RegulationNovember 7, 2024

Congressional Tax-Writing Committee Chairs Could Make Big Impact in New Congress

Control of the House remains undecided, while Idaho Senator Mike Crapo is in line to lead the Senate Committee on Finance.

Reported by Matt Toledo

Plans for reauthorizing the expiring provisions of the Tax Cuts and Jobs Act of 2017, a signature legislative accomplishment of the first administration of President-elect Donald Trump, are likely to be front and center when the 119th Congress is seated in 2025.

That means leadership of the tax-writing committees, the Senate Committee on Finance and the House Committee on Ways and Means, will have the chance to set the tone for which provisions are renewed and which revenue offsets fund them.

Lobbying on the extension of the TCJA has increased throughout 2024, and Trump promised other tax reductions on the campaign trail, which could mean funding for more than just the $4.6 trillion in expiring tax provisions will be needed.

The deferral of income tax on contributions made to traditional defined contribution retirement plans is among the largest federal tax expenditures (as unclaimed revenue is classified), so industry watchers suggest it could be targeted as a potential offset. In addition, in his first term, Trump pledged to eliminate the carried-interest tax deduction that benefits private equity firm partners, so both issues could be on the agenda.

Senator Ron Wyden, D-Oregon, has led the Senate Committee on Finance since 2021, but with Republicans taking control, the most likely replacement is Senator Mike Crapo, R-Idaho, who has been the committee’s ranking member. Crapo, in a September speech, called the TCJA “the focus of debate next year” and credited the law with creating “the strongest economy, I think, in any or our lifetimes.”

He added: “Unless Congress moves to extend these provisions by the end of next year, taxpayers would face the largest tax increase in U.S. history,” indicating he will work to ensure the tax cuts are extended.

Senator Chuck Grassley, R-Iowa, chaired the committee from 2019 to 2021 and remains a member of the committee. At age 91, he has been floated as a potential chair for the Senate Committee on the Judiciary.

Decisions on committee leadership in the Senate are guided by Senate rules, as well as party rules and practices.

In the House of Representatives, where elections in more than 30 seats remain outstanding and neither party has yet clinched control, Representative Jason Smith, R-Missouri, became the youngest Ways and Means chair in 2023 at age 42. Considered a populist, Smith has said he supports tax policies that support energy, food and health care in the U.S. He has also supported efforts to reduce the U.S. trade deficit with China.

The committee’s ranking Democrat is Representative Richard Neal, D-Massachusetts, who chaired the committee from 2019 to 2023. He is a strong advocate on retirement issues and has backed President Joe Biden’s plans to permanently extend the Affordable Care Act premium tax credits and provide comprehensive paid family and medical leave.

Decisions on committee leadership in the House are made by the Republican Conference and the Democratic Caucus.

The Joint Committee on Taxation, which assists the Congressional tax-writing committees and members of Congress with both developing and reviewing legislative proposals and which also prepares official revenue estimates of all tax legislation considered by the Congress, is likely to retain most of its current membership. Senator Debbie Stabenow, D-Michigan, who sits on the committee, will retire at the end of the current legislative session.