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| Vol. 2 No. 7 | April 2, 2001 | |
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Connect with Lawmakers and the Media
Submissions Feedback Subscribe/ Unsubscribe Back Issues What Tax Day? Tax Day 2001 Fact Sheet On Website Also available is a Tax Day Action Kit, which includes a sample letter to the editor and materials on how to conduct a Tax Day Penny Poll to illustrate for the public how few of our tax dollars address community needs. Please contact Pamela Schwartz at pamela@natprior.org (or 413.584.9556) with any questions. Over 18,000 Sign Petition to Preserve the Estate Tax Oppose the Estate Tax Repeal Fair Taxes for All Website Democrats’ Prediction of the Cuts to Come Cutting Waste[ful Spending] to Save the Environment NCLIS Comprehensive Assessment of Public Information Dissemination Evaluation of OSHA'S ERA and EPA Whistleblower Investigations Occupational Safety and Health Administration TRI Lead Rule Next on Enviro Chopping Block? IRS Seeks Comments on Form 1023: Application for Tax-Exempt Status for 501(c)(3) Organizations MAKE YOUR VOICE HEARD! SIGN ONTO THE INVEST IN AMERICA STATEMENT OF PRIORITIES The Century Institute Summer Program for Undergraduates Online Survey |
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So far, the House has passed, with slight modifications, two major elements of President Bush's tax plan:
On Wednesday, the House will be considering a third major piece, a bill repealing the estate tax over ten years (HR 8), which has an estimated cost of $193 billion over ten years, but could be considerably more costly unless loopholes can be closed. Since most of these tax cuts are phased in, they will cost substantially more in the decades following repeal. The House finalized and passed its budget resolution on March 28, essentially following President Bush's priority - a tax cut costing $1.68 trillion over the next ten years. The rapid progress of the House is unlikely in the more-evenly divided Senate. Senate Budget Committee Chairman Pete Domenici (R-NM) is not even holding a Senate Budget Committee mark-up because all eleven of the Budget Committee's Democrats - exactly half of the Committee - oppose a budget resolution with such a large tax cut. The budget resolution will go directly to the Senate floor this week. Since the Senate will be in recess for the two weeks following this week, the hope is that the budget resolution can be passed by the end of the week. This is a close one. The budget resolution will basically set the parameters for future spending decisions. A budget resolution containing a $2.6 trillion-plus tax cut, largely benefiting wealthier Americans, will constrain domestic investments in people and communities for decades to come. Weigh in with your Senator this week - and ask him or her to "just say no" to the budget resolution. The President's full budget is expected to be released on April 9. Even delaying passage of the Senate budget resolution until after the President's budget is known would be a significant victory. The President's detailed budget will allow for more of a sense of the spending cuts that will be inevitable to balance a budget around the huge tax cuts. Back to TopPublic Opinion and the Bush Tax Cuts As the Senate proceeds to vote on its Budget Resolution this week, it might be helpful to assess how the public views the Bush tax cuts. Below are three charts from a recent NBC News/Wall Street Journal Poll (March 1-14, 2001) providing some insight:
In a separate Gallup survey conducted in January 2001, the public said a tax cut is not the country's top priority. In fact, out of 11 choices, a tax cut was ranked 8th.
