The House and Senate tax-writing committees are both set to lose veteran lawmakers in the next Congress, changing the dynamic on the panels as they gear up for a major fight next year over the fate of the expiring provisions of the Tax Cuts and Jobs Act.
Fifty-three members of Congress have announced they won’t seek reelection in November, eight of them in the Senate and 45 in the House, according to the website Ballotpedia, which tracks state, local and federal ballots and elections. Those planned departures, due to members retiring or seeking other public offices, are in addition to several members who have died or left office early.
The powerful House Ways and Means Committee, which has jurisdiction over all tax legislation debated by Congress, will have lost six of its 42 members by January: Reps. Dan Kildee, D-Mich., Brian Higgins, D-N.Y., Earl Blumenauer, D-Ore., Bill Pascrell, D-N.J., Drew Ferguson, R-Ga., and Brad Wenstrup, R-Ohio.
In the Senate, four senior Democrats are departing from the powerful Finance Committee: Sens. Debbie Stabenow of Michigan, Ben Cardin of Maryland, Tom Carper or Delaware and Robert Menendez of New Jersey.
Rochelle Hodes, a principal in Crowe LLP‘s national tax office, said the departures from Congress of several lawmakers who have been longtime drivers of tax policy could have an impact on the issues they championed. However, next year, the pending expiration of the TCJA provisions will take center stage in the tax policy arena.
“It will change the dynamic, but it won’t shift the larger tax conversation on the table,” Hodes told Law360. “Maybe we’re not as certain about how those tax policies will be perceived by certain members of Congress, but I still believe there will be strong opinions and committee stances on both sides of the aisle, even from those who are new to tax-writing.”
While the makeup of the committees may shift, the overarching tax policy debates around the expiration of the 2017 GOP tax overhaul law are likely to continue apace, with new members stepping into new roles and bringing fresh perspectives on core concerns surrounding tax changes, such as fairness, efficiency and revenue generation.
The interplay of tax provisions in the Inflation Reduction Act and the Infrastructure Investment and Jobs Act with the approaching expiration of the TCJA provisions in 2025 already has shaped strategic decisions on whether to pursue tax legislation on Capitol Hill this year. Lawmakers have been weighing the potential costs and benefits of acting now versus waiting for a more favorable political alignment following the November elections, which could enhance their bargaining power in future negotiations.
Hodes said some members might be thinking, “Why would I take revenue items or negotiating chips off the table?” or “My party is going to win a clean sweep, and I will have more leverage to get a bill much more aligned with my priorities.”
Since GOP lawmakers passed the TCJA in 2017 using strict budget reconciliation rules that limited the amount of deficit-financed tax cuts, many of the code’s provisions affecting individual taxpayers will expire at the end of next year. These changes, which are due to revert and increase tax liabilities for many Americans, are sometimes called a “TCJA cliff.”
The expiring provisions include a higher standard deduction, elimination of personal exemptions, lower marginal income tax rates as well as a $10,000 cap on the state and local tax deduction. Additional TCJA changes due to expire at the end of 2025 include a higher child tax credit, a deduction for small businesses, increased exemptions from the alternative minimum tax and a doubled estate tax exemption.
The next Congress will be without Pascrell and Menendez, two of the most dedicated opponents of the SALT deduction cap. Pascrell, who died in August, authored legislation to eliminate the cap, saying the provision created a heavy burden for middle-class families and for public services that had depended on the amounts received before the cap was in place. Menendez and Sen. Bernie Sanders, I-Vt., unsuccessfully tried to permanently eliminate the SALT cap for taxpayers earning $400,000 or less, offset by higher taxes on wealthy businesses and individuals. Menendez resignedeffective Aug. 20 after a New York federal jury found him guilty on 16 corruption charges in July.
Even though SALT repeal and other complex tax issues are losing their chief legislative sponsors, one under-appreciated impact of the turnover in Congress comes from the loss of veteran tax staffers, who must find new places of employment once their members leave office. Although the lawmakers championed the issues, the staffers do much of the work of developing policies and finding workable solutions to present to their lawmakers, said one former staff member, who asked to remain anonymous while looking for new employment.
Funding for the Internal Revenue Service, which increased under the Inflation Reduction Act, could also be on the chopping block as a result of the upcoming November elections and the possibility that leadership in Congress and the White House changes hands.
