Transportation legislation has emerged as a top priority for the taxwriting committees as they continue to stall on fixing errors in the Tax Cuts and Jobs Act and advise patience when it comes to a stimulus package to counter the coronavirus.
Because legislation is more difficult to pass in an election year, “we have a front-loaded schedule,” said Andrew Grossman, Democratic tax aide for the House Ways and Means Committee.
Speaking at a March 6 Federal Bar Association conference in Washington, Grossman identified several priorities for Ways and Means Chair Richard E. Neal, D-Mass., including retirement legislation targeting automatic IRA enrollment and a comprehensive infrastructure package.
Those items are also on the list for Senate Finance Committee Chair Chuck Grassley, R-Iowa, according to his tax aide, Mark Warren. But key differences between the two lawmakers exist when it comes to infrastructure.
While Warren said Republicans are interested in funding surface transportation like highways and bridges, Grossman said Democrats want something nontraditional that would include addressing low-income housing.
Grossman also said Democrats might be willing to pursue an increase in the gas tax to partially fund an infrastructure package. Politicians have traditionally been hesitant to increase gas taxes, but Grossman said it can be “politically palatable” and that it shouldn’t be off the table.
Finance Committee Democratic tax aide Tiffany Smith agreed that the transportation package envisioned by Democrats would be wide-ranging and would also include broadband expansion.
Impasse Continues
Although both parties agree that fixing errors in the tax code remains important for businesses, Democrats continue to insist that any TCJA technical corrections be accompanied by the expansion of refundable credits such as the earned income tax credit and the child tax credit. Grossman said that “Democratic priorities should be reflected” if they clean up the 2017 tax law.
Democrats and Republicans were unable to strike a deal at the end of 2019 on expanding refundable credits, despite both sides agreeing that fixing the retail glitch to allow for a quicker write-off period for qualified property improvements is a priority. But the parties continue to work together to find a solution, according to Warren.
Making matters harder, Democrats would also like to include green energy incentives as part of the package, Smith said.
Wait and See on Stimulus Package
There is no immediate need for a tax package to counter the economic effects of the spread of COVID-19, the panel members agreed.
“We really need to figure out what policy goal we’re trying to achieve with any kind of tax package and whether or not a tax package is the appropriate tool to achieve that policy goal,” Grossman said, suggesting that a cut in the payroll tax — suggested by President Trump — may not be necessary.
Warren agreed, saying that lawmakers don’t yet know enough about what needs to be done to help businesses and individuals. “We need to know what the scope is; we need to know more what the impact is going to be,” Warren said, likening the situation to occasional natural disasters throughout the country.