Estate Tax Repeal Bill On House Floor This Week On March 29, the House Ways and Means Committee approved a bill (HR 8) phasing out the estate tax by 2011. The vote was 24-14, along party lines, with one Democrat, John Tanner (TN) who cosponsored an earlier version of the bill with Jennifer Dunn (R-WA), voting for repeal and one Republican, Amo Houghton (NY), voting against repeal. The bill is expected to reach the House Floor Wednesday (April 4) of this week. The bill phases in repeal of the estate tax over ten years, rather than the eight years proposed by President Bush. It is estimated to cost $193 billion over THE FIRST ten years. The cost jumps dramatically once the estate tax is fully repealed - from $35 billion in 2010 to $51.8 billion in 2011. It is very clear that the second decade of repeal will be much more costly than the first ten years - perhaps, according to some reports, as much as or more than $1 trillion. For example, estimates released by the Joint Tax Committee based on immediate full repeal, and including some of the changes to capital gains tax included in this bill, show a ten-year cost of an astronomical $662.2 billion. Essentially, in the last stage of repeal, the estate tax rate will drop from 39% in 2010, to zero in 2011. In addition to this huge and misleading "backloading" (so the cost of repeal during the next decade appears reasonable and within the President's $1.62 trillion tax cut plan), more recognition has been given recently to the possibilities for income tax avoidance if the estate tax, which acts as an effective backstop for taxation on income and capital gains, is repealed. It is not at all clear that the full extent of ways around payment of income tax has been factored into the $193 billion cost. The bill recognizes this by containing a provision requiring the US Treasury to study the possibilities for income tax avoidance created by the bill and to report to Congress by December 31, 2002. What this debate does make clear is that the estate tax serves a valuable purpose in taxing assets that have appreciated, i.e. "unrealized capital gains," that otherwise would escape taxation. The bill:
This complicated and quite possibly unworkable measure to recoup some of the losses from having no estate tax would probably generate very limited revenue and is, according to most commentators, subject to considerable abuse and tax avoidance measures. For more information about a similar proposal see the Center on Budget and Policy Priorities' paper. The full House will be debating repeal of the estate tax on Wednesday, April 4. Back to Top"Contractor Responsibility" Rule to be Repealed The Bush administration has decided to repeal a rule (completed at the end of the Clinton administration) that promotes greater accountability for federal contractors - to make sure they comply with important public protections. The proposed repeal is expected to be announced in the Federal Register on Tuesday, April 3; a separate notice is also expected to appear that will suspend the rule until it can be revoked. The "contractor responsibility" rule, as it's called, simply clarified a long-standing requirement that prospective contractors "have a satisfactory record of integrity and business ethics," specifying that this includes a company's record of complying with the law (including tax laws, labor laws, employment laws, environmental laws, antitrust laws and consumer protection laws). This is plain common sense. Businesses that consistently flout the laws of the land should not be rewarded with taxpayer dollars. Business interests, however, have engaged in a massive, and dishonest, campaign to thwart the rule. In particular, they charge that the new specificity of the standard amounts to "blacklisting" with no allowance for due process. But this is just not true. Each determination is made on a case-by-case basis for the contract in question, and does not constitute "debarment" for all federal contracts. In other words, a company that is denied one contract on the basis of its legal track record is still eligible to be considered for another federal contract. There is no centralized black list. In announcing its decision to repeal the rule, the administration also claimed that it would be impossible to implement. Again, this is not a serious argument. To facilitate implementation, the rule requires bidding companies to disclose whether they have been found liable for violating the law within the preceding three years. This disclosure requirement makes it easy for a government contracting officer to make the necessary determination. The opposition to this standard is difficult to understand. It seems obvious that the government should at least be able to consider frequent lawbreaking in awarding federal contracts. Say, for example, you have two contractors, equal in every way except that one has substantially violated environmental laws. The opponents seem to be saying that a government contracting officer should not be able to use this information in deciding which one should get the contract. This is absurd on its face. Taxpayers should not have to subsidize lawbreaking. Unfortunately, common sense doesn't seem to mean much in the face of raw political power. Business interests, who have contributed millions to President Bush, made this one of their top priorities, and the new administration has responded accordingly. Read the Washington Post article on the repeal. Back to TopBush Administration Rolls Back Drinking Water Standard The Environmental Protection Agency (EPA) announced on March 20 that it would repeal a recent standard, completed during the Clinton administration, that requires levels of arsenic in drinking water to be reduced by 80 percent. The previous standard for arsenic was set in 1942, but a 1999 study by the National Academy of Sciences concluded that this standard was insufficient, and encouraged quick action by EPA. The NAS study found that arsenic in tap water causes bladder, lung and skin cancer, and may cause kidney and liver cancer. The study also found that arsenic harms the central and peripheral nervous systems, heart and blood vessels, and