The IRS recently proposed regulations that clarify it will not “clawback” gifts made under the temporarily increased estate and gift tax exemption levels in the Tax Cuts and Jobs Act (TCJA) should those levels be decreased in the future. AALU has been following this regulation and will be providing comments to the IRS, in addition to providing you with additional information and analysis on the proposal.
On Monday, Ways & Means Chairman Kevin Brady (R-TX) introduced a wide-ranging tax bill, titled the Retirement, Savings, and Other Tax Relief Act of 2018 (H.R. 88), that includes positive reforms to federal retirement policy, IRS reforms, tax extenders, and five technical corrections for last year’s Tax Cuts and Jobs Act (TCJA).
The retirement section contains several important provisions that AALU supports from the Retirement Enhancement and Savings Act (RESA) and the Family Savings Act. Notably, provisions that reduce barriers to forming multiple employer plans, annuity safe harbors for plan sponsors, and a repeal of the maximum age for IRA contributions.
Enactment before the end of the 115th Congress is complicated by the debate over government funding and the border wall, a plethora of other legislative imperatives (ranging from flood insurance to the farm bill), as well as Democratic objections to helping solve errors created by the TCJA when they were excluded from its development in the first place.
Senate Finance Chairman Orrin Hatch (R-UT) said in an interview this week that the Senate will try and improve the House draft. Incoming Senate Finance Chairman Chuck Grassley (R-IA) suggested that there were tax extenders and some technical corrections that Democrats could get behind.
Nancy Pelosi (D-CA) won the Democrats’s nomination for Speaker of the House in the 116th Congress on Wednesday by a vote of 203-32. While there was much reported on certain House Democrats forming an opposition to her campaign for Speaker, her vote total far surpassed her total for 2016, when she beat out Rep. Tim Ryan (D-OH) for minority leader. Despite the intra-party dissent, Pelosi and her allies remain confident that she will secure the 218 votes necessary to become Speaker. She will need to turn fifteen more votes in order to secure the post in a full House vote on January 3rd.
As Republicans released their plan for a lame-duck tax package, there were plenty of complaints from their colleagues across the aisle. They likened the manner of delivery to last year’s TCJA, saying they did not know what was in it until it was reported on by the media. Democrats will look to delay a debate over technical corrections for the new tax law until they control the House and have more leverage. Sen. Sherrod Brown (D-OH) demanded that any legislation include language addressing General Motors’ decision to lay off thousands of workers following its tax savings under the new regime. And Sen. Ben Cardin (D-MD) questioned how such a large bill gets done in such a short period of time, especially with other priorities likely to take precedence.
Despite Republicans’ desire to see quick movement on their new tax bill, its progress was held up this week following a Joint Committee on Taxation and Congressional Budget Office prediction that the retirement plan provisions included in the draft would add about $53 billion to the federal budget deficit over a 10-year period. The high cost could complicate the process, especially while Congress negotiates a spending package to fund the government. Democratic opposition represents another road block. During a House Rules Committee meeting on Wednesday, some Democrats complained that Republicans had not looked for their input when drafting the new tax package, a complaint that mirrored ones from the TCJA process.
With less than two weeks until the current continuing resolution on government funding runs out, President Trump told reporters this week that he would be willing to shut down the government if he does not get funding for his Southern border wall. While Senate Minority Leader Chuck Schumer (D-NY) said Democrats would approve of $1.6 billion in funding for the wall, the President said that his request for $5 billion would only cover the physical border, and that the number for overall border security is larger. He also signaled he would not look to strike a deal over immigration, instead waiting for court challenges on the Deferred Action for Childhood Arrivals (DACA) program to wrap up.
President Trump suggested that he could find another path to securing his Southern border wall if Congress does not fund his campaign promise. He spoke of more military action combined with less permanent barriers like barbed wire and fencing. House Majority Leader Kevin McCarthy (R-CA) attended a meeting with President Trump and told reporters that the President was “very solid with where he wants to go” on funding for the wall.
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