Daily Tax Update - February 08, 2005

Treasury Secretary Testifies on Tax Provisions in FY 2006 Budget
Today, Treasury Secretary John Snow testified before the House Ways and Means and Senate Finance Committees on the revenue proposals in President Bush’s Fiscal Year 2006 budget. The President’s budget includes $106 billion in net tax relief over five years. Making permanent certain tax cuts enacted in 2001 and 2003 accounts for about half of that amount and the remaining amount is for other Administration tax cut proposals that have not been enacted.

  • Snow said, "Tax cuts can be hard on budgets and deficits in the short term, but if the tax cuts are geared toward improving incentives the long-term benefits can far outweigh the short-term discomfort, and this fact has been well illustrated by these outstanding economic results. I point to this record because it is so important that we continue on a pro-growth path. Continued economic growth is needed, and will be needed, to continue to improve our standard of living and until every worker in America who is still looking for a job can find one." Snow added, "For example, we’ve got to make the President’s growth-enhancing tax cuts permanent – and that is included in this budget. The President’s Panel on Tax Reform was also created with economic growth in mind. It is a group of some of the best minds in our country, and they’ll be looking critically at the entire existing code and coming up with proposals that would make it fairer, less complex, and more pro-growth."
  • Snow’s testimony can be accessed here.   
  • Today, IRS Commissioner Mark Everson issued a statement on the IRS budget. Everson’s statement said, "The proposed 2006 budget makes a strong commitment to a sound system of tax administration. Overall, the budget calls for a 4.3 percent increase in the IRS budget, with a nearly 8 percent increase for enforcement." Everson added, "The IRS will continue to make productivity gains and work to improve overall service to taxpayers. However, the budget calls for the IRS to do a modest amount of belt-tightening in the area of taxpayer services. We expect to make selected service cuts, including closing some taxpayer walk-in offices. These walk-in sites are relatively expensive and the number of visitors has dropped as use of the IRS Web site has dramatically increased." Everson added, "The budget holds Business Systems Modernization funding steady at substantially the same level Congress approved last year. The IT modernization program has had a number of successes in the past year, including the first update to the main IRS database in 40 years, the roll-out of new Internet services for taxpayers and practitioners and improved administrative systems. The 2006 budget focuses resources on projects with direct impact on taxpayer service and enforcement efforts."
  • Everson’s statement can be accessed here.  
  • Today, House Majority Leader Tom DeLay (R-TX) said there would be some type of tax bill this year. DeLay said, "We are going to do a tax bill this year. We've done a tax bill every year for 10 years and we're not going to stop." DeLay suggested that the tax bill would "extend if not make permanent" existing tax cuts, particularly on dividends and capital gains. DeLay added, "There's a lot of things that could go in that bill in the context of the budget and what we can and cannot accomplish."

Tax Bills Introduced February 7

  • S. 298 sponsored by Sen. Daniel Inouye (D-HI) would repeal the reduction in the deductible portion of expenses for business meals and entertainment.
  • S. 303 sponsored by Sen. Tim Johnson (D-SD) would exempt certain employment as a member of a local governing board from Social Security coverage.

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.

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