Archive for the ‘Uncategorized’ Category

Mazur Nominated to be Assistant Sec’y for Tax Policy

Monday, November 14th, 2011

The President has announced that he will nominate Mark Mazur, the current Deputy Assistant for Tax Analysis at Treasury, for the top job of Assistant Secretary for Tax Policy.  The post has remained vacant since May of this year when the prior Assistant Secretary, Michael Mundaca, left.  Mundaca recently re-joined Ernst & Young’s National Tax Office as c0-head of the office with Eric Solomon.

Mazur has held a series of top economic jobs in the executive branch, dating from 1993, when he joined the Clinton White House Council of Economic Advisors as a Senior Economist.  He later became Senior Director of that office.  From 2001 to 2009, he was the Director of the Statistics of Income (SOI) office at the IRS.

Comparing the Super Committees

Wednesday, July 27th, 2011

One common feature of both the Reid (S. 1323) and Boehner (S. 627) debt ceiling bills is a ”Joint Select Committee on Deficit Reduction”  with the power to report legislation (almost) directly to the House and Senate that is entitled to consideration under modified fast-track procedures.  The Boehner version prevailed and was included in the debt-ceiling legislation, with no changes, on August 2.

The language of the provisions creating these ”super” committees is so similar that it’s clear that the two bills have a common origin, but they differ on their revenue targets and on authority to write tax legislation.  The Reid bill empowers the committee to “include recommendations and legislative language on tax reform” in its report.  The Boehner version that ultimately prevailed on August 2 omits the language on tax reform but it contains no specific prohibition on writing tax legislation.   

In public comments, the Speaker has emphasized that it would be nearly impossible for the Committee to propose significant tax reform, but other commentators are not so sure.  The Wall Street Journal editorialized that the committee could “end up proposing tax increases.”

Here are the commonalities:

  1. Membership – - 12 members, with 3 each chosen by the Speaker, the House minority leader, and the majority and minority leaders of the Senate. 
  2. Approval Threshold – - 7 of 12 members.  At least one member must cross party lines in order for the committee to report.
  3. Deadlines – - Committee vote on recommendations due Nov. 23, 2011.  Committee report due by December 2nd.  Committees of jurisdiction must report by December 9th.  Floor vote on final passage due December 23rd.
  4. Fast Track Procedures  – - in nearly identical language, the bills would be entitled to consideration with 4 hours of debate in the House and 30 hours in the Senate.  Cloture would be invoked by the terms of the legislation, so that 50 Senators and the V.P. could determine the outcome.   The chamber that acts first gets precedence, unless the bill contains revenue measures, in which case the House bill takes precedence.
  5. Role of Committees – - In both bills the Super Committee report is referred to committees for 7 days for an up or down recommendation.  In the Senate, the committees with jurisdiction are “automatically discharged” if they fail to report, and in the House, a motion to discharge the committees becomes in order after 7 days.  Committees are also allowed to submit recommendations to the Super Committee by October 14, 2011.

Differences:

  1. Revenue Targets – - The goal of the committee in the Reid bill is to reduce the deficit to “3 percent of GDP.”  The Boehner bill sets a goal of $1.8 trillion in deficit reduction from 2012 to 2021.
  2. Tax Reform – - The Reid bill allows the Super Committee to include “recommendations and legislative language on tax reform” in its report.  The Boehner bill omits this language, and it also revises the language referring to the Joint Committee on Taxation.  The JCT is not mentioned in the bill text, but there is a cross-reference to a section of the Budget Act that clarifies JCT’s role in providing tax estimates.

Note:  Updated Aug. 4.

Tax Deal Said to be Imminent

Thursday, July 21st, 2011

According to Democratic leaders interviewed today, President Obama and Speaker Boehner are close to approving a budget deal that would require in 2012 a re-vamping of the tax code to lower individual and corporate rates by modifying or repealing scores of “tax breaks” and other “loopholes.”

Thus, the Speaker and the President appear to be on the verge of accepting the logic of the Bowles-Simpson commission that issued its unofficial report in December, initiating a process that could wring out an overall rate reduction by focusing on tax expenditures.

Which tax expenditures are at risk?  Sen. Tom Coburn’s “Back in Black” report provides useful context, although it has not been endorsed by any other Senator.  In it, Sen. Coburn uses the familiar style of appropriations battles past to highlight what he views as inappropriate use of tax deductions, like the historic preservation credit, the exclusion for foreign-earned income, and (humorously) the tax deduction for Eskimo whaling captains.  

His point is that they should all be repealed immediately and other tax benefits should be sharply limited.   In the face of determined opposition, Coburn takes on the home mortgage interest deduction (cap at $500k of mortgage principal; no second homes) and the exclusion for employer-provided health insurance (cap at $15k for families).  In total, his reforms are said to save $962 billion in tax revenue over 10 years, which is close to the $1 trillion figure touted by the Gang of Six as their goal.   In reality, his proposals would bring in much less than $1 trillion, because taxpayers would change their behavior to minimize tax.  

