Daily Tax Update - June 15, 2011: Biden Confident Budget Talks Will Cut Deficit Over $1 Trillion

BIDEN CONFIDENT BUDGET TALKS WILL CUT DEFICIT OVER $1 TRILLION:  After emerging from yesterday’s deficit reduction talks, Vice President Biden said that he was confident the talks would produce an agreement soon on cutting the deficit "well beyond" $1 trillion over the next decade.  Biden also said he hoped to meet the July 4th target date to reach an agreement.  Biden said, “It ain't over till it's over, but I'm convinced we can come up with an agreement that gets the debt limit passed and makes some real serious down payment on the commitment for 4 trillion bucks over the next 10 or 12 years."   Biden added, “We’re down to the really hard stuff.  Everybody’s still in the game.”

  • Bernanke warned Republicans not to use the debt ceiling deadline to force Democrats to agree to what the chairman called "necessary" cuts in federal spending.  Yesterday, Federal Reserve Chairman Ben Bernanke warned, “I fully understand the desire to use the debt-limit deadline to force some necessary and difficult fiscal policy adjustments, but the debt limit is the wrong tool for that important job.”  He also said that Congressional inaction on the debt ceiling could cause “severe disruptions” in financial markets.  Bernanke said that a budget deal should “reform the government’s tax policies and spending priorities so they not only reduce the deficit but also enhance the long-term growth potential of our economy.”
  • Today, Biden Group member Rep. Chris Van Hollen (D-MD) said that Democrats want a debt cap, which would include the use of taxes to control the deficit.  Republicans want a debt ceiling increase along with a corresponding level of budget cuts without any tax increases.  Van Hollen said, “The difference is they want a spending cap only, we have said it should be a debt cap; we are interested in reducing the deficit and that means we think we should be able to get deficit reduction by closing special-interest tax loopholes, getting rid of oil subsidies, that kind of thing.”  Van Hollen said that the issue of revenues remains unresolved.  He said, “We are discussing different approaches.” 

MISCELLANEOUS GUIDANCE RELEASED TODAY:

Notice 2011-47 suspends certain requirements under section 42 of the Internal Revenue Code for certain low-income housing credit properties in the United States as a result of the devastation caused by severe storms, tornadoes, and flooding in Missouri beginning on April 19, 2011.

TAX BILL INTRODUCED JUNE 14TH:

H.R.2178: To amend the Internal Revenue Code of 1986 to allow a refundable credit against income tax for the cost of passports and other enhanced identification documents required to comply with the June 1, 2009, implementation of the Western Hemisphere Travel Initiative.

Sponsor: Rep Higgins, Brian [NY-27] (introduced 6/14/2011) Cosponsors (1)

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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