President Obama and Speaker Boehner meet
For the first time since December 2012, President Barack Obama and Speaker of the House John Boehner (R-OH) had a face-to-face meeting this week. The two met for roughly an hour and covered an incredibly long laundry list of items that included: the California drought, the Affordable Care Act, wildfires, manufacturing, the Highway Trust Fund, trade promotion authority, immigration, and Afghanistan.
While observers do not expect the meeting to bear immediate fruit, this event was seen as a thawing in what had been a very frosty relationship between the two men since the breakdown in negotiations over attempts to avoid the so-called "fiscal cliff" at the end of 2012.
Republicans, particularly in the House, have cited a lack of trust in the administration as an impediment to several policy initiatives - most notably on the question of comprehensive tax reform.
With Republicans likely to hold on to the House, if not expand their majority, and with it increasingly possible that Republicans could gain control in the Senate, the ability of the White House and Speaker Boehner to work together in the final two years of the Obama administration will be key to progress on a range of important issues.
Tax reform unveiled
This week, Chairman Dave Camp (R-MI) of the Ways and Means Committee, unveiled his long-awaited plan to reform the tax code. If enacted, Camp estimates the reform would create 1.8 million jobs, increase federal revenue by $700 billion in the next decade and increase economic activity by $3.4 trillion. Here are a few highlights:
Individual marginal rates:
- 10 percent rate for income up to $71,200 for joint filers
- 25 percent rate for income between $71,201 and $450,000 for joint filers
- 35 percent rate for income above $450,001 for joint filers
- Standard $22,000 deduction for joint filers (adjusted for inflation)
- Repeal of the Alternative Minimum Tax
Corporate marginal rates:
- 25 percent flat-rate phased-in by 2019
- Deducts 40 percent of the capital gain or dividend and remaining 60 percent is taxed as marginal rate of income.
Deductions and credits affecting you or your business:
- Increases child tax credit to $1500 per child
- Reduces mortgage interest deduction limit from $1 million to $500,000 of interest indebtedness
- Repeals deduction for a family’s out-of-pocket medical expenses
- Revises accelerated cost recovery tables for depreciable capital assets
- Repeals the medical device tax for sales after the date of enactment
- Repeals the inflation adjustment for the renewable energy production tax credits (PTC) for electricity and refined coal produced or sold after 2014. The credit would revert back to 1.5 cents per kilowatt-hour for the remainder of the 10 year period, and the entire PTC would be repealed for electricity or refined coal sold after 2024.
- Repeals expensing of the cost of any qualified property used for processing liquid fuel from crude oil or qualified fuels prior to 2014. The remaining cost would be recovered under normal depreciation rules.
- Provides $126.5 billion for the Highway Trust Fund through a one-time tax on accumulated foreign earnings that the taxpayer has the option to pay over an eight-year period.
- Considers interest on private activity bonds (PABs) issued after 2014 as taxable income.
- Imposes a 0.035 percent excise tax on financial institutions with more than $500 billion in assets.
- Requires private businesses with more than $10 million revenue to use accrual accounting, with some exceptions.
Click here to view the Washington Business Brief, Tax Reform Unveiled
Prospects for tax reform dim - Attention on extenders
The prospects for Rep. Camp's comprehensive tax reform legislation are dim to say the least - at least in this Congress. Before the bill was even dropped,Senate Minority Leader Mitch McConnell (R-KY) announced that comprehensive tax reform was dead in the Senate. Speaker of the House John Boehner's (R-OH) reaction to the Camp legislation can be described as lukewarm at best.
With the prospects for comprehensive tax reform incredibly slim this year, attention will soon be turning to the question of extenders.
The term “tax extenders” refers to the collection of temporary tax provisions that are regularly extended by Congress, typically for one or two years at a time. Tax extenders encompass a wide range of provisions and are diverse in purpose. The more than 50 temporary tax provisions that expired in 2013, included provisions impacting individuals, businesses, the charitable sector, energy, community assistance, and disaster relief.
Since the beginning of the 113th Congress, Chairman Camp has been reluctant to consider tax extenders outside of the broader context of tax reform. Ways and Means members and House leadership have been respectful of the Chairman’s position, and despite the popularity of many of the extenders, these provisions were allowed to expire on Dec. 31, 2013 with almost no opposition.
The discussion draft released by Camp did not include a package of tax extenders. If these temporary tax provisions were permanently extended, the Congressional Budget Office (CBO) estimates say it would lower the revenue baseline for this proposal by $1 trillion over a 10-year period. However, the Committee recognizes the likelihood that some of the expired temporary tax provisions will be extended, and Ways and Means has indicated its interest in receiving feedback on which extenders should be included to determine if the package is deficit neutral.
If Camp is unable to sell his tax overhaul proposal to House Republicans in the lead-up to the November elections, senior GOP sources believe Congress will revive discussion on retroactively renewing the tax extenders that failed to be renewed last year.
