Here are the members of the U.S. Senate Finance Committee for the 112th Congress announced today by the Senate Republican and Democratic leadership offices:
| U.S. Senate Finance Committee | |
| Chairman Max Baucus | Chuck Grassley |
| Jay Rockefeller | Orrin Hatch |
| Kent Conrad | Olympia Snowe |
| Jeff Bingaman | Jon Kyl |
| John Kerry | Mike Crapo |
| Ron Wyden | Pat Roberts |
| Charles Schumer | John Ensign |
| Debbie Stabenow | Mike Enzi |
| Maria Cantwell | John Cornyn |
| Bill Nelson | Tom Coburn |
| Robert Menendez | John Thune |
| Thomas Carper | |
| Ben Cardin | |
The Senate Democratic and Republican leaderships today announced the newest members of the Senate Finance Committee. Senators Coburn and Thune will join the Committee on the Republican side. Sen. Ben Cardin will join the end of the dais in the Democratic side.
Note: Earlier, Senator Isakson was rumored to have won a seat on the Republican side. The full Senate must still ratify the selections, but that is largely a formality.
The House Committee on Ways & Means announced today that it will hold the first of a series of hearings on fundamental tax reform on Thursday, Jan. 20th.
According to the announcement, marginal income tax rates have increased and the tax based has narrowed since 1986 when Congress last enacted fundamental tax reform. The Committee will consider how the current Federal income tax with its myriad tax preferences ”discourages job creation and economic growth.”
Quoted in the hearing announcement, Chairman Dave Camp says “we have one of the highest corporate tax rates in the world, and our small businesses are struggling with continued uncertainty about individual tax rates and new regulations. It is this Committee’s responsibility to examine ways to reform the code so that it won’t be a continued barrier to economic growth and job creation.”
According to University of Maryland economics professor Peter Morici, the latest U.S. census figures show that sun-belt states with a favorable tax and business environment, such as Texas and Florida, are attracting more immigrants. High tax northeastern and midwestern states are losing population.
Every so often, the real world makes a mockery of the neat figures modeled by Congressional budgeteers. In 2008, U.S. individual taxpayers reported $438 billion less in capital gains than they did in 2007. This change, reported today by the IRS, resulted in about $65b less revenue than in 2007.
The other significant components of individual taxpayers’ gross income either dropped slightly, or picked up slightly, but the capital gains figure dropped a whopping 48%. To put this in perspective, the total drop in adjusted gross income from 2007 to 2008 was $425b, less than the drop in capital gains. The biggest component of AGI - – wages and salaries – - rose by a meager 1.9%.
In 2007, capital gains accounted for 10% of AGI. In 2008, it had dropped to 5%.
What this illustrates is that federal revenue has become sensitive to the performance of capital markets. When the stock market crashes, as it did in 2000 and in 2008, it causes a major impact on federal revenue in the following year.
The House last night voted 277-148 to approve the $856 billion bipartisan tax compromise negotiated at the White House, sending the bill to the President for his signature and ending more than a year of uncertainty about whether Congress would extend President Bush’s 2001 and 2003 tax cuts or allow some rates to increase to their pre-2001 levels. The bill also extends for 12 months the 0% capital gains rate for investment in small business stock and enacts a one-year payroll tax holiday that will save wage earners up to $2,136 in 2011.
Households with more than one wage earner could save substantially more, because the holiday applies to each wage earner. For example, a household with two wage earners, each earning $80,000 would save $3,200 or $266 per month in payroll tax. Under a new IRS policy announced today (IRS Notice 1036), these amounts will start appearing in employees’ paychecks no later than January 31st.
The tax bill also retroactively extends and increases the AMT exemption levels for 2010 and extends them through 2011 at a cost of $136 billion, and extends nearly all other expiring tax provisions until the end of 2011.
By a vote of 81-19, the Senate passed a bill to extend the EGTRRA and JGTRRA sunsets until 2012, increase the estate tax exemption level to $5 million, reduce the maximum rate to 35%, enact a 2% payroll tax holiday for 2011, and extend expiring tax provisions. The House Rules Committee is expected to meet later today to pass a rule for consideration of the bill in the House. Reportedly, the House is considering allowing an amendment on the estate tax provisions of the bill. Any changes that the House makes would set up a new vote in the Senate before final passage.
The Senate today voted to end debate on the bipartisan tax compromise negotiated at the White House, setting the stage for a final Senate vote within 30 hours. The final vote was 83-15, with Sens. Bingaman, Brown, Coburn, DeMint, Ensign, Gillibrand, Hagan, Lautenberg, Leahy, Sanders, Sessions, Udall, and Voinovich voting “no.” Sens. Merkley and Wyden missed the vote.
Incoming Chairman Dave Camp announced that the following Republican members (listed alphabetically) will join the Ways & Means Committee in the 112th Congress:
Rick Berg (ND)
Diane Black (TN)
Vern Buchanan (FL)
Jim Gerlach (PA)
Lynn Jenkins (KS)
Chris Lee (NY)
Erik Paulsen (MN)
Tom Price (GA)
Aaron Schock (IL)
Adrian Smith (NE)
The Democratic side of the panel will shrink, but the decisions on who will leave have not yet been announced.
House and Senate tax writers last night introduced bipartisan legislation to carry out the terms of the tax compromise negotiated earlier this week between top Republican and Democratic negotiators at the White House. The legislation was introduced late on December 9th as S.A. 4753 to H.R. 4853. The Senate Majority Leader filled the amendment tree and filed cloture, setting up a vote on whether to end debate at 3pm on Monday. At this point, it is unclear precisely what amendments would be allowed, but the legislation is expected to win 60 votes. After that, there would be a maximum of 30 hours of debate, a vote on final passage, and the bill would go back to the House.
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