January-February 2019

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A s much as the invigorated House Democratic majority wants to roll back Republicans' signature legislative achievement of the past two years, it will likely be a rough road. The new top tax writer in the House, Ways and Means Committee Democrat Chairman Richard Neal, has pledged to make the tax law—which passed in December 2017 with no Democratic votes—a figure in hearings throughout the year. But Senate Finance Committee Chairman Chuck Grassley isn't interested in making concessions. When asked the week of January 7th if he was open to revisiting the tax law, Grassley only mentioned advancing technical corrections for any drafting errors. "But if he's talking about making changes like raising tax rates, absolutely no," Grassley said of negotiating with Neal during a pen-and-pad meeting with reporters. The pent-up enthusiasm to repeal reductions to the corporate tax rate and to taxes for top earners is already showing as lawmakers roll out their agendas for the 116th Congress. Many have heard of Congresswoman Alexandria Ocasio-Cortez's comments on 60 Minutes talking about a 70% tax rate on the wealthy. But there's little chance of major changes to the tax law until Democrats control both Congress and the White House, which wouldn't come any sooner than 2021. House Appropriations Committee Chairwoman Nita Lowey and Republican Rep. Peter King, both from New York, reintroduced a bill last week that would lift the $10,000 cap on the state-and-local-tax deduction, which has drawn the ire of Democrats and Republicans alike in high-tax districts. King was one of the handful of Republican House members to vote against the tax bill, because of the SALT (state and local tax) provision. But it's unlikely there will be much progress on the bill. "I think it's going to be very difficult to undo now that's it's in place," said William Gale, the codirector of the Urban-Brookings Tax Policy Center, of the deduction cap. "And the reason is that the direct benefits—and I emphasize the direct benefits—go to high-income households." That's a fight that many Republicans may be eager to have, said Rohit Kumar, a principal at PwC and a former aide to Senate Majority Leader Mitch McConnell. Kumar recalled the Democratic opposition to the first round of the George W. Bush tax cuts in 2001. "I think, frankly, Republicans are salivating at the prospect of Democrats doing this because they've got—if you go back to 2001—18 years of Democratic rhetoric about tax cuts for the rich that they will wield like a cudgel against Democrats the moment they regard pursuing politics to raise the SALT cap," Kumar said. House Democrats approved their new rules package Jan. 3, which includes the Pay Go provision requiring that all tax cuts or other Policy at Play Taxes and the Road Ahead Guest Writer, Casey Wooten of the National Journal and Patrick Atagi, NWPCA 10 PalletCentral • January-February 2019 CAPITOL HILL CORNER

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