We have an unfortunate development to report this week, with the recent news of Senator Ben Ray Luján's (D-NM) stroke. Thankfully, he is resting comfortably and expected to make a full recovery within a few weeks. While nothing is more important than one's health and we would never suggest that it is worth rushing recovery to address legislative matters (tax-related or otherwise), his absence in the chamber will no doubt be keenly felt. There are many items on the Senate's legislative agenda and without him the Democrats' slim majority is no more. Apart from Build Back Better Act (BBBA), there remains impending action on the budget, potential consideration of additional COVID-19-related relief, confirmation hearings for Justice Breyer's replacement on the Supreme Court, and a host of other issues. We wish Senator Luján a successful recovery. In the meantime, given the continued inactivity we expect on BBBA, tax policy observers have increased their focus on the pending China competitiveness bill as a potential vehicle for tax legislation.
 
The House passed the America COMPETES Act last Friday, which includes a variety of provisions aimed, inter alia, at increasing American competitiveness, encouraging domestic manufacturing activity (including that of advanced semiconductors), and strengthening supply chains more generally. While the bill does not contain a tax title, it will go to conference to reconcile the differences between it and the Senate-passed United States Innovation and Competition Act of 2021 (USICA), where many are hopeful that the House-passed BBBA provision delaying the requirement to amortize research and development (R&D) expenses over five or 15 years will be included. Of course, there are those that are concerned that any indication from Democrats that they are willing to "pick off" provisions of the BBBA package signals the bigger bill's demise. Representative John Larson (D-CT), the sponsor of the House bill that would address the R&D amortization issue, made a statement on the House floor last week stressing the need to address the issue immediately and specifically referenced the COMPETES Act as a potential legislation vehicle. While there is a rational relation between the substance of the COMPETES Act and provisions like R&D amortization, the Tax Cuts and Jobs Act (TCJA) interest expense deduction limitation change, and the investment tax credit for the semiconductor industry, experience tells us that the floodgates will open and many will be pushing for the inclusion of tax provisions with a more – shall we say – tenuous link to the substance of the bill. Should be fun. #TaxTake

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