Line Items: Tax Edition A Weekly Update on Budget and Fiscal Policy Developments and a Look Ahead
Tax Reform Cometh…Eventually – Today is Tax Day, when federal tax returns are due. Procrastinators have DC Emancipation Day, a holiday in the District of Columbia celebrating the day President Lincoln freed the slaves there, to thank for the extra day to file. The law prohibits Tax Day from falling on a weekend or federal or state holiday. Congress returns from a two-week hiatus just in time for lawmakers to take advantage of the tax filing deadline to promote their favorite tax reforms. While the two parties agree on the need for a tax overhaul, they differ widely on how exactly to improve the tax code. In a statement, CRFB urged lawmakers to take heed of the tax deadline they face at the end of the year when several tax provisions expire to enact fundamental tax reform as part of a “Go Big” comprehensive fiscal plan. The so-called “taxmaggedon” is part of the “fiscal cliff” that threatens the economy unless lawmakers act thoughtfully. The tax reform plan put forward by the Simpson-Bowles Fiscal Commission serves as a model for a plan that can achieve bipartisan support and improve the tax code while also raising revenue. But for now, the two parties are taking vastly different tacks to tax reform.
Buffetting the Tax Code – The Democratic-controlled Senate held a vote Monday on the “Buffett Rule,” designed to ensure that millionaires pay at least 30 percent of their income in taxes. The White House promoted the bill all last week. Though the bill did not survive a filibuster, it will live on as a campaign issue. The Republican-controlled House will counter later in the week with a vote on legislation to let small businesses deduct 20 percent of their income. Fundamental tax reform that simplifies the tax code and broadens the tax base is desperately needed. It is clear that limiting or eliminating tax expenditures must be a key facet.
One Deadline Missed – Lost amid the tax discussion is another deadline that just passed. By law, Congress is supposed to produce a concurrent resolution on the budget for the next fiscal year by April 15. Yet again, Congress will not agree on a budget. The FY 2013 budget resolution that passed the House along party lines stands no chance in the Senate. While the Senate Budget Committee will mark up a budget resolution on Wednesday, Senate Majority Leader Harry Reid (D-NV) has already said that he will not schedule a vote on a budget. The stage is being set for yet another government shutdown showdown later this year as the two chambers move forward on divergent spending paths. The Senate will craft appropriations bills based on the topline number of $1.047 trillion in last year’s Budget Control Act. The House is moving forward based on the topline of $1.028 trillion in the House budget resolution and several committees will act on reconciliation instructions contained in the budget resolution. The latest budget battle not only highlights the need for a bipartisan fiscal plan that both sides can agree on, but also the need for reforming the budget process. See lots of budget reform ideas here. And try your own hand at the budget with our updated simulator.
Key Upcoming Dates (all times ET)
- Tax Day! Federal income tax returns are due.
- House Ways and Means Committee hearing on tax reform and tax-favored retirement accounts at 10 am.
- Joint Economic Committee hearing on "How taxation of capital affects growth and employment" at 10 am.
- House Budget Committee hearing on strengthening the safety net at 10 am.
- House Judiciary Committee marks up reconciliation proposal to comply with FY 2013 budget resolution at 2:15 pm.
- House Ways and Means Committee marks up reconciliation proposal to comply with FY 2013 budget resolution at 9:30 am.
- House Appropriations subcommittee mark-up of FY 2013 Energy and Water appropriations bill at 9:30 am.
- House Committee on Financial Services mark-up of reconciliation proposal to comply with FY 2013 budget resolution at 10 am.
- Senate Budget Committee mark-up of FY 2013 budget resolution at 2 pm.
- House Appropriations subcommittee mark-up of FY 2013 Commerce, Justice and Science appropriations bill at 9:30 am.
- House Ways and Means subcommittee hearing on using technology to better target public benefit spending at 10 am.
- Senate Appropriations Committee mark-up of FY 2013 spending bills for Commerce, Justice & Science and Transportation, Housing & Urban Development at 10:30 am.
- House Subcommittee on Economic Development, Public Buildings, and Emergency Management hearing: "GSA's Squandering of Taxpayer Dollars: A Pattern of Mismanagement, Excess, and Waste"
- Presidential contests in Connecticut, Delaware, New York, Pennsylvania, and Rhode Island
- Senate Finance Committee hearing on what tax reform means for state and local tax and fiscal policy at 10 am.
- Senate Finance Committee hearing on improving the taxpayer tax filing experience at 10 am.
- US Dept. of Commerce's Bureau of Economic Analysis releases its advance estimate of 2012 first quarter GDP growth.
- Dept. of Labor's Bureau of Labor Statistics releases April 2012 employment data.
- Presidential contests in Indiana, North Carolina, and West Virginia
- Presidential contests in Nebraska and Oregon
- Dept. of Labor's Bureau of Labor Statistics releases April 2012 Consumer Price Index (CPI) data.
- Presidential contests in Arkansas and Kentucky
- Presidential primary in Texas
- US Dept. of Commerce's Bureau of Economic Analysis releases its second estimate of 2012 first quarter GDP growth.