The leaders will not likely come close to endorsing Dr. Coburn’s prescriptions, but they now seem to be willing to enact procedural changes, such as a the new fast-track process endorsed by the Gang of Six, that would require the tax writing Committees to repeal enough deductions to reach the inflated $1 trillion target. 

This could be a disaster for taxpayers.

Gang Of Five

Tuesday, May 17th, 2011

Oklahoma Senator Tom Coburn dropped by the latest “make or break” meeting today of Senate budget negotiators to let the “Gang” know he is dropping out, bringing the size of the gang down to five.

According to Sen. Coburn, one of the main obstacles to a bipartisan agreement is the three Democratic Senators’ unwillingness to consider material changes to entitlement programs as part of the budget reform proposal.

With only 2 Republicans, and three Democrats remaining, Sen. Coburn’s decision lowers the odds of achieving an agreement that can be called bipartisan.

It remains to be seen whether Senator Conrad will issue a report reflecting the 3 remaining Democrats’ views, or whether the whole effort will now collapse.

Gang of Six Close to Reporting

Tuesday, May 17th, 2011

Senate budget talks among the bipartisan “Gang of Six,” reportedly are coming to a close, and the team will report a proposal that will affect the upcoming debate on raising the federal debt ceiling. According to sources close to the talks, the Gang’s proposal will feature a series of votes that will lock the Senate into a committed level of budget savings. The budget targets could only be breached with a 60 or 67 vote threshold. The committees of jurisdiction – - including Senate Finance – - would be required to pass legislation to achieve the budget targets. Otherwise, an across-the-board sequestration would occur. The Gang’s plan goes easier on mandatory spending than the Ryan plan, but, overall, it achieves approximately $4 trillion in savings over a modified CBO baseline.

W&M Schedules Full Committee Markup

Friday, May 6th, 2011

Ways & Means Chairman Dave Camp has announced that the full Committee will mark up the Jobs, Opportunity, Benefits and Services Act  (H.R. 1475) on Wednesday, May 11, 2011, at 10:30 AM.

Tax Policy Chiefs Testify

Tuesday, March 1st, 2011

Five former Assistant Secretaries for Tax Policy today kicked of an ambitious series of hearings by testifying on the broad topic of tax reform.  Chairman Max Baucus is planning to hold as many as 24 hearings, digging in to a wide variety of tax policy topics. 

In a harsh critique of the 1986 tax reform, former IRS Commissioner and Treasury Assistant Secretary Fred Goldberg blamed the ’86 Act for diminishing the United States’ economic competitiveness in banking and pharmaceuticals in particular.  Goldberg urged the Committee to respect economic forces beyond the Committee’s control to avoid further damage to the U.S. economy.

The fact is that our tax system is increasingly hostile to capital in most of its forms – money, human capital, and intangible assets. These kinds of capital are mobile, don’t respect national borders, and are extremely unforgiving. The ’86 Act, and legislation that has followed in its wake, have ignored or challenged these powerful forces. In doing so, we have acted at our peril – and we are paying a very high price.

Other former Treasury Asisstant Secretaries testifying included:

  

Goolsbee On “Startup America”

Friday, February 4th, 2011

Austan Goolsbee, Chair of the Council of Economic Advisors, at 2:29, promotes the White House proposal to make permanent the zero capital gains rate for small business stock (IRC Sec. 1202) as part of it’s “Startup America” initiative. The Kauffman and Case Foundations have founded a connected non-profit organization with the same name.

Bush Economist Says Scrap the Income Tax

Thursday, February 3rd, 2011

In testimony before the Senate Budget Committee, former Bush White House economist Lawrence Lindsey described the current income-based tax system as a “self-inflicted wound” in the economic competition between the United States and its major trading partners. 

He advised Senators on the Budget panel to abandon all income-based levies and raise revenue exclusively through “a cash-flow based tax such as a Business Receipts Tax or even a Value Added Tax.”

WH Proposes to Expand Small Business Tax Incentives

Monday, January 31st, 2011

The zero percent capital gains rate for certain investments in small business stock would be made permanent as part of the President’s recently announced “Startup America” campaign, aimed at promoting business formation.  In an article in the Wall Street Journal, the reaction of small business investors was positive, but some said Congress and the White House can do more to promote investment in startups.  Mark Heeson, president of the National Venture Capital Association pointed out that the small business stock rule has many limitations, such as a prohibition on investment in hotels and restaurants.  Payson Peabody, Of Counsel with Dykema in Washington, DC and an advisor to the Angel Capital Association said the tax break doesn’t go far enough to trigger the level of new investment that would jumpstart the economy.