Daily Tax Update - March 16, 2011: Finance Schedules March 30th Tax Reform Hearing

FINANCE TAX REFORM HEARING TO FOCUS ON HOW COMPLEXITY AND UNCERTAINTY AFFECT TAXPAYERS’ RESPONSES TO TAX INCENTIVES:  On March 30, the Senate Finance Committee will continue its series of hearings on tax reform by considering whether tax incentives actually work, or whether they reward behavior that would have occurred anyway at a hearing titled “How Do Complexity, Uncertainty and Other Factors Impact Responses to Tax Incentives.”  

  • At the hearing, Committee Chairman Max Baucus will ask about the extent to which taxpayers change their choices in response to tax incentives intended by Congress to encourage activities like retirement saving, charitable giving and investment.  Baucus will ask the witnesses about how responses to tax incentives are affected by the tax code’s complexity caused by the 15,000 changes made since the 1986 Tax Reform Act, uncertainty brought on by legislative battles over reauthorizations and expirations, and overall design and administration.  Baucus will also ask about low-cost ways to increase responsiveness to tax incentives.  Next week’s hearing will be the second in the series examining why America needs tax reform.
  • The witnesses at the hearing will be:
    • Dr. Eric J. Toder, Institute Fellow, Urban Institute, Co-Director, Urban Institute-Brookings Institution Tax Policy Center;
    • Dr. Raj Chetty, Professor, Department of Economics, Harvard University; and
    • Dr. Robert Carroll, Principal, Quantitative Economics and Statistics, Ernst & Young, LLP.

HOUSE PASSES ANOTHER SHORT-TERM FUNDING BILL: Yesterday, the House passed another short-term resolution to extend federal funding close to fiscal year 2010 levels through April 8.  The House voted 271 to 158 in favor of the resolution, which contains about $6 billion in total cuts but would make no changes to IRS funding levels.  The Senate is expected to approve the resolution before the end of this week.

  • House Majority Whip Kevin McCarthy (R-CA) said, “It’s very difficult to do more short-term” funding resolutions.  McCarthy added, “Who doesn’t know that?”
  • Regarding negotiations between House and Senate leaders on a long-term resolution, Senate Majority Leader Harry Reid said, “We’re not going to take an ax to this budget. We’re going to work it as smoothly as we can and work to cut spending, but do it in a way that’s meaningful to the American people.”
  • Senate Minority Leader Mitch McConnell (R-KY) added, “In all likelihood, as the House Republican leadership has indicated, we’ll then negotiate a final agreement for the balance of this fiscal year.”

TAX BILLS INTRODUCED MARCH 15TH:
1.  [112nd] H.R.1079: Airport and Airway Extension Act of 2011
Sponsor: Rep Mica, John L. [FL-7] (introduced 3/15/2011)      Cosponsors (4)
Committees: House Transportation and Infrastructure; House Ways and Means
Latest Major Action: 3/15/2011 Referred to House committee. Status: Referred to the Committee on Transportation and Infrastructure, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

2.  [112nd] H.R.1097: To amend the Internal Revenue Code of 1986 to expand and make permanent the standard deduction for real property taxes.
Sponsor: Rep Paul, Ron [TX-14] (introduced 3/15/2011)      Cosponsors (None)
Committees: House Ways and Means
Latest Major Action: 3/15/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

3.  [112nd] S.574: A bill to amend the Internal Revenue Code of 1986 to allow individuals to designate that up to 10 percent of their income tax liability be used to reduce the national debt, and to require spending reductions equal to the amounts so designated.
Sponsor: Sen McCain, John [AZ] (introduced 3/15/2011)      Cosponsors (1)
Committees: Senate Finance
Latest Major Action: 3/15/2011 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

4.  [112nd] S.577: A bill to amend the Internal Revenue Code of 1986 to clarify eligibility for the child tax credit.
Sponsor: Sen Vitter, David [LA] (introduced 3/15/2011)      Cosponsors (None)
Committees: Senate Finance
Latest Major Action: 3/15/2011 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

5.  [112nd] S.591: A bill to amend the Internal Revenue Code of 1986 to extend the qualifying advanced energy project credit.
Sponsor: Sen Brown, Sherrod [OH] (introduced 3/15/2011)      Cosponsors (4)
Committees: Senate Finance
Latest Major Action: 3/15/2011 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

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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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