House Republicans Unveil New Tax Cut Plan

Plus: House hardliners’ blockade may go on for a while ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Good evening. The big news of the day: Former President Donald Trump has been indicted on 37 federal criminal charges related to his retention of classified documents after leaving the White House. It’s the first time a former president has ever been indicted in a criminal case. The [49-page indictment]( against Trump was unsealed Friday and is full of stunning detail. It charges him with willfully retaining national defense information and conspiring with his valet, Walt Nauta, to obstruct justice and conceal his possession of classified documents from the FBI and a federal grand jury. Trump said he is “an innocent man.” He is due to be arraigned Tuesday in Miami. Here’s what else should be on your radar. House Ways and Means Chairman Jason Smith (Reuters) House Republicans Unveil New Tax Cut Plan Fresh off their battle to cut federal spending in exchange for agreeing to raise the debt ceiling, House Republicans on Friday released plans for a new package of tax cuts that would likely reduce revenues by billions of dollars. The three bills included in the American Families and Jobs Act were introduced by Rep. Jason T. Smith, the Missouri Republican who chairs the Ways and Means Committee. Members of the committee [told Roll Call]( that they hope to finish markup of the legislation by the end of next week. What’s in the legislation: One of the bills would revive tax breaks for corporate research and development that were included in the 2017 Republican tax law but allowed to expire last year. Taking aim at some of the environmental provisions in the Inflation Reduction Act that President Joe Biden signed into law last summer, the bill would also limit tax breaks for the purchase of electric cars and revoke some tax credits for investments in clean energy. And it would terminate a new Superfund tax on crude oil, as well as end the ability of the Superfund to borrow from general tax revenues. A second bill would increase the size of the standard tax deduction over the next two years for families that make less than $400,000 per year. Married couples would see a $4,000 “guaranteed deduction bonus,” while single filers would get an extra $2,000. The third bill would repeal a new tax rule that requires taxpayers using services such as Venmo and PayPal to report all transactions worth more than $600. As The Washington Post’s Tony Room [notes]( the implementation of that rule has been delayed by the IRS, but Republicans have been pushing to return the reporting threshold to $20,000. The third bill would also increase the size of tax breaks for small businesses that buy new equipment, allowing an immediate write-off of $2.5 million, and expand the use of “opportunity zone” tax advantages in rural areas. Cutting taxes, cutting revenues: While the three bills have not yet been scored by the Congressional Budget Office, they would likely increase debt and deficits significantly if they were to take effect. Previous CBO scores of similar legislation suggest that the GOP plan would be costly, although much depends on how the changes were implemented and how long the changes lasted, as well as what kind of offsetting changes were made. The Urban-Brookings Tax Policy Center said Friday that restoring full tax breaks for business investments and loan costs would cost about $500 billion over 10 years. While the new Republican plan calls for those changes to last just two years, it’s likely that GOP lawmakers would push for extensions at the next expiration date. At the same time, the Republican bill calls for the repeal of green energy tax breaks, which could offset some of the costs of the proposed tax cuts. “These policies will provide relief for working families, strengthen small businesses, grow jobs, and protect American innovation and competitiveness, Smith said in a statement. Rep. Richard Neal, the top Democrat on the Ways and Means Committee, said the Republican plan follows a well-established pattern of pushing for more tax cuts soon after expressing concerns about the size of the national debt. “It’s Republican clockwork. Not even a week after their manufactured default crisis and it is back to tax cuts for the wealthy and well-connected,” Neal said in a [statement](. “This stoops to a new low even for them: retroactive corporate tax cuts, next-to-nothing for the most vulnerable children and families and sneaking in favors for Big Oil.” Neal also said the proposal is an expression of “failed trickle-down economics,” and warned that there will likely be more proposals along the same lines ahead. “Make no mistake about it, they are laying the groundwork for even bigger cuts in 2025,” he said. What’s next: While the legislation has little chance of making it past the Senate and becoming law in its current state, there’s a chance that some of the provisions could play a role in a tax deal that many lawmakers expect to pursue at the end of the year. House Hardliners’ Blockade May Not Be Resolved for a While The House remains in a holding pattern triggered by 11 hardliners angry over Speaker Kevin McCarthy’s handling of his debt limit negotiations with President Joe Biden — and the deadlock may not be broken for a while. The indictment of former President