Daily Tax Update - February 13, 2013: Obama Supports Comprehensive Tax Reform in State of the Union Address

OBAMA SUPPORTS COMPREHENSIVE TAX REFORM IN STATE OF THE UNION ADDRESS:  In his State of the Union address last night, President Obama endorsed bipartisan, comprehensive tax reform and discussed the economy as well as other issues. 

  • On the economy, Obama said, “Now, most of us agree that a plan to reduce the deficit must be part of our agenda.  But let’s be clear, deficit reduction alone is not an economic plan.  A growing economy that creates good, middle-class jobs -- that must be the North Star that guides our efforts.  Every day, we should ask ourselves three questions as a nation:  How do we attract more jobs to our shores?  How do we equip our people with the skills they need to get those jobs?  And how do we make sure that hard work leads to a decent living?”
  • On the issue of tax reform, Obama said, “To hit the rest of our deficit reduction target, we should do what leaders in both parties have already suggested, and save hundreds of billions of dollars by getting rid of tax loopholes and deductions for the well-off and the well-connected.  After all, why would we choose to make deeper cuts to education and Medicare just to protect special interest tax breaks?  How is that fair?  Why is it that deficit reduction is a big emergency justifying making cuts in Social Security benefits but not closing some loopholes?  How does that promote growth?  Now is our best chance for bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit.  We can get this done.  The American people deserve a tax code that helps small businesses spend less time filling out complicated forms, and more time expanding and hiring -- a tax code that ensures billionaires with high-powered accountants can’t work the system and pay a lower rate than their hardworking secretaries; a tax code that lowers incentives to move jobs overseas, and lowers tax rates for businesses and manufacturers that are creating jobs right here in the United States of America.  That’s what tax reform can deliver.  That’s what we can do together.”  Obama added, “I realize that tax reform and entitlement reform will not be easy.  The politics will be hard for both sides.  None of us will get 100% of what we want.  But the alternative will cost us jobs, hurt our economy, visit hardship on millions of hardworking Americans.  So let’s set party interests aside and work to pass a budget that replaces reckless cuts with smart savings and wise investments in our future.  And let’s do it without the brinksmanship that stresses consumers and scares off investors.  The greatest nation on Earth cannot keep conducting its business by drifting from one manufactured crisis to the next. We can't do it.”
  • The State of the Union remarks can be accessed via: http://www.whitehouse.gov/the-press-office/2013/02/12/remarks-president-state-union-address 
  • Ways and Means Committee Chairman Dave Camp (R-MI) made the following statement in response to President Obama’s State of the Union address: “The President laid out a vision for America that was formulated on the same failed policies that have left millions of Americans without a job – more taxes and more spending. The President’s call for higher taxes is anything but tax reform.  Tax reform should result in a simpler, fairer tax code for families and more jobs for American workers.  The President’s plan does nothing to change a tax code that is so complex that nearly 90 percent of families are forced to pay someone else to prepare their taxes or buy commercial software just to fill out their tax return.  Similarly, instead of closing loopholes to lower rates and create more jobs, the President closes loopholes simply to pay for more spending in Washington.  More spending and more taxes are not the answer to America's problems.  I'll work with the President to close loopholes, but only if it results in hardworking taxpayers getting a simpler, fairer tax code and an economy with more jobs – that is real tax reform."
  • Senate Finance Committee Chairman Max Baucus released the following statement in reaction to the President’s State of the Union address.  Baucus said, “I was encouraged to hear the President focus so much on job creation and jumpstarting the economy. We cannot afford to take our eye off the ball.  We need to focus like a laser on the economy and job creation.  That must be our top priority. We need to work together — Republicans and Democrats, House and Senate, with the Administration — to craft policies that boost small businesses, spark broad-based economic growth and create jobs. We need to put politics aside and start working together to get results for the American people.”

WAYS AND MEANS ANNOUNCES 11 BIPARTISAN TAX REFORM WORKING GROUPS:  Today, the House Ways and Means Committee announced that it is forming 11 bipartisan working groups to examine specific areas of the tax code as part of its tax reform efforts.  The 11 separate working groups will deal with manufacturing; small businesses and so-called pass-through entities; charitable and tax-exempt organizations; education and family benefits; energy; financial services; real estate; debt, equity and capital; income and tax distribution; international issues; and pensions and retirement.

  • According to the Committee, “The groups will be led by one Republican Member serving as Chair and one Democratic Member serving as Vice Chair.  Each of the 11 groups will review current law in its designated issue area and then identify, research and compile feedback related to the topic of the working group.  The working groups will be responsible for compiling feedback on its designated topic from: (1) stakeholders, (2) academics and think tanks, (3) practitioners, (4) the general public and (5) colleagues in the House of Representatives.  Once the work of those groups has been completed, the Joint Committee on Taxation will prepare a report for the full Committee, due by April 15, 2013, that describes current law in each issue area and summarizes the other information gathered by the Committee Members.”
  • Announcing the formation of the groups, Chairman Camp stated, “I am pleased to be working collaboratively with Ranking Member Levin and all of our Committee Members as we continue our efforts to fix our broken tax code. Regardless of party or politics, everyone can agree that comprehensive tax reform should result in a simpler, fairer tax code for families and more jobs for American workers.  In addition to Committee hearings, these working groups will be one more way for the Committee to gather the necessary information to produce the best possible legislation."
  • Ranking Member Levin added, "Tax reform must build on a full understanding of present provisions as a path to a simpler, fairer and adequate tax code. These working groups provide a framework to undertake in-depth fact-finding on a variety of important issues related to tax reform."

TAX BILLS INTRODUCED FEBRUARY 12TH:

1..[113rd] H.R.609: To amend the Internal Revenue Code of 1986 to repeal fossil fuel subsidies for large oil companies.
Sponsor: Rep Blumenauer, Earl [OR-3] (introduced 2/12/2013)   Cosponsors (26)
Committees: House Ways and Means
Latest Major Action: 2/12/2013 Referred to House committee.
Status: Referred to the House Committee on Ways and Means. 

2. [113rd] H.R.615: To amend the Internal Revenue Code of 1986 to provide market-based manufacturing incentives, and for other purposes.
Sponsor: Rep Honda, Michael M. [CA-17] (introduced 2/12/2013)   Cosponsors (4)
Committees: House Ways and Means
Latest Major Action: 2/12/2013 Referred to House committee.
Status: Referred to the House Committee on Ways and Means.

3. [113rd] H.R.616: To amend the Internal Revenue Code of 1986 to allow a credit against tax for qualified manufacturing facility construction costs.
Sponsor: Rep Honda, Michael M. [CA-17] (introduced 2/12/2013)   Cosponsors (1)
Committees: House Ways and Means
Latest Major Action: 2/12/2013 Referred to House committee.
Status: Referred to the House Committee on Ways and Means.

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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