Federal Tax Policy

Feb 8, 2016

Top 400 Taxpayers See Tax Rates Rise, But There’s More to the Story

As Americans were gathering party supplies to greet the New Year, the Internal Revenue Service released their annual report of cumulative tax data reported on the 400 tax r...

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Feb 4, 2016

Chlorine Bleach Plants Needlessly Endanger 63 Million Americans

Chlorine bleach plants across the U.S. put millions of Americans in danger of a chlorine gas release, a substance so toxic it has been used as a chemical weapon. Greenpeace’s new repo...

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Jan 25, 2016

U.S. Industrial Facilities Reported Fewer Toxic Releases in 2014

The Toxics Release Inventory (TRI) data for 2014 is now available. The good news: total toxic releases by reporting facilities decreased by nearly six percent from 2013 levels. Howe...

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Jan 22, 2016

Methane Causes Climate Change. Here's How the President Plans to Cut Emissions by 40-45 Percent.

UPDATE (Jan. 22, 2016): Today, the Bureau of Land Management (BLM) released its proposed rule to reduce methane emissions...

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Estate Tax Effects on Small Farms and Businesses

Jul 7, 2005 by Guest Blogger

The Congressional Budget Office (CBO) released a report today called "Effects of the Federal Estate Tax on Farms and Small Businesses." The report, which was prepared at the request of Senate Finance Committee Ranking member Max Baucus (D-MT), looks at how family farms and small businesses are truly affected by the existence of an estate tax. Proponents of estate tax repeal often make the argument that the tax unfairly hurts family farms and small businesses. In reality, a number of exemptions for family farms and small businesses exist, which can serve to significantly lower the number of estate tax filers. This analysis, which uses data from 1999 and 2000, looked at the effects of freezing the estate tax exemption level at $1.5 million, $2 million, and $3.5 million. The report found that any of those expemtion levels, along with a 48 percent tax rate and a large Qualified Family-Owned Business Interest (QFOBI) would substantially reduce the number of small businesses and farmers affected by the tax. The estate tax needs to be reformed so that in 2011 (when it is scheduled to revert to it's pre-2001 form), family farms and small businesses are not unfairly burdened with the tax. However, as this report alludes to, repeal is not necessary in order to reduce the burden on family farms and small businesses. Deductions like QFOBI as well as raising the exemption level to one of the above-mentioned levels can work to do the accomplish the same end.

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Tax Panel May Reveal Some Details in July

Jun 30, 2005 by Adam Hughes*

The president's advisory commission on tax reform could hold a hearing in mid-July that may offer a more detailed glimpse at the changes the panel will recommend in September, a senior Treasury Department official said June 29 at a tax roundtable sponsored by the District of Columbia Bar Association Tax Section. Also speaking at the roundtable event was the Commissioner of the Internal Revenue Service Mark Everson, who reiterated five points that he believes are significant as the panel works to produce its recommendations. The five points the panel's proposals should reflect include:

the increasinly global nature of many tax transactions
retaining "adequate progressivity"
being administrable
being simple for taxpayers to comply with, and
providing for a smooth transition

For more information on the tax panel's work to date, see OMB Watch's Tax Panel Webpage

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Smaller Deficit Could Lessen Pressure For Fiscal Discipline

Jun 29, 2005 by Adam Hughes*

Congressional observers and Wall Street analysts have once again projected down the U.S. fiscal deficit for 2005, with some believing the deficit could be almost $100 billion smaller than the White House's initial projection from January of $427 billion. Increased tax receipts and stronger than projected economic growth have contributed to the smaller deficit projection. Through May, receipts have increased 15.5 percent as compared to the same period in 2003, outpacing a 7.1 percent increase on the spending side, and the economy grew at a rate of 3.8 percent in the first quarter of 2005. Yet the lower deficit projection is hardly news for celebrating. Even $325 billion - the low mark for projections - would be the third largest deficit in history (the two others, incidentally, were in 2003 and 2004). And despite the better economic numbers, deficits are projected to remain for decades. The Bush administration has hailed the smaller projections as good news and says it is part of the plan to cut the deficit in half by 2009. What the administration does not say, however, is that after 2009, if current policies stay in place, the deficit will start to rise again. The government is currently running a structural deficit, meaning that no matter how larger our economic growth becomes, the current tax code will not be able to bring in enough revenue to pay for current programs, policies, and priorities. This is due to a lack of a long-term outlook for fiscal planning in the government and lack of discipline among the GOP in Congress to resist yet another round of unpaid-for tax cuts. This trend continues to be troubling.

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President's Tax Reform Panel Gets Two Additional Months

The deadline by which the President's Advisory Panel on Federal Tax Reform needed to report their recommendations to Treasury Secretary John Snow was pushed back two months by order of President Bush last week. On June 16, Bush signed an amendment to the executive order establishing the parameters of the panel allowing the report to be sent to Treasury by September 30, a full two months after the original July 31 deadline. It is unknown whether this change was due to political calculations by the president and his advisors or if the panel was behind schedule and simply needed more time.

