Daily Tax Update - December 8, 2010: White House Working To Shore Up Support For Tax Cut Plan

WHITE HOUSE WORKING TO SHORE UP SUPPORT FOR TAX CUT PLAN: The Obama Administration is trying to secure sufficient Democratic support for the President’s tax cut "framework." Not only have numerous House and Senate Democrats expressed opposition to the plan, but two Republican Senators have said that they would not support it. Democratic opposition is mounting not only to extending the tax breaks to high income earners and the amount it adds to the deficit, but also to the provision in the agreement that would implement an estate tax of 35 percent with a $5 million exemption.

  • Today, Senate Majority Whip Dick Durbin (D-IL) suggested that changes to the proposal may be forthcoming. Durbin said, "We need to find out where the members stand. Part of it is still a work in progress. Some people have come out for or against it. But from my point of view there are some questions that need to be answered." It is unclear whether any refinements to Obama’s plan would win enough Republican support to clear Congress.
  • Sen. Jim DeMint (R-SC) said yesterday that he would oppose it the tax cut plan. DeMint said, "Most of us who ran this election said we were not going to vote for anything that increased the deficit. This does. It raises taxes, it raises the death tax. I don’t think we needed to negotiate that aspect of this thing away. I don’t think we need to extend unemployment any further without paying for it and without making some modifications such as turning it into a loan at some point. Frankly, the biggest problem I have is we don’t need a temporary economy, which means we don’t need a temporary tax rate." Sen. George Voinovich (R-OH) said Monday that he would oppose an extension of any length. Sen. Bernie Sanders (I-VT) has said that he will try to filibuster the agreement on the Senate floor.
  • Democratic House and Senate leaders have also expressed concerns with the proposal. Senate Majority Leader Harry Reid said yesterday that he would "do what’s best" for the country and that “I think we’re going to have to do some more work” to build support. Today, Reid said, "There is work being done on the tax issue. It’s further along than most people would think. I don’t think there’s a great deal more work to be done on that, and then people can decide what they’re doing to do on it."
  • The Senate is expected to take up the plan later this week or early next week. The House is expected to vote after the Senate.
  • When House Speaker Nancy Pelosi was asked what could be added to the agreement to make it more acceptable, she replied, "To be continued." Pelosi added, "I think it's fair to say that there is a certain amount of unease with the proposal that was put forth by the President." Incoming Ranking Member of the House Budget Committee, Rep. Chris Van Hollen (D-MD) said, "Our guys got taken to the cleaners."
  • Meanwhile, Sen. Joe Lieberman (I-CT) said, "The main point is, what’s the alternative?" Lieberman predicted that, in the end, "more than half of the Democratic caucus would vote for this."

CAMP OFFICIALLY SELECTED AS WAYS AND MEANS CHAIRMAN: Today, House Ways and Means ranking member Dave Camp (R-MI) was selected by the Republican Conference to serve as the Committee's Chairman. Camp said, "It is a great honor and even greater responsibility to be selected today by my colleagues to serve as Chairman of the Ways and Means Committee for the 112th Congress. Our nation is at a crossroads – facing record debt and an unemployment rate stuck at nearly 10 percent. The decisions we make and the policies we put forward will determine whether or not we get this economy back on track and Americans back to work. I pledge to my colleagues, the American people and my constituents that the Ways and Means Committee will focus on a job-creating agenda and reducing out-of-control federal spending. In doing so, the committee will directly engage and listen to the American people – ensuring those impacted by the policies enacted in Washington have a voice in the process. That open dialogue is critical to our democracy and to producing the best possible solutions."

Revenue Procedure 2010-52 describes the procedure by which the plan sponsor of a multiemployer pension plan may request and obtain approval of an extension of an amortization period.

Notice 2010-93 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code. It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), the 24-month average segment rates, and the funding transitional segment rates under § 430(h)(2). In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007.

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 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.