160 tax proposals. Close to 160 doomed tax proposals. The President released the details of the tax proposals for his 2015 budget yesterday. Tax Analysts Reports ($link):
The added details on international reforms the administration is seeking serve as “a significant step forward” to flesh out its business tax reform framework and see if there is an “opportunity for movement” on business reform with Congress, a senior Treasury official told reporters at a February 2 briefing on the release of the Treasury’s green book explanation of the revenue proposals in the budget.
Overall, the fiscal 2016 budget includes roughly 160 tax proposals, of which about 30 are new, 45 are modifications or combinations of old proposals, and 85 are the same or similar to the administration’s fiscal 2015 budget, the Treasury official said.
Almost all of these proposals are doomed for this Congress. As most of these couldn’t pass when Democrats controlled the Senate, they’re hardly likely to pass now that they don’t. A GOP Congress is also not about to pass some of the more publicized class warfare proposals, like the increase in the capital gain rate, the taxation of capital gains at death, increase the estate tax rate to 45% (from 40$) and lowering the estate and gift tax lifetime exclusion to $1 million (from $5+ million).
A few proposals might get a sympathetic hearing on their own from GOP taxwriters. These include:
– Cash basis accounting and repeal of Section 263A inventory capitalization for companies with up to $25 million in gross receipts.
– Permanent extension of the Section 1202 exclusion for qualifying small C corporation stock gains.
– Permanent extension of the refundable Child Tax Credit.
– Increasing the maximum Section 179 deduction from $500,000 to $1 million.
A few other corporate welfare gimmicks that might get a hearing include permanent research credits and permanent New Markets Tax Credits.
While there are a few items that might attract GOP support, overall this batch of proposals is more extreme than the ones that went nowhere before. The President probably won’t let Congress just pick out the tasty bits from his proposals, so I expect little to none of this to actually pass.
Accounting Today, Obama Proposes Sweeping Tax Changes in 2016 Budget
Jeremy Scott, Obama’s Foreign Earnings Tax: 19 Percent Minimum DOA but Deemed Repatriations Key (Tax Analysts Blog)
Kyle Pomerleau, The President’s Tax on Offshore Earnings Represents the Worst of Retroactive Policy (Tax Policy Blog)
Len Burman, Are Accrued Capital Gains Income in the Year You Die? (TaxVox). “But reclassifying exceptionally thrifty middle-class families to the top of the income distribution by counting a lifetime of unrealized gains in income when they die clearly overstates their well-being.”
Tony Nitti, Tax Aspects Of The President’s FY2016 Budget
Annette Nellen, President Obama’s 2015 Tax Proposals
Megan McArdle, Government Blinks Again on Obamacare, a discussion of the IRS announcement that it won’t impose the failure-to-pay penalty on exchange policy purchasers who have to repay some subsidy:
The IRS emphasizes that this is a one-time-only deal, just for 2014. But I’m not sure if you should believe that. This emphasizes one of the problems we’ve spoken about a lot in this space: The political will to impose the costs of the Affordable Care Act is a lot less strong than the will to distribute the benefits.
It also telegraphs that the IRS expects that a lot of taxpayers who are anticipating a refund will be instead writing a check on April 15.
Peter Reilly, Repair Regs And Tax Pros Are Like Headlights And Deer:
For the most part, the people who have been really looking at these regulations have had a large firm perspective. To be a just a little cynical, they actually kind of like all this complexity, since they can make a case for sending out big bills to entities that can afford to pay them. My brief time at the national level, not Big 4, but with many former Big 4 people made me realize there is a radically different perspective at that level. They are used to having a very small number of competitors for any client who more or less sing from the same hymn book. The client people that they deal with are quite likely fellow members of the Big 4 cult rather than tight fisted entrepreneurs who resent every penny they spend on professionals.
Regulation always favors the big, and the “repair regulations” are no exception.
Russ Fox, Fake Interest Income, Fake Withholding, Real Fraud at the Tax Court. “What is amazing to me is that the petitioner has not, as far as I can tell, been criminally indicted.”
Robert Wood, The Truth About Lying On Your Tax Return. “…as with your resume, making up something on your tax return is a terrible idea.”
Martin Sullivan, JCT Report Provides New Insight on Competitiveness (Tax Analysts Blog)
TaxProf, The IRS Scandal, Day 635
News from the Profession: How Internal Controls Will Keep You Safe From Velociraptors (Leona May, Going Concern).