Here’s what you should know about this week on the Hill: It appears Democrats are on their own to pass any legislation this session as Republicans withdraw their support on multiple fronts.
This Week on the Hill
Congress takes on government funding again, but Democrats and Republicans have differing views on what should be included in the annual budget. Plus, Sen. Bernie Sanders wants to ensure the Social Security program is around for another 75 years.
- Appropriation talks lose bipartisan support. One of Congress’ main jobs is to pass appropriations bills to fund government programs each year. House Democrats intended to start marking up the funding bills this week in order to finish by the end of July, but bipartisan talks for a top-line agreement have stalled.
- Republicans want to ensure the defense spending level surpasses the rate of inflation, but Democrats want to focus on funding for domestic programs.
- House Democrats are pushing forward though, with the House Rules Committee starting the appropriations process with a resolution to deem discretionary spending levels at $1.6 trillion for fiscal year 2023. The resolution sets a single $1.6 trillion top line and doesn’t dictate how it should be split between military and domestic funding.
- This measure is included with a rule for consideration of two gun control bills (HR 7910 and HR 2377) and will go up for a vote on the House floor tomorrow. The House Appropriations Committee hopes to start marking up these bills next week.
- The Republican Study Committee’s Budget and Spending Tax Force released its annual alternative budget proposal. The framework includes a permanent extension of the 2017 tax law, reduced spending of $16.6 trillion over the next 10 years, and $3.9 trillion in tax cuts.
- The wheels are falling off the semiconductor/domestic manufacturing bill as Republicans don’t want to appear soft on China or give Democrats a win ahead of midterm elections.
- House Ways and Means Committee ranking member Kevin Brady says conferees are “nowhere close” to agreeing on whether a tax title should be included in the bill. Remember, some Democrats are concerned adding tax provisions to the bill (like 100% R&D expensing or an investment tax credit) would slow down the bill’s progress.
- Sanders introduced the Social Security Expansion Act, which would increase Social Security benefits by $2,400 annually and revise the method of calculating cost-of-living adjustments for the program.
- The increase would be funded by increasing the net investment income tax for certain taxpayers and expanding payroll taxes to all income above $250,000, including wages, salaries, capital gains, and self-employment earnings. Under current law, the maximum amount subject to Social Security payroll tax for 2022 is $147,000 and is only applied to wages, salaries, and self-employment income.
- Sanders' bill has seven Democratic co-sponsors in the Senate and companion legislation introduced in the House of Representatives has 15 Democratic co-sponsors.
In Case You Missed It
- The 10th Circuit Court of Appeals upheld the IRS’ position on abusive micro-captive insurance companies for the first time at the appellate level. The Court held that a taxpayer was not engaged in the insurance business because the company did not adequately distribute risk and the policies issued by the company were not insurance in the commonly accepted sense.
- The IRS announced an increase in the standard mileage rates for the final six months of 2022. Generally, these amounts are updated annually, but due to rising gas prices and inflation, the standard mileage rate for business travel will be 62.5 cents per mile and 22 cents per mile for deductible medical/moving expenses, effective July 1.
- A group of CFOs from major companies signed a letter urging Treasury to modify the new foreign tax credit regulations issued in December.
- The Multistate Tax Commission released a draft model statute to make state tax codes more uniform and potentially boost revenue collections from investment partnerships, including hedge fund, private equity, and venture capital sectors.
- The new cryptocurrency reporting requirements in the infrastructure bill passed by Congress last year are facing a lawsuit in Kentucky, alleging, among other constitutional claims, that the requirements violate the Fourth Amendment’s protection against unreasonable searches.
- The IRS released the final items on its 2022 “Dirty Dozen” scams list. Newly added items include: pandemic-related scams, Offer in Compromise (OIC) "mills" offering to resolve unpaid taxes for pennies on the dollar, suspicious communication attempting identity theft, spear phishing attacks, and bogus tax avoidance strategies, e.g., cryptocurrency, abusive syndicated conservation easements, abusive micro-captive deals, and high-income non-filers.
This newsletter features developing content that is subject to change at any time. It does not constitute legal or tax advice. Consult your professional advisors prior to acting on the information set forth herein.