causes serious skin problems, including pre-cancerous lesions and pigmentation changes. The ongoing assault on environmental protections by the administration has prompted Sen. Joseph Lieberman (D-CT) to launch an investigation into the Bush roll back, and blast its decision-making. The investigation will focus on the arsenic rule, the hard rock mining rule, and the roadless rule. Read a press release from the Natural Resources Defense Council expressing outrage at the decision to kill the arsenic standard. Back to TopAdministration Suspends Mining Restrictions The Bureau of Land Management proposed on March 23 to suspend a rule that would restrict hard rock mining operations on public lands to better protect ground and surface water. An eventual repeal of the rule is likely. The Environmental Protection Agency (EPA) estimates that 40 percent of the headwaters of all western watersheds are polluted by mining. Independent reports estimate that taxpayers could end up paying about $1 billion in environmental cleanup costs as a result. For more information on this decision, see this press release by the Mineral Policy Center. Back to TopCampaign Finance Reform Legislation Clears Senate
In a late Monday vote, the Senate approved a campaign finance reform bill that is the result of two weeks of debate and amendments. While the final language is not yet available, the record to date indicates the following elements will be part of the bill:
The Senate defeated two major amendments that would have effectively killed the bill. These were paycheck protection (requiring unions to get individual authorization from members to use treasury funds for election activity) and non-severability, which would have made the entire bill unconstitutional if any one portion of it was invalidated by the courts. OMB Watch will post a summary and analysis of the bill once final language is available. Back to TopMore Charitable Giving Bills Introduced In Congress Two more bills aimed at increasing charitable giving were introduced in Congress on March 21. The Senate bill (S. 592), sponsored by Sen. Rick Santorum (R-PA) and Joe Lieberman (D-CT) also provides incentives for low income households to establish savings accounts. In the House, H.R. 7 (also found at H.R. 1284), sponsored by Rep. J.C. Watts (R-OK) and Tony Hall (D-OH), contains similar provisions but also would expand "charitable choice" to nine more areas of federal funding. (See related story this issue.) Both S. 592 and H.R. 7 would expand the charitable tax deduction to nonitemizers, allow tax free withdrawals from individual retirement accounts for the purpose of making a charitable donation, expand the availability of the deduction for donations of food and create incentives for low income households to save. H.R. 7 also contains a provision limiting business liability for injuries involving in-kind donations. The major difference between the bills is their approach to the nonitemizer deduction. The House bill would allow a full deduction, up to the amount of the standard deduction. However, the Senate bill would not apply the deduction to the first $500 donated, and would limit the deduction to a percentage of the amount over $500. In the first year 50% of the amount over $500 could be deducted, with the level increasing by 10% over the following years until it reaches 100%. Both bills would allow individuals age 59 1/2 or older to withdraw from Individual Retirement Accounts (IRA) tax free if the donation goes directly to a charity from the IRA account. The bills expand deductibility of contributions of food from farmers, restaurants and individuals (currently only corporations can use the deduction), allowing them to deduct the fair market value of their donation. The House bill contains a provision that would excuse businesses that donate machines, vehicles or other equipment to nonprofit organizations from liability for injuries resulting their use, except in cases of gross negligence or intentional misconduct. Low income households would be encouraged to save for secondary education, purchase of a home or starting up or expanding a business through creation of Individual Development Accounts. The accounts would be established at participating financial institutions, such as banks and credit unions, that would match up to $500. There would be no tax on the individual's earnings, and the financial institution would receive a tax credit. To be eligible household adjusted gross income must be $20,000 or less for an individual, $40,000 or less for a couple and $25,000 or less for a head of household.
For more information on the variety of bills aimed at encouraging donations to charities have already been filed, see this comparision Charitable Choice Legislation Introduced in the House A charitable choice bill has been introduced in the House by J.C. Watts (R-OK) and Tony Hall (D-OH), which, unlike its Senate cousin, contains legislation allowing the federal funding of churches' social service activities. Similar language had been removed from a Senate version of charitable choice legislation after strong opposition from both the right and the left. When finally introduced in the Senate, the bill included only incentives for charitable giving, and does not allow for direct federal funding of churches. (See related Watcher story.) As discussed in a previous Watcher issue, the concerns over the legislation found in the Watts bill include the ability of federal grantees to discriminate in hiring as well as a lack of oversight and accountability. The Watts bill goes further, however by allowing new lawsuits against local, county and state governments by religious groups who feel they were denied grants because of their "religious character." This seems to be in direct conflict with Supreme Court decisions that prohibit the direct funding of "pervasively sectarian" organizations. For more information on charitable choice issues, see the OMB Watch analysis. Back to TopPBS's Moyers Goes After Chemical Manufacturers If you think Mondays are bad, toxic chemicals hated last Monday, but they ended the week striking back at health and safety protections and are