Shortsighted Tax Policy to Generate Windfall for the Rich

Monopoly

According to Howard Gleckman over at TaxVox, the blog of the Urban and Brookings Joint Tax Policy Center, due to a shortsighted revenue generator Congress put in place several years ago, wealthy individuals will soon be able to convert taxable investments into tax-free nest eggs, and deny the government needed revenues down the road. It's a perfect example of the unintended consequences of public policy and one of those things that make you either want to scratch your head or beat it against the wall, or both.

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The Numbers on FSC/ETI

Yesterday, the Joint Committee on Taxation released an updated score on the "chairman's mark" of the FSC/ETI bill. (See http://www.house.gov/jct/x-68-04r.pdf.)

Overall, the score raises $238 million in revenue, although there are several gimmicks which are used to keep the costs down (see http://www.cbpp.org/10-4-04tax.htm.)

  • The repeal of the exclusion of ETI will cost $57.7 billion.
  • Under title VIII, there are revenue provisions to close loopholes and raise some fees, which raise a total of $81.7 billion

The revenue enhancements from the repeal of the ETI regime and the loophole closings thus total $139.4 billion. (Note that this total would come close to paying for the $146 billion price tag of the "middle class" tax cut.)

Rather than using this money to finance cuts in other areas of the tax code or pay off the debt, the bill gives over $139 billion in additional tax cuts primarily to businesses.

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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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Cost of Estate Tax Repeal

Acording to the Joint Committee on Taxation, making permanent an estate tax repeal would cost $206 billion over the next ten years.

See x-14-04r.pdf (application/pdf Object)

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Cost of Estate Tax Repeal

Over 20 years, the repeal would cost $982 billion in lost revenues.

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Tools You Can Use - Links to Various Resources

Listing of useful federal budget and tax resources for nonprofits. Prepared for the Federation for Community Planning's "Federal Budget Training Academy" held in DC September 21-24, 2003.

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Foundation Expenses, Charitable Giving to be Debated in the House

Should foundation administrative expenses count toward their required annual 5 percent “payout,” or should only grants count? A controversial provision of the Charitable Giving Act (H.R. 7) eliminates all administrative expenses from the payout requirement, and will be debated at a mark-up scheduled for Tuesday, September 10 in the House Ways and Means Committee.

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CBO Report Analyzes Effects of President?s Budget Proposals

On March 7, the Congressional Budget Office (CBO) released its annual report analyzing the effects on revenue and spending of the President’s budget proposals. The report was yet another blow to the President’s proposals for additional tax cuts.

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JCT Report Calculates Total Costs of President?s Latest Tax Cut Proposals

On March 4, the Congressional Joint Committee on Taxation (JCT) released its estimates of the costs of the tax provisions contained in the President’s FY 2004 budget proposal. Since the President’s Budget proposal is just that – a proposal – these analyses are important for providing a neutral examination of these policy changes that can permanently affect the federal government’s resources.

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Dynamic Dysfunctions

At the start of this Congress, the Republican-led House Ways and Means Committee made the implementation of the controversial practice of “dynamic scoring” for budget decisions one of its first orders of business.

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