United States: Tax Policy Update - September 9, 2015

NUMBER OF THE WEEK: 10

The total number of legislative working days in September. Lawmakers returned from the August recess yesterday facing a daunting to-do list, including incendiary debates over foreign policy, tight deadlines, and the specter of a government shutdown this fall. Somewhere in the melee, a push for international tax reform and the revival of 50-plus expired tax provisions will fight for lawmakers' attention. Check out the Legislative Landscape section below for more details.

LEGISLATIVE LANDSCAPE

Welcome Back, Congress! It's a relatively slow week as House and Senate members ease themselves back to the D.C. grind. Don't be fooled by this week's shorter agenda, however. After wrapping up consideration of the joint resolution disapproving the Iran nuclear agreement, Members will turn their full attention to keeping the government running beyond Sept. 30, the end of the current fiscal year.

Congressional leaders are looking to put together a short-term funding bill, known as a continuing resolution or "CR," to keep the government afloat until mid-December, giving lawmakers a few more months to iron out differences in one dozen appropriations bills. The process won't be completely drama-free, as conservatives are hoping to use the stopgap funding bill as a vehicle to defund Planned Parenthood – a move that would risk a government shutdown.

Beyond the potential funding showdown, members will have to roll up their sleeves on the debt ceiling, reauthorization of the Export-Import Bank, and reviving tax extenders. The Tax Relief Extension Act (S.1946), with an estimated cost of $86.5 billion, would renew all of the 50-plus tax extenders for 2015 and 2016. Then there's the House Ways and Means Committee's push for international tax reform tacked on to a domestic infrastructure funding bill—although, it appears that Congress may have more breathing room on the highway funding dilemma, according to an announcement yesterday from the Department of Transportation (read more below).

Bottom line: it's going to be a busy fall. So, sit back, relax, grab your pumpkin-flavored latte, and let the McGuireWoods Tax Policy Update break it down for you. Be sure to check in each week for the latest tax policy news roundup and analysis.

The Road Goes On...But Not Forever: According to the Department of Transportation's Highway Trust Fund Ticker, the Highway Trust Fund has enough money to maintain solvency until the fourth quarter of fiscal year 2016. The three-month patch passed by Congress on July 30, which contains $8 billion in offsets, appears to have a little more mileage than originally thought, but Ways and Means Chairman Paul Ryan (R-WI) is still moving full-speed ahead with an international tax reform/highway funding package. Word is the Joint Committee on Taxation is working on it as we speak.

Bush Tax Cuts: Round Two? Republican presidential candidate Jeb Bush outlined his tax reform plan in a Wall Street Journal op-ed last night, before officially unveiling more details this afternoon at a North Carolina manufacturer (a manufacturer of "poultry-chilling solutions," no less, because who among us wants to live in a world with non-chilled chickens?). Bush claims the plan will "will unleash increased investment, higher wages and sustained 4% economic growth, while reducing the deficit." Here are the details you should know:

• Cuts the corporate rate from 35 percent to 20 percent.
• Eliminates the interest deduction and "most" corporate tax expenditures.
• One-time tax of 8.75 percent on repatriated foreign earnings, payable over 10 years
• Reduces the current seven individual tax brackets to three: 10 percent, 25 percent, and 20 percent.
• Doubles the standard deduction, eliminates the marriage penalty, and expands the Earned Income Tax Credit.
• Caps a slew of deductions for high-income earners.
• Eliminates the capital gains treatment of "carried interest"—a surprising proposal from a Republican.

Another presidential contender, Republican hopeful Donald Trump, says he, too, will release a tax reform proposal later this month. Stay tuned....

LOOKING AHEAD

Relevant Congressional Activity

Thursday, 9/10

Relevant Agency Activity

Thursday, 9/10

Other Activity

Wednesday, 9/9

Thursday, 9/10

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.