The Budget Process Begins
The Budget Process Begins
The U.S. House of Representatives began consideration of the budget reconciliation package. Reconciliation is a process by which Congress can quickly pass budget-related legislation by a simple majority in the Senate. Reconciliation can only be used for certain legislation such as those measures addressing spending, revenue, or the debt limit—think of it as the Express Lane for legislation for use by only certain vehicles.
The House Committee on Ways and Means (tax writers), the House Committee on Energy and Commerce, and the House Committee on Agriculture, held long, contested hearings this week to consider the program modifications needed to offset the cost of extending tax provisions from the expiring Tax Cuts and Jobs Act and other policy priorities of the Administration. The House Agriculture Committee focused on the Supplemental Nutrition Assistance Program (SNAP) and various specialty crop programs. The discussions on SNAP were heated and partisan. Nonetheless, the measure came out of committee with approximately a $290 billion reduction in SNAP funding and an increase of subsidies for commodity farmers and trade promotion programs by about $60 billion. It also contains provisions to increase funding for animal health. The policy priorities for the equine industry were not addressed in the reconciliation process but will be under consideration in the appropriations process.
The Ways and Means Committee adopted a tax package that holds several positive components including an increased exemption for the federal estate (Death Tax), one hundred per cent bonus depreciation for five years for machinery and equipment, and an increase in the Qualified Business Deduction (QBD) to 23%. Many in the equine industry are organized as pass-through businesses, such as sole proprietorships, partnerships, S corporations, and Limited Liability Companies who would see a tax savings if the QBD deduction survives the legislative process.
The next step in is to combine these measures with the work product of other committees into one “Big Beautiful Bill” for a vote by the full House. If successful, the Senate will begin its consideration.