Donald Trump may add to internal GOP divisions and further complicate the path to a resolution. “A number of House Republicans left Washington on Thursday warning the sides remain so far apart that it might require weeks — maybe longer — to get the House back to working order,” The Hill’s Emily Brooks, Mike Lillis and Mychael Schnell [wrote]( Friday morning. Rep. Brian Fitzpatrick of Pennsylvania, a McCarthy ally and co-chair of the bipartisan Problem Solvers Caucus, indicated that this particular problem could last more than just a few days, suggesting that lawmakers should “give ‘em a few weeks to work it out,” The Hill notes. Some Republicans are reportedly growing frustrated by the hardliners’ tactics, but it’s not clear how the standoff might be resolved or what the enraged 11 might demand to allow legislative action to resume. “My idea is that he broke it, he’s gotta fix it, and that it’s not up to me to come up with a solution,” Rep. Andy Biggs of Arizona, a former head of the Freedom Caucus, told reporters, speaking of McCarthy. “It’s up to him. So I’m waiting to see what he proposes.” Roll Call’s Ryan Tarinelli and Michael Macagnone [note]( that some of the hardliners who revolted against McCarthy are also among Trump’s most prominent defenders and McCarthy will now have to balance concerns about how to move legislation with pressure to respond to the criminal charges against the former president. So far, only Republican messaging bills that can’t pass the Senate have been affected by the standoff, but McCarthy’s leadership position, which initially appeared to have been bolstered by his dealmaking, is once again in question. That uncertainty comes as lawmakers face some major deadlines on September 30, including the need to fund the government for the next fiscal year, pass a farm bill, reauthorize the Federal Aviation Administration and more. Number of the Day: $2.1 Billion The Department of Defense on Friday [announced]( a new military aid package for Ukraine worth $2.1 billion. The U.S. is sending more ammunition for the Patriot air defense system, which has reportedly had considerable success against Russian missile and drone attacks. Ukraine will also receive surface-to-air Hawk missile systems, laser-guided rockets, Puma surveillance drones and 155-millimeter artillery shells. The equipment and munitions will be provided under the terms of the Ukraine Security Assistance Initiative, which allows for the transfer of military products directly from U.S. defense contractors. Quote of the Day “It would be political malpractice to have students repay student loans under Biden when Trump provided the relief. This is not rocket science. The White House must figure out how to make sure there is an extension on the moratorium.” – Rep. Ro Khanna, a progressive Democrat from California, in a [Washington Post article]( detailing efforts by liberal lawmakers to have the Biden administration prepare fallback options to cancel student debt if or when the Supreme Court strikes down President Joe Biden’s existing plan to forgive up to $20,000 in debt for millions of borrowers. --------------------------------------------------------------- Send your feedback to yrosenberg@thefiscaltimes.com. And please encourage your friends to [sign up here]( for their own copy of this newsletter. --------------------------------------------------------------- Fiscal News Roundup - [Trump Indictment Could Further Test House GOP Majority Unity]( – Roll Call - [McCarthy Says Trump Indictment Will ‘Disrupt the Nation’]( – The Hill - [Republicans Buckle Down for What Could Be Marathon Blockade]( – The Hill - [With Debt Debate Finished, House GOP Unveils New Bills to Cut Taxes]( – Washington Post - [On Heels of Debt Fight, House GOP Rolls Out Tax-Cut Package]( – Politico - [Ways and Means GOP Preps Tax Package for Vote Next Week]( – Roll Call - [Liberal Lawmakers Urge White House to Prepare Backup Plan on Student Debt]( – Washington Post - [Dems Unveil Debt Ceiling Reform Act to Prevent Future GOP Hostage-Taking]( – Common Dreams - [Energy Tax Credits, Meant to Help U.S. Suppliers, May Be Hard to Get]( – New York Times - [Warren Calls for More Transparency on Biden Drug Pricing ‘March-In’ Review]( – The Hill - [Saudi Crown Prince Threatened ‘Major’ Economic Pain on U.S. Amid Oil Feud]( – Washington Post Views and Analysis - [In the House, a Spectacular Flameout]( – Dana Milbank, Washington Post - [The Pass-Through Deduction Is Tilted Heavily to the Wealthy, Is Costly, and Should Expire as Scheduled]( – Chuck Marr and Samantha Jacoby, Center on Budget and Policy Priorities - [Expanding Child Tax Credits Provides More Effective Inflation Relief Than A Higher Standard Deduction]( – Elaine Maag, Tax Policy Center - [Money for Nothing: The Qualified Small Business Stock Capital Gains Exclusion Is a Giveaway to Wealthy Investors, Startup Founders, and Their Employees]( – Manoj Viswanathan, Washington Center for Equitable Growth - [The Government Needs to Measure Things. Somehow, That’s Controversial]( – Catherine Rampell, Washington Post - [American Families Deserve Permanent Tax Cuts]( – Reps. Randy Feenstra (R-IA) And Michelle Steel (R-CA), The Hill - [DeSantis Ushers In Our Fake-Images-in-Politics Nightmare]( – Aaron Blake, Washington Post Copyright © 2023 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](