NUMBER OF THE WEEK: 18.4 cents

The current federal tax levied on each gallon of gasoline, which has not increased in more than 20 years. With gas prices plummeting and the looming insolvency of the Highway Trust Fund, proposals to gradually raise the federal gas tax, like the one introduced by Republican Sen. Bob Corker last year, are gaining some momentum. Sen. John Thune (R-SD), the incoming chair of the Senate Commerce, Science and Transportation Committee and a member of the tax-writing Finance Committee, indicated over the weekend that he is open to such an increase.

LEGISLATIVE LANDSCAPE

A Whole New Hill. Today marks the beginning of the 114th Congress and the official first day on the job for 58 freshmen in the House, including 43 Republicans and 15 Democrats. In the Senate, 13 new lawmakers, all but one of them Republican, will be sworn in, as the GOP takes control of the chamber with a 54-vote majority — six shy of the 60 votes needed to overcome a bill-killing filibuster.

With Republicans controlling both houses of Congress for the first time in eight years, the party is bent on showing voters they can get things done — a demonstration critical for the party’s 2016 presidential election hopes. To that end, Republicans will queue up legislation to greenlight construction of the Keystone XL Pipeline this week, potentially setting up the new Congress’s first opportunity for a presidential veto.

Time for Taxes? Low-hanging fruit and time-sensitive matters (read: expiring legislation) will get the bulk of lawmakers’ attention in the next few months. While we expect to hear increasing calls for tax reform from the newly minted leaders of the tax-writing committees, Rep. Paul Ryan (R-WI) and Sen. Orrin Hatch (R-UT), the complexities and intraparty divisions surrounding tax reform do not lend themselves to “getting things done” in the relatively short window between now and the 2016 primaries.

Repeal of the medical device tax is the lowest of the low-hanging fruit in terms of tax policy, but there are still a number of unanswered questions about how the repeal would work and whether (and how) Republicans will want to pay for it.

We also expect to see legislation in the near term to define a full-time workweek as 40 hours, rather than 30, for purposes of triggering the healthcare coverage employer mandate under the Affordable Care Act.

The Year of the Dynamic Score. House Republicans plan to vote this week on a rule to require the Congressional Budget Office and the Joint Committee on Taxation to incorporate so-called dynamic scoring in their analysis of legislation. The change would allow lawmakers to consider the macroeconomic effects of proposed changes to tax policies and other provisions, but there are mixed views on whether or how much dynamic scoring will impact the tax reform debate.

Critics, largely Democrats, say dynamic scoring is tantamount to “cooking the books.” Proponents, largely (or exclusively) Republicans, say the scoring method is the “reality-based” way of analyzing proposed changes to the tax code. But even the incoming Republican chair of the Senate Finance Committee, Sen. Orrin Hatch (R-UT), has noted that, in the end, dynamic analysis of tax proposals will not dramatically alter the landscape as some Republicans hope and many Democrats fear. Read more on Hatch’s prior comments on dynamic scoring here.

Context Matters. Making matters more complicated, and less hopeful for major progress on tax reform, a good chunk of political capital will likely be eaten up in order to clear a number of deadline-driven legislative hurdles.

First up is the late February deadline for funding the Department of Homeland Security, which received only a short-term funding extension in the Cromnibus spending bill that passed last month, funding the rest of the government through the end of the 2015 fiscal year. Republican backlash at President Obama’s executive order on immigration, which many in the GOP refer to as “illegal executive amnesty,” will likely boil back up in these negotiations.

Then there’s the expiration of the Medicare “doc fix” in March, followed by the looming insolvency of the highway trust fund in May. As if these politically charged negotiations aren’t enough, lawmakers will once again find themselves up against the debt ceiling — the current limit on the nation’s borrowing authority — sometime in late spring or early summer. Judging by past battles over raising the country’s debt ceiling (versus risking default on its currently owed debts), this could easily transgress into a major showdown, both within the Republican Party and between Republicans and Democrats.

Against this backdrop, and a below-20-percent approval rating of Congress, Republicans have their work cut out for them to “get things done” in 2015.

Messaging Matters, Too . House Democrats will use the first day of the new Congress to promote their pro-middle-class, anti-corporate-inversion message, with introduction of a legislative package to restrict corporate inversions and limit company deductions for executive compensation, according to aletter from Minority Leader Nancy Pelosi (D-CA) to her fellow House Democrats outlining their agenda for the new year. The legislation has zero chance of advancing through the House this year.

REGULATORY WORLD

IRS “Actively Working” On Anti-Inversion Regs. Regulations to implement the anti-inversion Notice 2014-52 are in the works, along with additional guidance that could include action on earnings stripping, according to a senior IRS official speaking at a Bloomberg BNA forum on Jan. 5. Erik H. Corwin, IRS deputy chief counsel (technical), also said final rules on dividend equivalents under tax code Section 871(m) are expected in the near term.

LOOKING AHEAD

Congress 
After lawmakers are sworn in today, the action really begins. Votes on an extension of the expired Terrorism Risk Insurance Act and the Keystone XL Pipeline are expected before the end of the week.

Internal Revenue Service 
The IRS will hold a hearing on Wednesday, Jan. 7, on amendments to hybrid defined retirement benefit plans. More information is available here.