Daily Tax Update - July 29, 2009

HOUSE LEADERS AND BLUE DOGS REACH AGREEMENT ON HEALTH CARE – NO VOTE UNTIL SEPTEMBER:  House Democratic leaders, members of the moderate Blue Dog Coalition, Administration officials, and Energy and Commerce Chairman Henry Waxman reached an agreement today on health care reform. The Energy and Commerce Committee will mark up the bill later today and a vote is expected in the Committee Friday. Rep. Mike Ross, head of the Blue Dog health care task force, said the agreement would cut more than $100 billion from the Democratic health bill, increase exemptions for small businesses, and prevent the public insurance option from basing reimbursements on Medicare rates. Ross said, “We got significant concessions in two weeks of very long talks. The entire bill will come in at under $1 trillion, and it will be paid for.” Ross added, “I suspect that you will see the revenue piece of this change when you get to the Rules Committee.” The deal includes an assurance that a House floor vote won’t be held until September.

  • Today, House Ways and Means Committee Chairman Charles Rangel said that he is willing to modify the Committee’s bill to get it to the House floor. Rangel said, “We're prepared to make any changes necessary to have an agreement so that the three committees can start working toward one bill.” When asked if he would make changes to the surtax provision passed by the Committee, Rangel said, “Yes, if indeed that's an issue. But I want to make it clear that no matter how many times you ask, it's not an issue, but it could be.”
  • Although Finance Committee Chairman Max Baucus said that an agreement is close, other Senators expressed frustration with the negotiating process. Baucus said that a bill “will be ready when it's ready.” Senate Majority Whip Richard Durbin said that members are feeling a “level of frustration” because they have little information about the Finance Committee’s negotiations. Durbin added, “This is really behind closed doors with six senators, the rest of us are truly on the outside. We get information from time to time, but it really isn't specific.” Today, Durbin said that he hopes the Finance Committee can finish its work before the August recess. Durbin continued, “I think it’s very important, and I hope we get it done. I still have my fingers crossed and feel good about it. And there are some people in the House, some Members of the House, are waiting on that to see that the Senate Finance Committee can actually produce a bill.”
  • Today, one of the Republican negotiators working on the Finance bill denied they were close to an agreement. Senator Mike Enzi said, “We still have several areas where we haven’t been able to come to a consensus. No deal is at hand and substantive issues, big and small, remain under discussion and need to be resolved. We need to keep working together. I will need to see complete language and a final estimate from the Congressional Budget Office before I can agree to any health care reform bill.”
  • Baucus said that the preliminary cost estimate by the Congressional Budget Office of health care reform legislation the committee is drafting is less than $900 billion over 10 years. Baucus added, “The current draft of the bill scores below $900 billion over 10 years, covers 95 percent of all Americans by 2015, and is fully offset. In fact, according to the preliminary CBO report, the bill would actually reduce the federal deficit the 10th year by several billion dollars.”
  • In addition to taxing insurance companies that sell “Cadillac” health plans, the Finance Committee has been discussing a proposal to establish a co-op system of health care coverage. Senate Budget Chairman Kent Conrad said the plan being discussed would permit co-ops to operate on state, regional, and national levels. States could form regional co-ops while Conrad did not specify what type of entity would form a national co-op.

TAX BILL INTRODUCED JULY 28th:
H.R. 3367:  To amend the Internal Revenue Code of 1986 to extend and modify the credit for new qualified hybrid motor vehicles.
Sponsor: Rep Levin, Sander M. [MI-12] (introduced 7/28/2009)      Cosponsors (6)

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.