When the new Congress convenes in January with Democrats in charge of the House for the first time in eight years and Republicans retaining control of the Senate, there will be some show of bipartisanship and possibly some legislative action but no new, dramatic changes in tax policy.
That was the takeaway from a roundtable of Republican and Democratic tax policy experts with experience in either the Treasury Department or Congress, sponsored by the Urban-Brookings Tax Policy Center on Thursday.
The future direction of tax policy is “especially murky,” said Mark Mazur, former assistant secretary of tax policy at the Treasury during the Obama administration, now the Robert C. Pozen director at the Tax Policy Center.
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In addition to a divided Congress, tax legislation will be hampered by the growing federal deficit — federal revenues are expected to fall while spending rises — slowing economic growth that will eventually devolve into recession and a wildcard president unlike any other. “The “future ain’t what it used to be,” said Mazur quoting Yogi Berra.
Under the Trump White House and its “inconsistent policy positions… it’s hard to scope out the possibilities for legislative deals,” said Mazur. “There will be a lot of drama in the next two years. There will be a few legislative achievements but largely in areas outside of taxes,” such as criminal justice reform and minimum wage, said Mazur.
Still a bipartisan panel at the Brookings roundtable suggested possible bipartisan cooperation on some items included in the House Republican year-end tax bill sponsored by House Ways & Means Chairman Kevin Brady (R-Texas), primarily tax extenders, though not necessarily before year-end.
The bill includes such items as extending the tax credit for electric cars as well as deductions for mortgage insurance premiums — available to taxpayers who itemize — and for college tuition and related costs, available even for taxpayers who don’t itemize.
The panel was less confident about passage of the retirement savings items in the Brady bill, including provisions for pooled employer plans and the repeal of the maximum age limit for traditional IRA contributions.