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Rhetoric Heats Up On Estate Tax as Political Reality Pushes Compromise

The Senate appears headed for another showdown on repeal of the estate tax, possibly before the August recess. With permanent repeal costing around $1 trillion over the first 10 years, there is discussion between Senate Republicans and Democrats on possible reform options. It is unclear whether these discussions on reform may turn into a back-door approach by pro-repeal groups to push through legislation that would amount to a virtual repeal of the estate tax.

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Where is the Party of Fiscal Responsibility?

Jun 27, 2005 by Guest Blogger

This is an excellent op-ed in today's New York Times by Nicholas Kristof, focused on the debt and the lack of fiscal responsibility which has permeated White House economic policy for the last five years. As Kristof points out, "More than two centuries of American government produced a cumulative national debt of $5.7 trillion when Mr. Bush was elected in 2000. And now that is expected to almost double by 2010, to $10.8 trillion." There are reasons why we are now so far into debt that three-fourths of the debt have to be purchased by foreigners -- many of them are related to the economic policies passed by the administration and Congress over the last five years. Bush was able to pass his tax cuts of 2001 based on projections of future levels of revenue that proved to be false; yet the tax cuts are still in place, and Congress is calling for more (i.e., repeal of the Alternative Minimum Tax and the Estate Tax). As the article points out, in a speech Bush gave after presenting his first budget in 2001, he said, "I hope you will join me to pay down $2 trillion in debt during the next 10 years. That is more debt, repaid more quickly, than has ever been repaid by any nation at any time in history." He stated that the U.S. would be "on a glide path toward zero debt." This has turned out to be almost ludicrously false. The debt held by the public is $4.5 trillion today. And each time Bush and Congress pass expensive legislation without figuring out how they are going to pay for it (as they are trying to do with Social Security right now), it only increases this amount. In one of the richest countries in the world, every baby is born tens of thousands of dollars in debt. There is a reason why GAO Comptroller David Walker calls our fiscal irresponsibility "the greatest threat to our future." We are currently on an unsustainable path.

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NY Times Editorial on the Estate Tax

Jun 21, 2005 by Guest Blogger

This excellent editorial in the New York Times discusses the conservative push to repeal the estate tax in the Senate. The article says "The mostly Republican supporters of repeal don't have the necessary votes, but are threatening to bring the measure to the floor to force Democrats to vote against it. Democrats, in turn, fear being painted as pro-tax at election time, so would rather broker a compromise than vote against repeal." However, a bad compromise would be worse than no compromise at all. The article notably points out that irresponsible repeal - such as one that had the exemption level at $3.5 million and the taxable rate at 15% - would end up costing the treasury almost as much as full repeal would (87 percent), and thus is just as harmful.

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President's Tax Reform Panel Pushes Back Deadline

Jun 16, 2005 by Guest Blogger

The President's Advisory Panel on Tax Reform was scheduled to make recommendations to the Treasury Department concerning the tax code on July 31st. The panel announced today that they will be pushing this deadline back to September 30th. Many believe that Congress won't take up reforming the tax code until 2006 (if at all), so the panel feels it has more time to explore specific reforms. Check the panel's website for more information.

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Frist Adds ET Repeal Amendment to Energy Bill

Jun 16, 2005 by Guest Blogger

From today's TaxAnalysts: An amendment proposing permanent repeal of the estate tax has been added to an energy bill - the Energy Policy Tax Incentives Act - going to the Senate Finance Committee today, June 16, for markup. The amendment was one of five added by Senate Majority Leader William Frist (R-TN) to the $16 billion energy tax title including 56 total amendments. Although many of the amendments will be withdrawn and others added before reaching the Senate floor, some suspect that Senator Frist will keep the estate tax amendment to obligate Democrats to vote on the contentious issue. Before becoming law, the amendment would have to be approved by the Finance Committee and full Senate as well as survive conference negotiations with the House of Representatives.

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Social Security and Pension Hearings

Jun 15, 2005 by Guest Blogger

A number of important hearings have taken place this week. Yesterday, the House Ways and Means subcommittee on Social Security held a hearing examining the impact of the American population’s increasing longevity on Social Security’s finances and exploring ways to encourage work at older ages. Members of the panel heard a range of proposals to address the impact of longer-living individuals on solvency. Witness testimonies can be read here. Also, this morning the Senate Budget committee held a hearing on the solvency of the Pension Benefit Guaranty Corp., which we wrote about in our last issue of the Watcher. The committee heard from Bradley Belt, Director of the PBGC, and CBO head Douglas Holtz-Eakin. The hearing was held because it is clear the defined-pension benefit system needs to be reformed. Rep. Boehner has offered a bill (HR 2830) to overhaul the pension system; however his bill has been criticized by both Republicans and Democrats. Boehner's bill raises pension insurance premiums that companies pay from $19 to $30 to ensure that the PBGC does not need a taxpayer bailout.

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