TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Wednesday, November 16, 2005

Today's Political Tax News

Bloomberg:

U.S. House and Senate panels have chosen divergent paths on a $70 billion tax cut for wealthy Americans, with the House seeking to renew investment tax breaks and the Senate preferring a measure that prevents millions from paying the alternative minimum tax.

A proposed $5 billion tax increase on oil companies may derail efforts in the U.S. Senate to extend a tax cut on dividends and capital gains, Senator Trent Lott said. The Senate Finance Committee voted 14-6 yesterday to send a $59.6 billion tax-cut measure to the Senate floor. The measure includes the tax increase on oil companies to help offset the cost of renewing dozens of expiring tax breaks. The panel omitted an extension of the 15 percent rate on dividends and most capital gains and Republicans said they'd include the measure in a final version of the legislation to be negotiated with the House of Representatives. Concerns about the proposed oil tax increase are threatening that plan. ``It's an absolute deal-breaker,'' Lott, a Mississippi Republican, said today. ``That will not be in the final product and if it is, I will vote against it.''

New York TimesSenate Panel Approves Special Tax on Oil Profits (Edmund L. Anrews):

In a telling sign of the political impact of soaring energy prices, the Republican-controlled Senate Finance Committee voted on Tuesday to impose a $5 billion tax next year on the nation's biggest oil companies. The measure amounts to a one-year windfall profits tax, a concept that most Republicans had until recently denounced as a discredited idea from the 1970's. It was added to a larger bill that would cut taxes by about $61 billion over the next five years. Conservative Senate Republicans who support the oil industry bitterly protested the measure, noting that Congress had just approved billions in new tax breaks to encourage oil and gas exploration. But every Republican voted for the overall package, which passed the committee 14 to 8 and which the full Senate is expected to take up on Wednesday.

Wall Street Journal:

Congress took the first steps toward approving a $70 billion, five-year tax bill as tax-writing committees in the House and Senate began acting on the legislation. Republican leaders in both chambers hope to bring the tax bills to floor votes by week's end. Debate in the Senate could begin today. The two versions vary widely, but Republicans in both chambers hope to settle on a compromise package to send to the White House that would extend President Bush's 15% tax rates on capital gains and dividends, provide billions of dollars in incentives for business to rebuild hurricane damage along the Gulf Coast and exempt millions of middle-class Americans from the alternative-minimum tax, or AMT.

The Internal Revenue Service is planning to hire private debt-collection agencies to help the government recover billions of dollars in unpaid taxes. But the project is taking significantly longer to launch than expected. In April, the IRS said it planned to hire a few debt-collection firms in June and to begin assigning cases to them in January 2006. But a court challenge led to a delay. Now, the IRS's latest timeline calls for assigning cases "in early summer" of 2006, says John Lipold, an IRS spokesman.

Washington Post:

Tax reductions of about $60 billion being considered by the Senate highlight internal divisions between Republican moderates trying to restrain budget deficits and others pressing ahead with tax cuts. The tax bill makes many Republicans unhappy because it omits a top priority for the GOP _ a two-year extension of reduced taxes on capital gains and dividends. "It's almost as bad as it is good," Sen. Trent Lott, R-Miss., said of the $60 billion package that the Senate planned to debate Wednesday. The tax cuts for investment income are missing because of pressure from a Republican moderate, Sen. Olympia Snowe of Maine, who said the country needs to deal with hurricane damage, high energy costs and other demands.

Facing a stalemate over one of President Bush's top economic policy goals, the Senate Finance Committee yesterday gave up efforts to extend deep cuts to the tax rate on dividends and capital gains and approved a $60 billion tax measure largely devoted to hurricane relief and tax cuts with bipartisan appeal. The measure, which could pass the Senate today, marks the latest in a string of legislative setbacks for Bush, who has repeatedly called on Congress to make his first-term tax cuts permanent and has taken particular pride in the 2003 dividends and capital gains tax cuts, which are set to expire in 2008.

Washington TimesTax Reform Non-Starter (Bruce Bartlett):

Two weeks ago, the President's Advisory Panel on Federal Tax Reform issued its final report. Although our federal tax system is in dire need of restructuring and simplification, the panel's approach is a nonstarter. It proposes much pain for very little gain. The likelihood is virtually nil that it will form the basis for congressional action.

http://taxprof.typepad.com/taxprof_blog/2005/11/todays_politica.html

Political News | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341c4eab53ef00d83461a84969e2

Listed below are links to weblogs that reference Today's Political Tax News: