In the coming days and weeks, the U.S. House of Representatives will finalize the rosters of the various chamber’s committees — a process that is usually completed by now, but has been delayed due to the House speaker race. No committee is more pivotal to the majority than the tax-writing Ways and Means Committee, and it just got a chairman, Representative Jason Smith of Missouri. As the next chairman, Smith should move quickly to enact a bold conservative tax agenda in order to give the House a strong voice when dealing with the Democrat-led Senate Finance Committee and its chairman, Senator Ron Wyden of Oregon.

Get Ahead of the 1099-K Fight

There won’t be any sweeping tax reforms in this Congress. The reason is simple: So many tax provisions expire at the end of 2025 — after a presidential election and another congressional election — and this expiration sucks all the oxygen out of the room. There’s also a Democratic Senate and White House to tangle with, not to mention one of the thinnest House majorities ever. To use congressional parlance, major tax changes aren’t ripe.

However, that doesn’t mean there isn’t any work to do. The committee should start with something easy. Just before Christmas, the IRS announced a unilateral delay in Form 1099-K reporting requirements. Before the IRS action, any taxpayer who ran more than $600 through a payment app such as Venmo or Paypal, or a sales platform such as Ebay or Facebook Marketplace, would get a tax form this tax season from that service (so, most people who get one form would probably have gotten several). There would be no easy way to distinguish between taxable and non-taxable funds, as well as personal versus business transactions.

The old reporting limit of such activity was $20,000 and 200 transactions on any given platform. Not a single Republican voted for the $600 threshold, so the GOP-led Ways and Means Committee should take the initiative: report out Representative Carol Miller’s (R., W.Va.) bill to permanently bring back the prior reporting threshold of $20,000 and 200 transactions. Point out how failure to do so will result in tens of millions of new forms that the IRS obviously thinks they, taxpayers, and tax professionals cannot handle.

While major tax reform isn’t quite ripe, the 1099-K issue is one that Congress has no choice but to deal with in 2023, and it provides the next Ways and Means chairman the vehicle and opportunity to advance the other common-sense tax improvements detailed below.

Bring the Three TCJA ‘Orphans’ into Line

Another policy area to address is the early expiration of some key Tax Cuts and Jobs Act (TCJA) provisions. Unlike the rest of the law’s provisions which sunset in 2025, these three elements have already expired or are phasing down. The three policies are:

  • Full business expensing is, as of now, 80 percent business expensing. This figure will decline by 20 percentage points a year until it’s gone. This means businesses have no choice but to increasingly expose their business-property investments to lengthy and complex depreciation deductions, rather than immediately deducting them.
  • Research-and-development costs now have to be amortized over 60 months rather than deducted in the year the costs are incurred.
  • The TCJA limits the deductibility of interest to a percentage of business profits. The definition of profits has changed to a more narrow equation, effectively punishing companies who invest in themselves by taking away their ability to deduct interest.

These three TCJA provisions should be restored to their original form: 100 percent expensing, full deductions for research expenses, and the broader definition of profit for interest cap purposes. Ideally, these policies should be made permanent. But at the very least, Republicans should be pushing for them to expire on schedule with the rest of the TCJA provisions in 2025. Everything should be on the table that year to extract maximum leverage.

Take Back GOP Ownership of the Child Tax Credit

The Democrats talk about the child tax credit so much, you’d be forgiven for not remembering that this is longstanding Republican policy. The Contract for America in 1994 called for a $500 per-child tax credit, a policy that was enacted by a Republican Congress in 1997. President George W. Bush successfully doubled the child credit to $1,000. President Trump doubled it again, to $2,000, in the TCJA. Along the way, the credit became largely refundable (meaning tax filers can claim it even if they have already zeroed out their liability).

In 2021, for one year only, the Democrats expanded the child tax credit to $3,000 ($3,600 in the case of a small child). They got rid of the work requirement that had always been a part of the child credit. Finally, they made it not only fully refundable, but advanced to households in real time via a direct deposit or check from the IRS.

Republicans rightly have balked at the lack of a work requirement (the child credit would quickly become a universal basic-income grant and depress workforce participation), as well as the advanced payments (again, they look a whole lot like a basic-income subsidy and were a mess to administer). However, there is no reason for Republicans to object to a larger child credit (at the Democrats’ levels or a little lower), and they all voted for phased-in full refundability as part of TCJA.

A Republican version of child-tax-credit expansion should be reported out of the chamber. Pick a number –$2,500, $3,000, whatever — per child. Index this figure to inflation. Let the current phase-in of the child tax credit’s refundability continue apace. Retain a strong work requirement. Reject a universal basic-income payment system, but instruct the IRS to investigate the viability of integration with employer payroll and withholding tax reporting. This would be a pro-family, pro-work child tax credit that keeps up with the cost of living — and it would get Republicans ahead of the curve on retaking ownership of this popular tax policy. In order to keep the package affordable, Congress should lower the phaseout starting point of the child tax credit from $400,000 to $250,000 for married couples.

The important thing for the Ways and Means Committee to do is to , even if they are unlikely to be making a lot of major new tax laws this Congress. Republicans cannot live on oversight alone. They acquired a reputation (especially in tax policy) of being the laboratory of good ideas, and it’s high time to flex those unused muscles again.