Tax Policy Under Speaker Pelosi and Ways & Means Chair Rangel

Hints of tax policy under the incoming Speaker of the House Nancy Pelosi and incoming Chair of the House Ways & Means Commiitee Charlie Rangel can be found in press coverage of the election:

• Washington Post:  Pelosi's Platform, by Michael Kinsley:

The two favorite words of Democrats on the cusp of power seem to be "tax credit." ...

The problem with tax credits in general is that they never appear in the budget, so they never get the same scrutiny as direct spending, although their impact on the deficit is exactly the same. By definition, they cost more than whatever benefit they are intended to achieve, since no one is going to be induced to spend an extra dollar on, say, dance lessons (because some member of Congress has decided that it would be good for the country if more people knew how to dance) unless the subsidy is worth more than a dollar.

The Tax Foundation criticizes Pelosi's fixation on tax credits here.

• Bloomberg News:  Rangel Says He'll Try to Heal Partisan Rifts as Tax-Panel Head:

Rangel said his priority after securing an early legislative victory that restores bipartisanship would be to steer the panel toward solving the growing problem of the alternative minimum tax, which if left unchecked will impose up to $1.35 trillion in additional taxes on 45 million households over the next decade.

• USA Today:  Democratic House Means Changes in Tax Agenda, by Sandra Block:

The Democrats have won control of the House. What will it mean for your tax returns? Here's a look at what to expect:

• Estate Tax
• Tuition and Sales-Tax Deduction
• AMT

• Roth & Co.:  The 2006 Election Results: Federal and Iowa Tax Policy Implications, by Joe Kristan:

• Estate Taxes
• 15% Capital Gains and Dividends
• Comprehensive Tax Reform

• Start Making Sense:  Significance of the Election, Part 1: The Next 2 Years, by Dan Shaviro:

The expiring tax cuts need to be addressed at some point, if only so people will know what to expect. The Democrats will not want to extend them, and Bush is probably unamenable to anything else. So perhaps we can expect the chicken games on this to continue through the 2008 election, with everything still unresolved. Likeliest exception: I could imagine an estate tax compromise (much higher exemption amount, lower rate as part of a "permanent" new regime), but only if Bush will sign on to make it veto-proof. Meanwhile the AMT will be growing, and I don't see how they are going to be able to make a deal addressing this, especially with paygo rules in place.