2025’s Potential Tax Writers
As the dust settles on the 2024 election, several members on the Senate Finance Committee and the House Ways and Means Committee will be leaving Congress. Brownstein will preview some of the members who could be considered for these committee openings. Our series begins with Reps. Rudy Yakym (R-IN) and Max Miller (R-OH).
Rep. Rudy Yakym (R-IN)
Rudy Yakym has served as the representative from Indiana’s 2nd Congressional District, covering northern Indiana, since November 2022. He was first elected to the seat in a special election following the death of the district’s former representative and Ways and Means Committee member, Rep. Jackie Walorski. Rep. Yakym currently serves on the House Budget Committee and the House Transportation and Infrastructure Committee.
Rep. Yakym has long sought to join the Ways and Means Committee, with some of his notable actions including leading a letter joined by about 150 other House Republicans to Speaker Mike Johnson (R-LA) urging him to put before the House legislation to extend the three expiring business-related provisions from the Tax Cuts and Jobs Act (Pub. L. 115-97)—full research and development expensing, bonus depreciation and deductibility of business interest. These provisions were included in the Tax Relief for American Families and Workers Act (H.R. 7024), which passed the House on a strong bipartisan vote but was not able to advance through the Senate, although they are likely to resurface in tax legislation in 2025. Rep. Yakym is considered a top choice among Republicans to join the committee.
Rep. Max Miller (R-OH)
Max Miller has served as the representative from Ohio’s 7th Congressional District, covering parts of northeastern Ohio, since January 2023. He previously served in the United States Marine Corps Reserves and as an assistant in the Treasury Department during President-elect Donald Trump’s first term. Rep. Miller currently serves on the House Agriculture Committee and the House Science, Space, and Technology Committee, including chairing the Subcommittee on the Environment.
Rep. Miller has introduced two bills in the 118th Congress under the jurisdiction of the Ways and Means Committee. The first, the American Workforce Act (H.R. 8316), would impose an excise tax of 1% on large, nonreligious university endowments, with funds going towards workforce development initiatives. The bill received additional attention due to Vice President-elect J.D. Vance being an original cosponsor of the Senate companion. The second, H.R. 9338, would impose stricter foreign entity of concern requirements on the Section 45X Advanced Manufacturing Production Credit, enacted as part of the Inflation Reduction Act (IRA, Pub. L. 117-169). With endowment taxes and scrutiny of IRA credits among the top priorities of the House Ways and Means Committee, Rep. Miller is a well-positioned candidate to join the committee in the 119th Congress.
Legislative Lowdown
Trump to Nominate Scott Bessent as Treasury Secretary: On Nov. 23, President-elect Donald Trump announced his intention to nominate Scott Bessent to serve as secretary of the Treasury Department, writing in a post on Truth Social that Bessent would “help me usher in a new Golden Age for the United States, as we fortify our position as the World’s leading Economy, Center of Innovation and Entrepreneurialism, Destination for Capital, while always, and without question, maintaining the U.S. Dollar as the Reserve Currency of the World.” Bessent is a veteran of Wall Street, currently leading Key Square Capital Management, an investment firm he founded in 2015 after first working as a fund manager for George Soros. While Bessent’s political engagement started with the Democratic Party, he later became a major contributor to Republican candidates, donating almost $2 million to the Trump campaign and affiliated committees in 2024 and eventually becoming one of Trump’s closest economic advisors. Additional background on Bessent is available here.
Should he be confirmed, Bessent is expected to support and carry out Trump’s economic and tax-policy agenda. Despite having previously been bearish on the use of tariffs, he has recently argued for increasing tariffs on national-security grounds and for inducing other countries to lower trade barriers with the United States. He criticized trade policy with China for enriching Wall Street, weakening U.S. industrial might, and failing to lead to Chinese economic overhauls. Bessent has pushed back on claims by mainstream economists that tariffs are inflationary and inefficient, pointing to tariffs’ potential for increased federal revenues. He has pointed to enacting tariffs as a focus for his term at the Treasury Department.
Bessent also supported passage of the 2017 Tax Cuts and Jobs Act (TCJA, Pub. L. 115-97) and has advocated for making permanent its expiring provisions, with additional pay-fors to lower the cost. He has also called for enactment of other Trump campaign proposals, including eliminating taxes on tips, Social Security benefits and overtime pay, and repealing certain Inflation Reduction Act (Pub. L. 117-169) energy-tax credits.
Following the announcement, Senate Finance Committee Chairman Ron Wyden (D-OR) criticized Bessent’s Wall Street background, saying that ”the government under Trump is of, by, and for the ultra-wealthy,” and calling for “thorough and longstanding vetting” of Bessent and other Cabinet nominees. In contrast, Ranking Member Mike Crapo (R-ID) praised Bessent, saying that his “extensive private sector experience and market knowledge make him well-positioned for the task.”
Trump to Nominate Kevin Hassett to Chair the NEC: On Nov. 26, President-elect Trump announced his intention to nominate Kevin Hassett as the chairman of the National Economic Council (NEC). Hassett, a career economist, previously served as the chairman of the Council of Economic Advisers and as senior advisor to the president for economic issues during Trump’s first term. As NEC chairman, Hassett will likely have a key role in helping to negotiate an extension of the Tax Cuts and Jobs Act (Pub. L. 115-97). Trump also stated that Hassett will focus on trade issues and bolstering economic relationships with other countries.
Trump to Nominate Jamieson Greer to Lead USTR: On Nov. 26, President-elect Trump announced his intention to nominate Jamieson Greer to serve as United States trade representative, which has jurisdiction over major aspects of Trump’s tariff agenda. Greer, currently a partner at King & Spalding, served as chief of staff to USTR Ambassador Robert Lighthizer during Trump’s first term where he helped negotiate the United States-Mexico-Canada Agreement, implement the Phase One agreement with China, and assisted with other trade-related matters. Howard Lutnick, the presumptive nominee for secretary of the Commerce Department, will also have “additional direct responsibility” for USTR, per a post by Trump on Truth Social.
Following the announcement, Senate Finance Committee Chairman Ron Wyden (D-OR) expressed pessimism for Trump’s proposed tariff policies, stating that they would “hike consumer prices,” and that the next USTR should address “trade cheating.” Ranking Member Mike Crapo (R-ID) praised Greer’s “extensive trade policy experience” and said that Greer “will be a critical partner in the effort to expand market access and level the playing field for American farmers, manufacturers and service providers.”
Republican Lawmakers Plan 100-Day Timeline to Push Through Tax Agenda: Republican House and Senate leadership have met multiple times over the last few weeks to formulate a 100-day agenda to accomplish President-elect Donald Trump’s policy goals, which will include concerted efforts to work through and pass a tax bill that would extend or make permanent several provisions of the Tax Cuts and Jobs Act (TCJA, Pub. L. 115-97). Republicans are planning to use the budget reconciliation process, which would allow the bill to pass the Senate with a simple majority.
However, barriers remain to the Republicans’ ability to meet their deadline, including potential conflicts over how much the package will cost and what offsets to include in the bill. In particular, Republicans, including members of the Senate Finance and House Ways and Means committees, have expressed concern over the use of tariffs as an offset to the bill. Concerns have also been raised regarding repeal of Inflation Reduction Act’s (Pub. L. 117-169) energy-tax provisions as revenue offsets, given the role some credits have played in attracting investments and expanding employment in Republican-controlled states and districts. House Speaker Mike Johnson (R-LA) will also have to contend with a slim House majority in the next Congress: until April, Republicans are expected to have only a one-seat margin with a 217-215 majority.
Energy-Tax Mainlines
House Democrats Urge Treasury Department and IRS to Broaden Section 45V Credit Eligibility: Led by Reps. Suzan DelBene (D-WA) and Kim Schrier (D-WA), 12 House Democrats sent a letter to Treasury Secretary Janet Yellen and Internal Revenue Service (IRS) Commissioner Daniel Werfel urging expansion of the regulations governing the Section 45V Clean Hydrogen Production Tax Credit to allow more businesses to be able to qualify for the credit. The credit, enacted as part of the Inflation Reduction Act (Pub. L. 117-169), is designed to incentivize the production of hydrogen for use in manufacturing, transportation and other industries. The letter expresses concern that the proposed section 45V proposed regulations are too narrow, “pos[ing] a serious risk to hydrogen projects across the county” and “undermin[ing] ... our nation’s competitiveness in this emerging global industry.”
The lawmakers encourage the Treasury Department and the IRS to finalize regulations that take a “regionally flexible” approach to encourage hydrogen production, with four specific recommendations: (1) providing flexibility in incrementality requirements, (2) allowing hydropower and nuclear power as a qualified energy source for incrementality requirements, (3) pausing hourly matching requirements until 2032, and (4) considering regional variations in energy availability and grid characteristics when analyzing projects for compliance. The letter states that this approach will allow proper utilization of existing clean-energy resources while maintaining global competitiveness.
Tax Worldview
Trump Threatens to Impose Tariffs on Canada, Mexico and China: On Nov. 25, President-elect Trump announced in a post on Truth Social that he plans on implementing a baseline 25% tariff on all imports from Mexico and Canada, citing what he called the countries’ refusal to prevent the flow of illicit drugs and undocumented immigrants into the United States. Trump claimed that Canada and Mexico “have the absolute right and power to easily solve this long simmering problem” and that the enacted tariffs will remain in place until the problem is mitigated. In a separate post, Trump also announced that China will also face a 10% tariff on U.S. imports due to the influx of fentanyl of Chinese origin into the United States.
Over the last week, both Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau separately spoke with Trump to discuss the proposed 25% tariff policy and the effects that it would have on the economies and trade relationships of the three countries. Results of the discussions were unclear, with Trump claiming that the discussions with Sheinbaum were productive and that she has “agreed to stop migration through Mexico and into the United States.” Sheinbaum confirmed that Mexico is already making efforts towards mitigating migrant caravans and would not seek to make any other changes to government policy. Sheinbaum also criticized Trump’s tariff plans and claimed that Mexico may seek to enact retaliatory measures. Canadian government officials indicated that the meeting between Trudeau and Trump was also productive, with Canada reportedly working to curb drug-smuggling and boost border security while also attempting to persuade Trump to backtrack on tariffs and not to lump Canada in with Mexico regarding border issues.
