CQ TODAY ONLINE NEWS
April 13, 2012 – 10:08 p.m.
Tax Measures Move to Front Burner
By Sam Goldfarb, CQ Staff
With large portions of the tax code set to expire at the end of the year, lawmakers are aiming to get a mandate from voters to pursue their preferred tax policies, while taking some small, practical steps to prepare for a legislative showdown that is sure to occur after the election.
This week, Democrats will get the first shot at influencing the political debate with a procedural vote on legislation that adheres to President Obama’s “Buffett Rule” by establishing a new alternative minimum tax for millionaires. Democrats have argued that wealthy taxpayers such as the billionaire investor Warren E. Buffett should not be able to pay a lower effective tax rate than people with more modest incomes.
In an attempt to realize that goal, the Senate on Monday will vote on a motion to proceed to legislation (
While Democrats are betting that voters will embrace their message of “tax fairness,” Republicans are trying to reinforce their brand as the party that keeps taxes low for every segment of society. To that end, the Republican House will vote April 19 on legislation (
Neither of the tax bills that will be debated this week are likely to become law anytime soon. Opposed to any sort of tax increase, Senate Republicans are expected to block further consideration of the Buffett Rule bill. Arguing that it would be a windfall for wealthy lawyers, entertainers and financial managers, Democrats have similarly vowed to halt the progress of the small-business tax cut once it is sent to the Senate.
Both bills, however, are meant to help lawmakers as they campaign for re-election and provide momentum to causes that could potentially be settled later this year, when Congress will confront the expiration of sweeping tax cuts (PL 107-16, PL 108-27) that were enacted last decade and temporarily extended at the end of 2010.
“We hope to pick up some Republicans when the Senate votes on April 16,” the Senate’s No. 3 Democrat,
Noting that a majority of Americans appear to support some version of the Buffett Rule, Schumer predicted that Republicans would start to modify their opposition to the tax “and move more quickly than people think.”
Republicans argue that the Buffett Rule will be a losing proposition for Democrats because it does not address voter concerns about the economy. They also point out that it would make only a small dent in the federal budget deficit, with the Joint Committee on Taxation (JCT) estimating that the Senate bill would raise $46.7 billion over 10 years when compared with current law.
Shifting from defense to offense, Republicans are trying to put Democrats in the awkward position of rejecting a tax cut for smaller enterprises. Republicans say the one-year tax break would lead companies to hire more workers. But Democrats argue that there are better ways to encourage hiring and note that the tax cut would add nearly $46 billion to the deficit, according to the JCT.
Even as they jockey for political position, lawmakers know that they also face logistical challenges.
Absent congressional action by the end of the year, reduced rates enacted as long ago as 2001 will expire for every person who pays income or Social Security taxes. In addition, Congress is under pressure to retroactively extend a host of already expired provisions, including a “patch” for the alternative minimum tax to prevent a large increase on thousands of middle- and upper middle-income taxpayers.
Tax Measures Move to Front Burner
Although Congress has waited in the past until the last moment to pass tax laws, the future of revenue collections is particularly uncertain this year. That has raised concerns among those who administer the tax code.
“If Congress can’t act by the end of the year and even starts to think about retroactive legislation of things, like the AMT [alternative minimum tax], which have already expired, you could have a real disaster in the filing season, where there’s total confusion, where some people are filing under one law and under another,” IRS Commissioner Douglas Shulman said at the National Press Club on April 5.
Shulman said he was “hopeful that these pieces of legislation will pass sooner rather than later.”
In fact, very few people expect Congress to pass major tax legislation before November. But there are signs lawmakers are preparing now so that they can act relatively quickly once the campaign season is over.
In one such example, House Ways and Means Chairman
Over the next few months, Camp and Ohio Republican
In his examination of expired tax breaks, Camp is likely to get considerable support from Democrats.
“There are some things that merit extension; there are some where it might be time to move on or put time frames around them,” Ways and Means member
Camp, Blumenauer said, has a good working relationship with Ways and Means ranking Democrat
“I think they are two people who are serious about the tax code, so I’m cautiously optimistic that something might happen,” he said.