Senate Dems Weigh Advancing New Taxes Without Panel Vote

Senate Dems Weigh Advancing New Taxes Without Panel Vote

Senate Democrats are considering moving some tax proposals in their $3.5 trillion reconciliation bill without a formal markup by the Finance Committee as they try to rally support from undecided centrists for new levies aimed at corporations and wealthy individuals.

Several senior Democrats said the Senate's reconciliation tax package would be developed in intraparty talks, possibly without a formal markup of some tax-related proposals by the Finance Committee. While the House prepares to try to advance the reconciliation bill and considers add-ons to the tax package approved by the Ways and Means Committee, they said senators would lay the groundwork to amend the bill when it comes over to the Senate.

Sens. Debbie Stabenow, D-Mich., and Ben Cardin, D-Md., senior members of the Finance Committee, said they did not expect the panel to mark up a full-fledged response to the reconciliation tax package passed by the Ways and Means Committee last week. They said Finance Committee members would try to promote tax proposals in talks behind the scenes.

Stabenow, the chair of the Democratic Policy and Communications Committee, told Law360 that Senate tax measures could be developed in a streamlined process without a formal vote on an overall tax package by the Finance Committee.

"We're not going to have a markup because none of the Republicans have said they would even entertain supporting it," she said.

Instead of scheduling a markup for a fully developed version of the reconciliation tax package, Cardin said Democrats could focus on continuing to develop a broad package that can pass the evenly divided Senate with the support of all 50 members of the Democratic caucus. Vice President Kamala Harris would have the tie-breaking vote.

Cardin told Law360 there was "an open process among the Democrats" on the Finance Committee to develop a reconciliation tax package in private negotiations. For some of these proposals, he said, "we are not going to be doing committee markups."

If the House and Senate pass different versions of the tax hikes aimed at corporations and the wealthy, Cardin predicted a compromise would be worked out in a final round of informal bicameral negotiations. He said Democrats probably would opt against a formal conference committee because it would be difficult for Senate negotiators, who would be drawn equally from both parties, to resolve disputed issues with the House.

"We don't have Republicans participating with us, and don't have the numbers. So I don't think we will have a conference committee," Cardin said.

Finance Committee Chair Ron Wyden, D-Ore., made clear that he was still weighing the possibility of more committee proceedings, including sessions to mark up parts of the reconciliation bill.

"We are looking at the schedule," Wyden told Law360.

In May, his panel approved a clean energy tax package that could become part of the reconciliation bill, but it has yet to schedule markups for other tax proposals expected to move in the legislation.

Whatever happens, Wyden said he hoped proposals developed by his panel over the last seven months could move in the Senate's version of the reconciliation bill, including the clean energy package and an international tax framework.

"We have a big chunk of the programs and the pay-fors," Wyden told Law360.

Senate Democrats have backed family incentives similar to those in the House reconciliation tax package, which included a four-year patch for the one-year expanded child tax credit contained in the American Rescue Plan Act.The House bill also would extend permanently the incentive's refundability and expanded one-year versions of the child and dependent care credit and earned income tax credit for workers without qualifying children.

But Senate Democrats have not given the green light to some new tax hikes in the House package. The bill includes a 26.5% corporate rate, a 25% top capital gains rate and a plan to allow the expanded $11.7 million exemption cap for the estate tax to expire at the end of the year, four years earlier than scheduled under the 2017 Tax Cuts and Jobs Act .

Democrats in both chambers also have focused on developing a plan to ease the temporary $10,000 cap on state and local tax deductions, expiring at the end of 2025. Such a measure could be combined with as-yet unspecified revenue-raising offsets in a bid to entice support from uncommitted lawmakers for the reconciliation bill.

For their part, Senate Republicans have looked for ways to slow down the reconciliation bill and have argued tax hikes would undercut economic growth as families and businesses continue to deal with the COVID-19 pandemic. COVID-19 is the respiratory ailment caused by the coronavirus.

They have criticized the idea of moving a reconciliation tax package without a Finance Committee markup of a broad range of provisions.

Sen. Mike Crapo, R-Idaho, said the lack of a Finance Committee markup for a full reconciliation tax package could erode the panel's traditional clout over tax legislation.

"It undercuts the authority and the value of the committee," Crapo told Law360.

Sen. Chuck Grassley, R-Iowa, former Finance Committee chair, said he was concerned the 14 Republicans on the committee might not have a chance to offer amendments to key parts of the reconciliation tax package unless they are brought before the panel for a markup.

"If you just write off 14 Republicans, it doesn't show a lot of respect," Grassley said.

As Republicans continue to raise objections, Democratic leaders and President Joe Biden's administration have tried to help clear the way for reconciliation tax packages in both chambers.

In a bid to nudge the process forward, Biden held separate meetings last week with a pair of undecided centrists: Sens. Joe Manchin, D-W.Va., and Kyrsten Sinema, D-Ariz. Both senators have opposed a $3.5 trillion reconciliation bill and raised concerns about tax hikes aimed at corporations and wealthy individuals.

Sen. Chris Coons, D-Del., a Biden ally, said he expected the president to stay in the background, for now, holding private talks with lawmakers rather than offering his own version of the reconciliation bill.

"He's going to be quite interactive and engaged. But he's also going to let the Senate come to its own conclusions," Coons told Law360.

While Democrats in both chambers prepare for floor votes, Ways and Means Committee Chair Richard Neal, D-Mass., said he was continuing to have chats with Wyden to discuss the reconciliation tax package. But Neal said the onus for working out the details of a final bicameral deal probably would fall to three key people.

"It's the president and the speaker and the majority leader of the Senate," Neal told Law360.

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Senate Dems Weigh Advancing New Taxes Without Panel Vote Democrats are considering moving some tax proposals, aimed at corporations and wealthy individuals​, in their $3.5 trillion reconciliation bill without a formal markup by the Finance Committee.2021-09-21T17:00:00-05:00

Senate Democrats are considering moving some tax proposals, aimed at corporations and wealthy individuals, in their $3.5 trillion reconciliation bill without a formal markup by the Finance Committee.

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