The Washington Post editorial board responds to a member of the Virginia House of Delegate's comments that Virginia is a highly-taxed state and thus should not raise taxes in order to meet the state's critical priorities.

Washington Post: Reality and Taxes

As we've said time and again, one of the main reasons why the Bush tax cuts are so egregious -- besides the fact that they are draining the Treasury of revenues and causing important federal programs to get squeezed -- is the that the beneficiaries of these tax cuts are overwhelmingly the very richest people in our society. As this well-written article puts it, "things will get even worse if the Bush administration gets its way. That’s because one key part of the Bush administration’s tax cuts--eliminating the estate tax--hasn’t gone into effect yet." This is an excellent point; estate tax repeal would only further slant tax cut benefits towards the wealthiest.

The article includes a number of other great points and facts on taxes; I've included a few of them below.

• Those in the top 1 percent income bracket are expected to get an average tax cut of $39,000 in 2006--or 52 times more than households at the middle of the income ladder. Those with incomes over $1 million will receive an average tax cut of more than $111,000.
  
• Because of lowered tax rates on investment income, taxpayers with annual incomes more than $10 million paid about the same share of their income in income taxes as those making $200,000 to $500,000.
  
• The 181,000 Americans with annual incomes of $1 million or more--about one-tenth of 1 percent of all taxpayers--reaped 43 percent of all the savings on investment taxes in 2003, about $41,400 per person.
  
• In contrast, the 71 percent of tax filers with incomes less than $50,000 saved $10 each from the capital gains and dividend tax cuts, adding only 2 percent to their $425 average tax reduction in 2003.

Finance Committee Chair Charles Grassley (R-IA) sent a letter to IRS Commissioner Mark Everson April 13 regarding online tax filing, and specifically, his recommendations for reforming it. While the IRS currently provides a free online filing service to qualified individuals (those with adjusted gross incomes of $50,000 or less) throught the "Free File Alliance," Grassley is "looking into allowing" the IRS to provide a free, electronic direct filing service to all taxpayers.

In the letter, according to the BNA trade pub, Grassley "urged Everson to rein in commercial offers and charges for basic services charged by the alliance, noting that a new staff analysis by his committee indicates some of the services are not free, and include hidden charges and 'get rich quick schemes.'" They indicated that some companies participating in the Alliance use the Free File web site to market other products and services. Grassley wants to ensure that these "free" services are really free, saying, "An underlying principle of the Free File Alliance is that no one should be forced to pay to electronically file a tax return. That principle has been and continues to erode."

Following up on a OMB Watch Budget Blog posting late last month, the Washington Post has an excellent editorial in this morning's paper criticizing Congress for "resorting to a [tax] gimmick that is even more egregious than their usual tactics."

The only way for the folks over at the Post to improve this editorial is to correctly identify this gimmick as a GOP proposal and not hide behind the general moniker of 'Congress.' As important as it is for all members of Congress to be honest about the impact of their policy proposals, it is equally important for the media to call a spade a spade. This tax gimmick is a purely GOP idea to finagle passage of a GOP tax cut that Democrats do not support.

It is still possible for the Senate parliamentarian to rule against this tax gimmick when Congress returns next week, then forcing the Senate to muster a more difficult 60 votes to approve the bill rather than simply 50. Unfortunately, that is the only way this bill won't eventually pass into law.

Washington Post: Tax Gimmickry

Interesting article yesterday from the Associated Press about who prepares the tax forms for the members of Congress who are responsible for writing the tax code. Turns out three out of the top four lawmakers in Congress who have jurisdiction over the U.S. tax code use private preparers to file their tax returns. The lawmaker who still prepares his own taxes is Rep. Bill Thomas (R-CA), who chairs the Ways and Means Committee.

About sixty percent of Americans use a private preparation company or service when it comes to filing their own returns.

Associated Press: Tax Law Writers Rely on Pros for Returns

Last week the National Priorities Project released their annual publication Where Do Your Tax Dollars Go? The publication shows how the median income family's income tax dollars are spent for every state and 200 cities, towns and counties. It also looks at the shift in how tax dollars were spent in 2005 compared with 2000. For example, NPP has found that the military's share of the income tax dollar has risen by 20 percent since 2000, while the share of spending has dropped for job training (-21 percent), environment (-19 percent), housing (-7 percent) and veteran's benefits (-2 percent).

Despite a flurry of last minute negotiations and abundant rumors from Capitol Hill, GOP negotiators could not find a compromise on the long-delayed 2005 tax reconciliation bill before they left Washington for a two-week recess. Both the president and GOP leaders in Congress made a push to reach consensus on the bill before the upcoming tax filing deadline on April 15.

This was the second positive piece of fiscal news coming out of Congress in less than the span of a few hours yesterday afternoon. Those kinds of days have been few and far between in Washington recently and have convinced many veteran Capitol Hill watchers that perhaps, just for a short time, Congress moved beyond sight and sound and briefly passed into the twilight zone at some point yesterday afternoon. As of this posting however, that was still unconfirmed...

Maybe Congress will now re-instate pay-as-you-go (PAYGO) rules and complete a fiscally responsible trifecta?

In a surprising collapse late yesterday afternoon, the House GOP leadership pulled the 2007 budget resolution from floor consideration and gave up any efforts to pass the bill before the two-week April recess. Lacking the votes to pass the resolution, new GOP Majority Leader John Boehner (R-OH) failed in his first major test as head of the new leadership team in the House.

Boehner had made statements earlier this week vowing to pass a budget before the recess or abandon efforts to pass one at all. On April 4, he asked rhetorically, "If we don't do it this week, why do it at all?"

The straw that broke the camels back was a provision to require authorization from the Budget Committee for any emergency disaster relief appropriations in excess of $4.3 billion. This budget cap was heavily pushed by conservatives over the past few weeks (along with other harsh budget process changes) in exchange for their support on the budget resolution. But inclusion of this cap forced Appropriations Committee Chairman Jerry Lewis (R-CA) to withdraw his suppport and lobby the other 35 members of his commmittee to do the same.

While it is unclear if the House Majority Leader will hold to his earlier comments about abandoning efforts to pass a budget resolution, it may make little difference at this point. With the House GOP caucus now split into multiple factions and with united Democratic opposition, it seems more unlikely Congress will pass a budget now than perhaps at any other time this year.

And without the ability to pass a budget, the Republican Party continues to pull apart at the seams and has become a majority party withouth the ability to govern. While before they could muster the support to pass an irresponsible and reckless budget, this year, they may not be able to pass any budget at all.

Here's hoping they don't...

Washington Post: GOP Budget Talks Collaspe In House
NY Times: House Republicans Abandon Budget Effort

Posted by Adam Hughes, 10:19:54 AM

Thursday, April 06, 2006

Wednesday, April 05, 2006

Tuesday, April 04, 2006