G20 Expresses Support for Taxation of High-Net-Worth Individuals and Two-Pillar Framework: In a Group of Twenty (G20) summit in Rio de Janeiro on Nov. 18 and 19, leaders published a joint declaration in which they pledged to advance several domestic and international tax reform initiatives. These include the endorsement of domestic progressive taxation reforms, including “engag[ing] cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed.” The declaration also endorses the Organisation for Economic Co-operation and Development (OECD) two-pillar framework and encourages “swift implementation of the Two-Pillar Solution by all interested jurisdictions, including expeditious negotiations on the final package of Pillar One."
1111 Constitution Avenue
IRS Extends Third-Party Payer Deadline for ERTC Voluntary Disclosure Program: On Nov. 21, the Internal Revenue Service (IRS) announced that the agency would extend from Nov. 22 to Dec. 31 the deadline for third-party payers to submit claims for the Employee Retention Tax Credit (ERTC) program. The Voluntary Disclosure Program allows applicants who submitted an ERTC claim and received a payout in error to pay back 85% of the value of the credit, in exchange for protection from audits or from penalties or interest on the claimed ERTC amount.
IRS Sets $5,000 Threshold for Forms 1099-K for Tax Year 2024: On Nov. 26, the Internal Revenue Service (IRS) issued Notice 2024-85, announcing that the threshold for third-party settlement organizations (TPSOs), including online payment platforms and marketplaces, to report payment transactions using Form 1099-K is $5,000 for transactions made during tax year 2024, with no minimum number of transactions. Prior to the enactment of the American Rescue Plan Act (ARPA, Pub. L. 117-167), the reporting threshold was $20,000, with a 200-transaction minimum. Although ARPA set the reporting threshold at $600, with no minimum number of transactions, the IRS has twice delayed the implementation of the statutory threshold due to compliance concerns expressed by TPSOs, taxpayers and tax preparers. The reporting threshold for tax years 2022 and 2023 remained at $20,000, with a 200-transaction minimum, and tax year 2024 will be the first year that the IRS is implementing a lower threshold, though not at the statutory level of $600. Notice 2024-85 also provides a timeline for the phase-in for the ARPA-enacted policy, stating that the reporting threshold will be $2,500 for tax year 2025 and $600 for tax years 2026 and after.
In light of this announcement, House Ways and Means Committee Chairman Jason Smith (R-MO), who has previously been critical of both the ARPA-enacted 1099-K reporting threshold and the IRS’ decision to delay its implementation, released a statement saying that that the $5,000 threshold goes “even a step further outside the bounds” of current law. He also criticized the scaled phase-in, saying that it puts “Democrats’ 1099-K policy on a delayed timer that will fully detonate in the middle of Donald Trump’s second term in office.”
Werfel States the IRS Is Well Equipped to Handle Implementation of Potential Tax Package: In an interview on Nov. 25, Internal Revenue Service (IRS) Commissioner Daniel Werfel said that, due to IRS funding received in the Inflation Reduction Act (Pub. L. 117-169), the agency will be well prepared to handle the enactment of a tax package that may pass Congress in 2025. He cited IRA funding for enabling the IRS to improve operational efficiency and hire and train employees. He also expressed confidence that the agency will effectively transition into the incoming presidential administration and that the IRS will have “a seat at the table” with regard to providing input on the operational feasibility and burden of potential provisions in a tax package. Werfel also answered questions about the potential clawback of IRA funds by the incoming Trump administration, saying that improving taxpayer service and modernizing IRS equipment has historically been bipartisan and that “future decision-makers” will choose to retain IRS funding levels.
Treasury Department, IRS Release First Set of Guidance on PTEPs: On Nov. 29, the Treasury Department and Internal Revenue Service (IRS) released proposed regulations on the previously taxed earnings and profits (PTEP) of foreign corporations governed by Section 959 under the Internal Revenue Code, as well as basis adjustments governed by Section 961. The proposed rules seek to prevent double taxation by excluding PTEP from gross incomes of U.S. persons and controlled foreign corporations (CFCs). The proposed guidance also addresses foreign currency gain or loss with respect to PTEP as well as other issues under Sections 959 and 961. Public comments and requests for a public hearing must be submitted by March 5, 2025.
At a Glance
Treasury Department, IRS Issue Final Rules on Recourse Partnership Liabilities: On Nov. 29, the Treasury Department and Internal Revenue Service (IRS) published final regulations for recourse partnership liabilities and other related parties. The final regulations largely adopt proposed regulations published in December 2013 that would amend Section 752 regulations related to a partner’s share of a recourse partnership liability and rules for related persons.
Hearings and Events
House Ways and Means Committee
The House Ways and Means Committee has no tax hearings scheduled for this week.
Senate Finance Committee
The Senate Finance Committee has no tax hearings scheduled for this week.