The issue of taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. law changes again occupied Congress yesterday as the Senate passed a measure that included $70 billion in various tax cuts. The issue will now head to conference with the House. Highlights of the bill courtesy of Tax Wire:
After 20 hours of debate and several hours of voting on amendments, the Senate has approved a substitute version of its tax reconciliation bill. However, before the Senate can name conferees on the legislation, the House will first have to take up the Senate-approved bill.
The broad substitute amendment, which replaces the original Senate-approved language, is designed to bump the total price tag of the bill up to $70 billion –- the amount originally provided for under the fiscal 2006 budget resolution.
The substitute amendment extends for two years several noncontroversial provisions, including the deduction for state and local sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. es; the applicability of nonrefundable personal credits against the alternative minimum tax; and a bundle of so-called business extenders, including the research credit, the work opportunity tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. , and the above-the-line deduction for teachers’ classroom expenses.
Democrats used the hours of debate as an opportunity to tout the one-year extension of AMT relief included in the Senate bill over the two-year extension of the reduced rates on capital gains and dividends, which the House included in its bill. Democrats also offered numerous amendments to the bill, although at press time only one Democratic amendment had been approved.
That amendment, offered by Sens. Robert C. Byrd, D-W.V., and John D. Rockefeller IV, D-W.V., and featuring several bipartisan cosponsors, provides 50 percent expensing for qualified underground mine safety equipment and a $10,000 tax credit for training mine rescue team members.
A Republican amendment was also approved by voice vote. That amendment, offered by Sen. Jim Talent, R-Mo., expresses the sense of the Senate that the child tax credit should be made permanent. The child tax credit is scheduled to expire at the end of 2010. (Full Story)
Each year Congress substantially changes the tax code, often adding a range of deductions, credits and other tax preferences to the code. The result: growing tax complexity.
Although many in Washington consider tax reform a dead issue, at the same time they continue to focus on the issue of lobbying reform in the wake of recent scandals. In reality, tax reform and lobbying reform go hand-in-hand.
One of the easiest ways in which Washington lobbyists influence the federal government is through tax law. And this works in both directions: the more complicated the tax code, the better chance various groups have at adding their own special provisions into the code unnoticed. The more lobbyists there are working to insert special provisions into the tax code, the more complex the overall code becomes, making periodic tax reform inevitable.Share