Today’s Congress Daily includes a number of points about the conference between House and Senate negotiators:
- “One source said April 25 it appears House negotiators will be willing to accept at least some of the offsets that were included in the Senate’s bill.”
- “It also appears that negotiators are simultaneously working out the details of a second bill of tax break extenders that will be dropped from the reconciliation bill, the source said.”
- “Pressure from the leadership and administration remains on conferees, Senate Finance Committee Chairman Charles Grassley (R-Iowa) said April 24, but he added that it was unclear whether a deal could be reached by week’s end.”
Full Article: http://nationaljournal.com/pubs/congressdaily/
Continued Focus on the Tax Gap
Yesterday, Senator Max Baucus (D-MT) - the ranking member of the Finance Committee - issued a press release calling on the IRS to be more accurate in its assessment of the tax gap - the difference between what taxpayers owe and what they pay on a timely basis. The release was done in conjunction with a new report from the Inspector General for Tax Administration at Treasury, which concluded that the IRS current estimates of the tax gap are incomplete and may underestimate the problem.
“The IRS will have a hard time closing the tax gap as long as they don’t know what the tax gap really is,” said Baucus. “Since this report indicates that the annual gap between taxes owed and taxes collected may be even more than $345 billion, there’s really no more time for the IRS to waste.”
In the past, Senator Baucus has called on the IRS to establish a goal of 90 percent voluntary compliance rate by 2010. Currently, the IRS estimates the compliance rate at about 85 percent. Both Baucus and the TIGTA estimate that a 90 percent compliance rate would increase annual collections by more than $100 billion.
S-CORP remains concerned that efforts to close the tax gap will result in destructive tax policies that - like the Joint Committee on Taxation proposal to increase payroll tax collections on S Corps - raise taxes on S Corps and other taxpayers who are already in full compliance with the tax code, paying what they owe, and playing an important role in the health of their communities.
TIGTA Report: http://www.treas.gov/tigta/oa_auditreports_fy06.shtml.
Tax Expenditures Estimated
Finally, the Joint Committee released its annual “Tax Expenditures” report yesterday. The report defines tax expenditures as “revenue losses attributable to provisions of the Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.” The concept of tax expenditure has been criticized from its inception, since it presumes there is a “normal” or regular amount of tax the Federal government should be collecting and that anything less than that amount is a give-away by the Federal government. It’s been compared to that old joke about the two-line tax form:
Line 1: How much did you make last year?
Line 2: Send it in.
Nonetheless, there are some interesting tidbits of information about how taxes are being collected, or not, as the case would be. Top tax expenditures include the exclusion of employer pension contributions ($577 billion over five years), employer-provided health benefits ($534 billion), lower rates on dividends and capital gains ($438 billion), and the home mortgage deduction ($402 billion).
You can see the full JCT Report at: http://www.house.gov/jct/s-2-06.pdf