Ways and Means Advances Five Tax Measures

On Wednesday, House Ways and Means Committee members marked up five tax-related bills — while debating everything from gun control to school choice. All of the bills advanced, but only one providing tax relief for those held hostage and targeting tax-exempt organizations supporting terrorism had broad bipartisan support.

Taking aim at terrorism.

The committee started their morning with consideration of a bipartisan bill, the Stop Terror-Financing and Tax Penalties on American Hostages Act (H.R. 9495). Introduced earlier this week, the bill would accomplish two goals — postponing tax deadlines and eliminating late penalties for those wrongfully detained or held hostage abroad and suspending the tax-exempt status of organizations that support terrorism.

The bill advanced out of the Ways and Means Committee Wednesday 38-0. It is co-sponsored by Representatives Claudia Tenney (R-NY), David Kustoff (R-TN), Brad Schneider (D-IL), and Dina Titus (D-NV).

The bill takes elements from two bills introduced earlier this year — Titus and Tenney’s bill on tax fairness for those detained abroad (H.R. 7791) and Kustoff and Schneider’s bill (H.R. 6408) to end tax-exempt status for terrorist supporting organizations. Similar measures were introduced in the Senate — S. 4057 and S. 4136, respectively. S. 4057 unanimously cleared the Senate in May.

H.R. 6408 actually passed the House 382-11 in April after advancing out of Ways and Means with unanimous support. Schneider explained that despite this, “it is important that we continue to highlight the troubling issue of individuals and organizations here in the United States, many with special tax-exempt status, giving material support to terrorism.”

However, on this go-round, Representative Lloyd Doggett (D-TX) noted a new concern — that the bill could be used by a future administration to target its political enemies. The bill, he said, “would be much better if it had some reasonable safeguards to ensure that an authoritarian decision was not one that prevailed.” Ultimately, Doggett said he wouldn’t vote against the legislation because “the good that it does far exceeds its shortcomings.”

‘Less-than-lethal’ equipment tax.

The other bipartisan measure considered, the Law Enforcement Innovate to De-Escalate Act (H.R. 3269), got a chillier reception. That bill would amend the Gun Control Act of 1968 by removing “less-than-lethal” equipment like TASER devices from the definition of a firearm — and consequentially, from the tax imposed under Code Sec. 4181.

The bill advanced out of Ways and Means 21-15 after a lively discussion on gun control. It is sponsored by Representative Greg Stanton (D-AZ) and has 66 co-sponsors, as well as a bipartisan Senate companion bill (S. 4255) — but it was fellow Arizonian David Schweikert (R) who advocated for the bill before the committee.

According to Schweikert, the bill aims to help us toward a “law enforcement where no one dies” by taking care of “a small … definitional quirk” that requires purchasers of TASERs and other non-lethal devices to pay an excise tax. Many of these purchases are government entities that then must “turn around and collect” the tax back as a refund, he noted.

But Representative Mike Thompson (D-CA) feared the bill would “create a new twist on the ongoing problem — ghost guns.” He argued that gunmakers had already dodged the requirement for all guns to be serialized by selling the frames and receivers in separate “kits.” Doggett added that the bill “opens a new loophole that will endanger even more Americans.”

And Democrats including Representative Dan Kildee (MI) also questioned “how current law prevents, or somehow interferes with a law enforcement agency acquiring these devices.” To that, Schweikert described the “multiple levels of bureaucracy” agencies must deal with to obtain a refund — but added that non-lethal devices might benefit those beyond government agencies, such as religious institutions with safety concerns.

Gig economy.

As of 2025, if users of platforms like Venmo or Paypal receive payments exceeding just $600, this will trigger the issuance of a 1099-K report filing with the IRS. Republican lawmakers have questioned how the IRS will handle the new $600 threshold — lowered from $20,000 and 200 commercial transactions. The change was set to go into effect in 2023, but the IRS delayed implementation, setting an intermediate $5,000 threshold for 2024.

Ways and Means took on the issue by voting 22-16 to advance Representative Carol Miller’s (R-WV) Saving Gig Economy Taxpayers Act (H.R. 190) — the bill would restore the higher threshold of 200 commercial transactions and $20,000 in payments. The Republican-backed measure has 48 House co-sponsors.

Kildee raised concerns with the loophole the lowered threshold was meant to close — that of wealthy investors renting out vacation homes, “earning hundreds of thousands of dollars and never having to report a dime of that income.” He introduced, and then withdrew, an amendment that would instead set a $5,000 and single transaction reporting threshold.

Workforce training.

Representative Lloyd Smucker’s (R-PA) USA Workforce Investment Act (H.R. 9461) to establish an individual tax credit for contributions to workforce development and apprenticeship programs advanced, with a vote of 22-15.

The bill takes a note from Smucker’s USA Workforce Tax Credit Act — introduced in multiple prior sessions — and provides a tax credit for donations to nonprofit organizations that provide workforce training.

The bill before Ways and Means, however, has a lower credit cap than Smucker’s original bill, among other things. H.R. 9461 would cap the credit at the lesser of 25% of the taxpayer’s liability for the tax year or $250,000. It also sets an aggregate cap of $5 billion annually for the credits through 2028.

But that cap was not low enough for several Democrats, who noted there was no pay-for despite high cost. Moreover, said Representative Linda Sanchez, the aggregate limit “would fuel a race to the bottom for worker training programs.” Sanchez, who noted her experience as a former lawyer for the International Brotherhood of Electrical Workers, also took issue with which programs would be eligible for the credit. She argued it excluded registered apprenticeships often jointly administered by the Labor Department and contractors in favor of “low-quality, low-road workforce programs.”

Doggett agreed that the need to develop a skilled workforce is “very real,” but that the credit in the bill would “discriminate against the best programs” while providing “the definite opportunity for the get-rich, quick operations that are fly-by-night to get involved.”

School choice.

Ways and Means spent the most time, however, debating the merits of a school choice tax credit, proposed in the Republican-backed Educational Choice for Children Act of 2024 (H.R. 9462). That bill, which ultimately advanced 23-16, would establish an individual tax credit for donations to nonprofit organizations that provide education elementary and secondary school scholarships. Organizations that receive the donations would then provide funds to schools on behalf of donors’ children.

Representative Adrian Smith (R-NE) introduced the bill last week, and it has amassed 12 Republican co-sponsors. Smith introduced a prior iteration last year, alongside Senator Bill Cassidy (R-LA) (H.R. 531/ S. 120) — that House bill had 153 co-sponsors.

The bill considered by Ways and Means would cap the credit at the greater of 10% of the taxpayer’s adjusted gross income or $5,000. It includes a $5 billion cap for 2024-2028.

Representative Gwen Moore (D-WI) had the most to say — asking whether $5 billion would be enough to help most kids or just whoever “gets to the door first.”

Among other concerns were whether taxpayers claiming the credit could also claim a state tax deduction for the same contribution. In addition, Doggett asked whether taxpayers could escape the capital gains tax using the credit.

And others were concerned that the income limitation for claiming the credit — 300% of the area gross median income — was much too high. Moore asked whether these could really be considered “low-income” families in need of help.