Despite rumors earlier this week that the estate tax might see floor action, the Senate had far too many issues on its plate this week for Majority Leader Bill Frist (R-TN) to schedule a vote. He did, however, file for cloture and we can plan on probably seeing an estate tax vote after Senators return from their August recess.

In other estate tax news, this week Sen. Jon Kyl (R-AZ) has floated some new specific numbers regarding reform options. He specifically mentioned a $3.5 million exemption rate and a 15 percent tax rate. While the $3.5 million exemption is much lower than what we have been hearing from him over the past month, the low tax rate still guts the tax. CBPP has estimated, based on Joint Committee on Taxation numbers, that in 2015 the cost of this proposal would be roughly 74 percent of what the total cost of repeal would be.

Although President Bush and Congressional Republicans have tried to sell the tax breaks in the energy bill as providing support for alternative energy and increased efficiency, the $14.5 billion tax package does not award nearly enough to these endeavors. Instead, 58 percent of this will go to tax breaks for traditional energy industries, including oil, natural gas, coal, electric utilities and nuclear power.

This tax package, which was negotiated behind closed doors, will most likely be approved by Congress later this week. Keith Ashdown, vice president of policy at Taxpayers for Common Sense, said, "They've created a complicated scheme of making sure a lot of different profitable energy industries are going to make off like bandits." He also said the tax breaks help companies "pad their bottom line, but it doesn't really create new behavior in the energy industry." Sen. Jeff Bingaman (D-NM) of the Finance Committee commented that he wanted to see more spent on alternative energy and conservation.

The $14.5 billion in tax breaks will be partially offset by $3 billion in revenue that the bill will generate. The Joint Committee on Taxation has scored the bill as having a net cost of $11.5 billion over 10 years.

While Congress will spend much of this week focusing on CAFTA, there are a number of issues competing for time on the floor or in committee. This includes a procedural vote in the Senate on estate tax repeal, which may happen this week. The Wall Street Journal reported on the possibility of a vote last friday. It is still possible that the estate tax will see floor action later this week. See the Wall Street Journal website for more information.

The President's Advisory Panel on Tax Reform met yesterday in their first gathering where they discussed reform proposals instead of actually hearing testimony from witnesses. At the meeting they revealed their first recommendation on changing the tax code: repeal of the alternative minimum tax.

The panel came to their consensus to recommend repealing the AMT, however now they will have to find a way to replace the more than $1.2 trillion the Treasury expected to collect from the tax over the next ten years. The AMT affects 4 million families this year but since it doesn't change with inflation, is expected to hit more than 51 million families in ten years from now. For more, click here.



Posted by Becky Lewis, 12:59:49 PM

Tuesday, July 19, 2005

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