Daily Tax Update - February 03, 2005

Social Security Reform Centerpiece of President's State of the Union Address
Last night, President Bush outlined an ambitious second term agenda ranging from Social Security and tax reform to expanded health savings accounts. Under the President’s Social Security reform plan, workers younger than 55 would be able to divert up to 4 percent of income subject to Social Security taxation into individual investment accounts.

  • The President said, "I will send you a budget that holds the growth of discretionary spending below inflation, makes tax relief permanent and stays on track to cut the deficit in half by 2009. My budget substantially reduces or eliminates more than 150 government programs that are not getting results or duplicate current efforts or do not fulfill essential priorities. The principle here is clear: Taxpayer dollars must be spent wisely or not at all." The President continued, "I ask Congress to move forward on a comprehensive health care agenda with tax credits to help low- income workers buy insurance; a community health center in every poor county; improved information technology to prevent medical error and needless costs; association health plans for small businesses and their employees, expanded health savings accounts, and medical liability reform that will reduce health care costs and make sure patients have the doctors and care they need."
  • On the issue of reforming the tax code, President Bush said, "To build the prosperity of future generations, we must update institutions that were created to meet the needs of an earlier time. Year after year, Americans are burdened by an archaic, incoherent federal tax code. I've appointed a bipartisan panel to examine the tax code from top to bottom. And when their recommendations are delivered, you and I will work together to give this nation a tax code that is pro-growth, easy to understand and fair to all."
  • The President’s speech can be accessed here.
  • In reaction to the President’s remarks, House Ways and Means Committee Chairman Bill Thomas (R-CA) said, "The 43rd President's second term marks the beginning of what will be another busy legislative season, including work on presidential priorities, such as strengthening Social Security and simplifying the Tax Code.  The Ways and Means Committee will examine these issues and work to produce legislation that the President can sign into law."

Tax Bills Introduced February 2                                                         

  • H.R. 519 sponsored by Rep. Kevin Brady (R-TX) would make the allowance of the deduction of State and local general sales taxes in lieu of State and local income taxes permanent.
  • H.R. 524 sponsored by Rep. Shelley Berkley (D-NV) would provide incentives for the conservation of water.
  • H.R. 574 sponsored by Rep. Jerrold Nadler (D-NY) would provide for regional cost of living adjustments.
  • H.R. 575 sponsored by Rep. Jerrold Nadler (D-NY) would deny any deduction for direct-to-consumer advertisements of prescription drugs.
  • H.R. 577 sponsored by Rep. Bill Pascrell, Jr. (D-J) would provide a credit to businesses whose employees teach at community colleges.
  • H.R. 578 sponsored by Rep. Ron Paul (R-TX) would amend the Internal Revenue Code of 1986 with respect to the purchase of prescription drugs by individuals who have attained retirement age, and amend the Federal Food, Drug, and Cosmetic Act with respect to the importation of prescription drugs and the sale of such drugs through Internet sites.
  • H.R. 597 sponsored by Rep. John Sullivan (R-OK) would permanently extend the Indian employment credit and the depreciation rules for property used predominantly within an Indian reservation.

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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