November 13, 2018

Election Impacts on the Tax Writing Committees and Their Lame Duck Agendas

Casie Daugherty, Keith Smith

This election saw almost half of the Republicans currently serving on the Ways and Means Committee leave in one way or another. By our count, 10 Republicans and 2 Democrats on the Committee announced their retirements or were defeated, with Republican Reps. Roskam (IL), Paulsen (MN), Curbelo (FL), and Bishop (MI) losing to their Democratic opponents last week and Rep. Joseph Crowley (NY) losing his Democratic primary earlier in the cycle.

As Democrats currently have at least 228 in the House next year, and currently lead in four additional races, the breakdown of majority-to-minority slots on the Committee is likely to be the same or very close to the current make-up – Democrats will have around 24 seats and Republicans will have around 16. Thus, there are not enough Republican members left to fill all the seats in the minority on the Committee next Congress. We will likely see at least a dozen new members, collectively, on the Committee come January.

On the other side of the capitol, the Senate Finance Committee will lose as many as three members, possibly four, depending on the outcome of the Senate recount in Florida. Most importantly, the Committee will have a new Chairman next year, as a result of the retirement of Sen. Orrin Hatch (UT). Sen. Chuck Grassley, who has previously served as Chairman of the Committee and maintains a year and a half of eligibility to return to that position, has indicated that his decision to lead SFC in the 116th Congress or remain as Chairman of the Judiciary Committee will come next week. If he chooses to remain at the helm of Judiciary, Sen. Michael Crapo (ID) would become Chairman.

But before the eulogy can be read, there is work to do in the lame duck session. It is unclear at this moment how many tax agenda items will be promoted, but there is a collection of tax extenders and retirement enhancements, including the Tax Reform 2.0 package that the House approved before Congress left for the November elections that could be offered in the coming weeks. Some of these have bipartisan support. Additionally, there is the new middle class tax cut that received some attention when the President floated it before the election, but Chairman Brady said today such action was contingent on the Republicans holding both chambers, which they failed to do. We also expect that a tax technical corrections bill will be discussed and/or offered, but it is unclear if there is any momentum for such action.

We believe that Republican leadership will probably play a major role in deciding which measures are worth the effort and can be negotiated with the Democrats. Senator Schumer is likely to be asked to protect the interests of House Democrats during this period before the Democrats assume control in January. Ultimately, we continue to believe that any tax proposal that loses significant amounts of revenue will be the most difficult to pass.

Finally, please watch for Prime’s 116th Congress Outlook reports starting the week after Thanksgiving, featuring policy-area specific looks at what the priorities in the House and Senate will be next year. We expect to release the Tax Outlook on December 11.

Keith Smith

Keith brings over 30 years of public affairs experience to Prime Policy Group. Managing the firm’s tax lobbying practice, he assists some of the largest multinational companies and some of the smallest business in the United States with their tax concerns before Congress and regulators, in addition to working on international trade issues.

Casie Daugherty

Casie helps to lead the firm’s trade practice, where she covers client needs in relation to NAFTA, tariff action, CFIUS, and other trade-related actions. She also works on tax, state and local, and energy issues.