of weight here, as key Republicans have already noted. Stephen Miller, who will be a top White House aide again after Jan. 20, certainly suggested that the Trump administration could get behind a dual-track approach next year. “Nobody is even talking about or considering delaying tax,” Miller said on Fox News over the weekend — the suggestion being that a 2025 tax bill will be complicated enough that it will take a good portion of next year, anyway, and that a border security package could be secured much earlier. SOME FINAL ODDS AND ENDS: This was never expected to be a very busy lame-duck session of Congress for actual tax lawmaking. (Preparation for future tax lawmaking? Well, sure.) Two areas that were thought to have a chance before the end of the year: Tackling double-taxation issues with Taiwan and a disaster relief tax bill. The disaster relief legislation last week became a rare tax bill approved by unanimous consent in the Senate, sending the measure to President Joe Biden’s desk. But that’s likely not the end of the story for disaster tax relief. The recent bill offers more narrow relief than previous disaster tax measures, and the most recent storms that hit the Southeast, hurricanes Helene and Milton, have sparked new legislative efforts to offer more aid.
So it’s understandable why people might think that Congress would double-back to offer further tax help, particularly for the most recent storm victims and for businesses and nonprofits. Advocates are also hoping for broader assistance next time, after this most recent bill didn’t offer much for businesses or nonprofits. In fact, lawmakers have already introduced a tax bill to help those affected by Helene and Milton, which does include that kind of help. “That doesn’t end the debate,” Rick Cohen of the National Council of Nonprofits wrote to Weekly Tax about the just enacted disaster bill. “A Helene/Milton bill has to have tax relief for nonprofits.” And about Taiwan: If one tax bill can pass as a standalone measure this holiday season, why not two? Some recent chatter had suggested that the Taiwan bill could be attached to the annual defense policy bill, which itself would’ve been out of the ordinary. But that path seems closed now. And there will certainly be challenges for supporters — and to be clear, this bill has broad, bipartisan support — to still get it passed in 2024. A Taiwan measure has yet to pass either chamber, for instance. (The disaster bill passed the House back in May.) And it’s far from clear whether such a proposal could unanimously pass the Senate, though its supporters are checking.. (Also, not for nothing: A Taiwan measure would remain a popular idea if it slips into 2025, as well.)
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