CBPP Calls Foul on Recent Estate Tax *Studies*

Center on Budget and Policy Priorities

The Center on Budget and Policy Priorities (CBPP), a non-profit fiscal policy institute, released a report yesterday questioning the accuracy of two recent reports from the American Family Business Foundation (AFBF) that claim repeal of the federal estate tax could create upward of 1 million jobs relatively cost free.

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Will Privatization Increase SS Management Fees?

As Paul Krugman noted in the New York Times this morning, social security overhaul comes with a lot of risks. He points out other countries have dabbled in privatization and is baffled at the lack of understanding of their experiences. For example, in Chile's program, privatization has caused management fees to be as high as 20 precent, whereas in the United States currently, 99 percent of social security revenues go towards benefits. This is another pitfall of privitization that is not mentioned by the Bush administration. Krugman's column is worth a read.

Also, click here to read the latest Center on Budget and Policy Priorities report about price indexing and how Bush's reform proposal could significantly reduce benefits in the years to come.

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Congress Strips Offending Tax Provision, Passes Omnibus Bill

Last week Congress reconvened for a second lame duck session. They succeeded in stripping controversial tax language from the bill and on Dec. 8 the President finally signed it, officially bringing the much delayed FY 2005 appropriations process to a close. The omnibus bill combines nine appropriations bills Congress was unable to finish working on before the end of the fiscal year, along with thousands of provisions and riders.

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Election Day Ballot Initiatives Could Affect State and Local Tax Policy

Citizens across the country have been gearing up for this election week for an untold number of months. And while much of the attention has been focused on the too-close-to-call presidential election and the key House and Senate races, when voters hit the polls on Nov. 2 they will also be deciding on a number of different ballot initiatives that potentially could have significant impacts on state and local tax policy.

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Senate Pushes Through Corporate Tax Bill Over Holiday Weekend

The Senate commemorated the Columbus holiday Oct. 11 by holding a special session to pass the corporate tax bill, also known as the FSC/ETI bill. The previous week the House had passed the bill, which was designed to remove certain corporate tax subsidies on exports which had been ruled illegal by the World Trade Organization two years ago. The new tax breaks hit the nation at a time when corporate tax revenue has dropped to a historic low -- and the federal deficit has climbed to an all-time high. Last week, the Congressional Budget Office reported the FY 2004 federal deficit hit a record $413 billion.

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Congress Votes to Extend Bush's Tax Cuts

The House and Senate voted overwhelmingly on the evening of September 23 to extend three tax cuts amounting to $146 billion total, with $13 billion set aside for a variety of business tax breaks. Because the costs of the tax cuts are not offset at all, many believe that they will end up hurting the middle class in the long run.

The Center on Budget and Policy Priorities released a report highlighting how the "middle class" tax cuts will likely end up making the middle class net losers, once the cost of paying for the tax cuts is considered. The report can be read here.

The legisltation, which was passed 92-3 in the Senate and 339-65 in the House, extends the $1,000 per-child tax credit and tax breaks for married couples, and prevents the 10 percent income tax bracket from being applied to smaller amounts of earned income. The legislation also extends alternative minimum tax relief for one year.

Click here to read a Washington Post article with further details on the new tax legislation.

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Appropriations: A Look Ahead

As Congress reconvenes today, the Defense Bill remains the only completed appropriation bill for FY 2005. The $417.5 billion bill was approved only just prior to the August recess. Members of Congress have a lot of work ahead of them if they wish to complete their appropriations work before the end of the fiscal year, which ends on September 30th, as only three other bills -- Homeland Security, Legislative Branch, and Military Construction -- have even made it through a full Senate committee.

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Watch for August 26 Release of Poverty, Income Statistics

This week, the U.S. Census Bureau will release its latest statistics on income, poverty and health insurance coverage, a month earlier than usual. It will show the 2003 poverty rate, household income information, and the percentage of Americans who are uninsured using the Census Bureau's "Current Population Survey" (CPS).

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Good Riddance to Bad Policy: Budget Enforcement Bill Dies

A conservative effort to severely limit domestic programs was soundly defeated in the House last week. The so-called "Spending Control Act of 2004" failed by a vote of 146-268.

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Will There Be a Budget Resolution?

"Paygo" rules, once a little-known budget technicality, are now proving to be the main impediment in reaching a budget resolution for FY 2005, which begins on October 1, 2004.

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