Newly minted Senate Finance Committee Chair Ron Wyden (D-OR) had previously indicated that tax extenders would be the top priority for his committee this year.
House democrats file discharge petition on minimum wage
This week, House Democrats filed a discharge petition in hopes of bringing legislation to the floor that would raise the federal minimum wage to $10.10 an hour. The move is a parliamentary procedure that would allow Democrats to bring the bill to the floor without the support of the leadership of the majority party in the House.
The discharge petition requires 218 signatures to be successful, which would mean Democrats would need the signatures of all 200 of their members and an additional 18 Republicans. Only 12 bills since 1967 have come to the floor as a result of a discharge petition. It is highly unlikely that the minimum wage bill will become the 13th bill to do so because even Republicans who support an increase in the federal minimum wage are incredibly unlikely to sign the discharge petition.
In the Senate, Majority Leader Harry Reid (D-NV) announced he would not hold a vote on the minimum wage legislation until the Senate returns from their next recess on March 24th - a tacit admission that Democrats continue to lack the votes to pass the bill.
Updated energy efficiency bill introduced
On Thursday, Senator Jeanne Shaheen (D-NH) and Senator Rob Portman (R-OH) introduced an updated version of the energy efficiency bill. The Energy Savings and Industrial Competitiveness Act is designed to cut energy waste in buildings, industry, and the federal government while saving billions of taxpayer dollars, creating tens of thousands of jobs, and cutting carbon pollution.
According to the sponsors, the newest version is estimated to create as many as 190,000 jobs, saving $16 billion annually and avoiding emissions equivalent to taking 22 million cars off the road.
Transportation in focus
President Obama seeks $302 billion transportation bill
In St. Paul, MN this week, President Barack Obama announced he was seeking a $302 billion, 4-year transportation bill. While the Obama administration had previously said they hoped to direct $150 billion for infrastructure from corporate tax reform, the White House was silent on how they propose paying for the $302 billion bill.
Camp tax proposal includes funds for HTF
The comprehensive tax reform package unveiled this week by House Ways and Means Committee Chair Dave Camp (R-MI) includes $126.5 billion for the Highway Trust Fund. That $126.5 billion, which could be used as an incentive to draw Democrats to the table on the bill, could help keep the Trust Fund solvent until 2021.
The money would be raised through a new two-tier tax on repatriated funds that is included in the Camp legislation. In addition to the Highway Trust Fund monies, the Camp bill also ends tax breaks for cruise ship companies, boosts an inland waterways user fee and hikes interest rates for municipal bonds.
Boxer still favors longer transportation bill
While President Obama announced his support for a $302 billion transportation bill over four years, Senate Environment and Public Works Chair Barbara Boxer (D-CA) continues to insist she will mark up a longer bill. Senator Boxer said this week that her committee intends to mark up a five or six year bill in April and that her bill will keep funding levels with small increases for inflation.
Boxer warned those who support an increase in the gas tax that there is little chance such a move could happen in this environment and cast herself as a "pragmatist" on the bill who is focused on getting something passed, not engaging in "ideological squabbles."
General funds transfer to save the HTF? Boehner says no
After meeting with President Obama this week, Speaker of the House John Boehner was asked about his conversation with the President in regards to the transportation bill. Boehner said, "We've got a funding mechanism to fund our infrastructure needs. The hunt has been underway for the last year and a half to find that funding source. I wish I could report to you that we've found it, but we haven't." When Boehner was pressed on the possibility of a general funds transfer to save the Highway Trust Fund, Boehner replied, "I just don't think members will accept that."
Colorado: Rep. Cory Gardner (R-CO) announced he would run for Senate in November. Weld County DA Ken Buck (R-CO) and state Rep. Amy Stephens end their candidacies and endorsed Gardner. State Sen. Owen Hill plans to remain in the GOP primary race.
Tuesday, March 4 – The House Education and the Workforce Committee will hold a hearing on Raising the Bar: The Role of Charter Schools in K-12 Education at 10:00 a.m. in 2175 Rayburn.
Tuesday, March 4 – The Senate Banking, Housing, and Urban Affairs Committee will hold a hearing on the nominations of Stanley Fischer to be a member and vice chairman of the Federal Reserve Board of Governors; and Jerome Powell and Lael Brainard to be members of the Federal Reserve Board of Governors at 10:00 a.m. in 538 Dirksen.
41 - The percentage of Republicans polled who don’t want New Jersey Gov. Chris Christie to run for president.
They said what?
"I told the president, next game I have him. Just remember, I may be a white boy, but I can jump." -- Vice President Joe Biden, on playing basketball with President Obama (CNN)
“If the doctors told Sen. McConnell he had a kidney stone, he would refuse to pass it.” - Kentucky Secretary of State Alison Grimes (D-KY) on her Republican opponent Senate Minority Leader Mitch McConnell (R-KY).
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