Daily Tax Update - May 14, 2008

DEMOCRATS TO PROPOSE “PATRIOT TAX” TO PAY FOR WAR SUPPLEMENTAL SPENDING BILL:  According to an aide to House Majority Leader Steny Hoyer (D-MD), Democrats will propose paying for expanded veterans' benefits by raising the marginal income tax rate on taxpayers earning more than $500,000 ($1 million for joint filers) by 0.5 percentage points. The Blue Dog Coalition called the increase a “Patriot Tax.”

• Rep. Mike Ross, the co-chairman for communications for the Blue Dog Coalition said, “I think those earning in excess of $1 million per year will gladly pay this new patriot tax.” Ross added, “We can't legislate in the House based on what we wake up in the morning and think the Senate may or may not do or the president may or may not do. In a spirit of cooperation with our Democratic leadership we agreed to help identify a pay-for because this is clearly a bill we all want to move forward and we all believe that if it's paid for, it's not as likely to be cut in future years than if it is not paid for.”
• House Speaker Pelosi said today, “We will see what happens in the Senate, but we are pushing for it very strongly.”
• The President has said that he would not sign into law any measure that raises taxes.

TAX BILLS INTRODUCED MAY 13TH:
H.R.6030: To amend the Internal Revenue Code of 1986 to allow employers a refundable credit against income tax for 50 percent of the employer's cost of providing tax-free transit passes to employees.
Sponsor: Rep Kirk, Mark Steven [IL-10] (introduced 5/13/2008)      Cosponsors (3)

H.R.6036: To amend the Internal Revenue Code of 1986 to establish lifelong learning accounts to provide an incentive to save for education.
Sponsor: Rep Emanuel, Rahm [IL-5] (introduced 5/13/2008)      Cosponsors (1) 

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE
Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving. Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.

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