rumored to have more attacks emerging from the waste pipeline. Last Monday, March 26, PBS aired "Trade Secrets: A Moyers Report," documenting what the Chemical Manufacturers Association (now known as the American Chemistry Council) knew - but did not inform workers of - about the harmful health effects of vinyl chloride. Over a thousand comments were posted to PBS's "Trade Secrets" web site, where viewers can view internal industry memos outlining what they knew and what their public relations strategies. One viewer noted, "After viewing this show, I am almost glad that I have had cancer and can not reproduce." Most comments praised the program, while many noted the show did not go far enough in showing the chemical industry's practices. Bush Buries Chemical Accident Information Later in the week, industry scored a win when the Environmental Protection Agency (EPA) withdrew plans to help inform the public about the risks of chemical accidents in communities across the country. On January 17, EPA requested public comment on its plan to give qualified researchers access to the entire database of chemical accident "worst case scenarios" filed under the Clean Air Act. EPA also withdrew plans for a read-only system that would allow the public to view any of the worst case scenarios but bar the public from copying the data or easily finding the communities most affected. Researchers receiving the entire database, including estimates of casualties and area affected in the surrounding community, must agree not distribute, publish or release the data to the public. Reportedly the Justice Department is hoping to review any research conducted by researchers accessing the data under the qualified researchers provision prior to its publication. The "worst case scenario" information is not classified information. It is officially designated as information in the public domain, but a law passed in 1999 prohibits government officials and others from releasing the information to the public if facilities do not release the information themselves. Over 90% of facilities have withheld complete access to their facility's accident data. Back to TopEhlers Moves to Create High-Level Science Czar at EPA Congress held hearings on Thursday on a proposal that could mean scientific uncertainty requires EPA inaction, leaving the public exposed to chemicals we know little about. Billed as an effort to promote science at EPA, the bill (H.R. 64), introduced by Rep. Vernon Ehlers (R-MI), would create a deputy administrator for science and techology at EPA. Environmental and public interest organizations view the proposal sceptically and question the workability of the proposal. The deputy administrator for science and technology would oversee information issues at EPA and ensure that scientific information underlying each EPA "is valid, appropriately characterized in terms of scientific uncertainty and cross-media issues, and appropriately applied." Despite the creation of the Office of Environmental Information within EPA, significant problems persist in EPA's ability to collect adequate information and fill key data gaps to support research, analysis and appropriate EPA actions to safeguard human health and protect the environment. Congress should strengthen the bill by giving more attention to right-to-know needs, bolstering environmental research at EPA, ensuring no conflicts of interest between the science and technology czar and the industry EPA is supposed to regulate, and pushing EPA to fill critical gaps in our knowledge of environmental and health threats. As currently drafted, the bill could very well send the unfortunate signal that science should be the only factor given weight in any decision to establish environmental safeguards. This would suggest that any level of scientific uncertainty requires inaction. In fact, there are always scientific uncertainties, but actions will at times be necessary to ensure that public health is protected. For more information on the hearing, including witness testimony, visit the House Science Committee Subcommittee on the Environment, Technology and Standards, or view the testimony of OMB Watch Policy Analyst Rick Blum. Report on Congressional Attitudes Towards Constitutent E-mail On March 19, 2001, the Congress Online Project, run by the Congressional Management Foundation, released "E-Mail Overload in Congress: Managing a Communications Crisis," a report based on work done in conjunction with George Washington University. The report indicates that as many as 55,000 and 8,000 e-mail messages are directed to members of the U.S. Senate and House of Representatives, respectively, each month - roughly 80 million messages a year for the Congress as a whole. The study, however, places a disproportinate amount of the burden on grassroots lobbying organizations (and the companies that work with and through them) who choose to use e-mail as an advocacy tool. A smaller level of blame is afforded to congressional offices that do not currently use e-mail tracking and filtering tools to separate mail from constituents versus those from the general public. The report makes a credible case for suggesting that citizen interest in making concerns heard on the Hill through electronic means has outpaced Congress' capacity to respond through those same mechanisms, and provides a number of promising practices to bridge the communications gap. It overlooks, however, some basic assumptions about the accountability of Congress to the American people as a whole, and not just as providers of services to constitutents. Back to TopTech Help: Online Gaming and Nonprofits If your organization is thinking about raising funds through web-based gaming services, it might be taking an unnecesary chance. Not only are most services operated outside of the legal authority of the United States, but many forms of gaming - online and offline - are prohibited under existing U.S. law. NPTalk shows what's in the cards for online gaming and nonprofits. Back to TopYour comments are always welcomed! Please send comments and questions to ombwatcher@ombwatch.org |
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