The committees will probably offer a series of options for lawmakers to consider when they return after the August recess. The Senate is scheduled to return Sept. 13. After a brief session starting Monday, the House will be back in session starting Sept. 20.
Van Hollen said that some changes that Biden has proposed—including corporate tax hikes and funding for the Internal Revenue Service to enhance its ability to go after tax cheats—are likely to have strong support. Other changes, including increases to capital gains rates and rule changes that would tax assets at the time they are passed on to heirs—rather than when they are sold—have faced pushback within the caucus.
A senior White House official said the president’s tax agenda is playing a prominent role. The White House has been part of discussions on proposals including ending step-up in basis—the change to the IRS code that would tax assets of wealthy individuals before they are passed onto heirs-- and greater funding for IRS enforcement. The White House will continue to meet with lawmakers during the process, the official said.
Wyden is looking to put his own mark on the tax bill with several ideas that he’s developed beyond White House proposals. His committee approved an energy tax credit plan this year, and the Oregon Democrat has released plans in recent weeks for a comprehensive rollback of tax breaks for private equity fund managers and another for annual taxes on derivatives. He plans to release an updated proposal to overhaul the international tax system next week.
The constitution requires that tax legislation start in the House, and Neal, a Massachusetts Democrat, is working on his own package.
“We intend to have our own version, with our priorities,” Neal said in an interview. “We assume through strong conversations with the administration and with Chairman Wyden that we can reach an agreement.”
A final bill is likely to look closer to the product written in the Senate, given the narrower Democratic control in that chamber and the crucial talks that will loom between moderates like Sinema and Manchin and progressives including Wyden and Senate Budget Committee Chair Bernie Sanders.
One more niggle for the committees is figuring out how to expand the state and local tax, or SALT, deduction, which is specifically outlined in the budget resolution as an area to address. Eleven Democrats on the Ways and Means Committee have highlighted that expanding the $10,000 cap set by Republicans in 2017 is a priority for them.
With control of Congress at stake in next year’s midterm elections, the pressure on lawmakers is high to hash out a deal before the opportunity is lost.
“I am optimistic about Congress about passing the Biden agenda, more or less,” said Steve Wamhoff, the director of federal tax policy at the Institute on Taxation and Economic Policy and a former aide to Sanders. “A bunch of compromises will be made at the last minute—because that’s how these things work.”
—With assistance from Nancy Cook and Sophia Cai.
This article was provided by Bloomberg News.