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Tax provisions unlikely in omnibus, Senate GOP leader says

BY: BRIAN FALER | 12/13/2022 12:43 PM EST | UPDATED 12/13/2022 03:23 PM EST

The Senate’s No. 2 Republican said Tuesday that he doesn’t expect lawmakers to include any tax provisions in a must-pass spending bill lawmakers hope to move before quitting for the year.

That would dash the hopes of Democrats still trying to squeeze through at least a piecemeal expansion of the Child Tax Credit.

It would also mean those pushing a number of other provisions dealing with corporate taxes, the gig economy and retirement may have to wait until next year — when negotiations will only become harder once Republicans take control of the House.

“I don’t see it now — I’m certainly not getting good vibes on a tax title,” said Senate Minority Whip John Thune (R-S.D.).

“There’s a lot of expiring tax policy that needs to be extended, and which enjoys bipartisan support, but as is usually the case, there is a ransom to be paid when it comes to tax policy and the price [demanded by Democrats] may be too high.”

“As of right now, I don’t see it, but it’s Christmas season, and anything can happen.”

Democrats have been hoping to trade at least a partial expansion of the Child Tax Credit in return for undoing new rules making it harder for big companies to write off their research and interest expenses.

But Senate Republican leader Mitch McConnell (R-Ky.) has balked at any expansion of the child credit, and Republicans protest that the research provision is broadly supported by lawmakers in both parties.

At the same time, some lawmakers are still hoping to move a package of retirement tax incentives as well as legislation undoing new tax reporting requirements that kick in next month on people working in the gig economy.

Lawmakers are now trying to wrap up an agreement on a sweeping omnibus spending bill needed to keep federal agencies open.

Told of Thune’s comments, Senate Finance Chair Ron Wyden (D-Ore.) said: “I’m going to fight like hell until they turn the lights out for the year to get both” an expansion of the child credit and the research deduction.

The prospects for action don’t look any better next year, when Republicans will hold a thin majority in the House and the 2024 presidential campaign will begin to loom large.

Democrats have hoped the business community’s unhappiness with new tax increases triggered by the Tax Cuts and Jobs Act would bring Republicans to the table.

Beginning this year, companies get less generous writeoffs for research and development expenses and for interest expenses on their loans. Next year, they’ll get smaller deductions for buying machinery and other property. Republicans included those provisions in their 2017 law — though with delayed start dates — because they raised money, which helped to defray the budgetary cost of their tax cuts.

For months, Democrats said they wanted to exchange dealing with those issues for reviving their monthly child credit payment program from last year. More recently, some Democrats said they’d be willing to accept a more modest expansion of the break.

“We’re not giving up,” said Sen. Sherrod Brown (D-Ohio). “I want to do R&D, but I want to do child tax — we’ve got to have both.”

That has been too much for Republicans, who called many Democrats’ insistence on eliminating work requirements associated with the break a nonstarter. Also, the degree to which the credit has become identified with Democrats, thanks to last year’s monthly payment program, has become another obstacle for some Republicans.

“At this point, we’re at an impasse,” said Sen. Mike Crapo, the ranking Republican on the Finance Committee. “We haven’t made much progress.”

The child credit is “one of the biggest sticking points” but “there really hasn’t been an agreement on anything,” he said.

That dispute threatens action on other tax items.

Some lawmakers are hoping to roll over a rump group of temporary tax provisions known as the “extenders.” Others want to turn off a provision included in Democrats’ coronavirus stimulus package last year that will begin requiring, starting in January, that Etsy, Airbnb, DoorDash and other pillars of the gig economy tell the IRS a lot more about how much money individual Americans are making through their platforms, something projected to bring in billions in new revenue.

Crapo still wants to approve a package of miscellaneous retirement incentives, even if they don’t deal with the other provisions.

“Definitely,” he said.

“That is one which we are pushing as aggressively as we can.”

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