The Tax Bills Have Arrived!
No, not invoices for taxes you have to pay. These are bills in Congress that affect the tax rules.
For some reason, a whole slew of them received cost estimates from the Congressional Budget Office this week. Regular readers of this blog know that a CBO estimate means a bill is serious. It might be going somewhere. So let’s review the latest tax bills and how they affect the budget.
The bills almost uniformly reduce revenues. If you like tax cuts, they’re for you. On the other hand, reducing revenue increases the national debt. If you’re a budget balancer, these bills aren’t for you.
Where do you stand? Register your opinions by voting on the bills and commenting. Perhaps you and your fellow WashingtonWatch.com users can figure out the right mix of tax policies for bringing the U.S. out of the economic doldrums.
S. 2261, The Tax Technical Corrections Act of 2014
Let’s start off simple. S. 2261 makes technical corrections and removes provisions of the tax laws that no longer apply. It’s the product of Senator Ron Wyden (D-OR), who recently took over as chairman of the Senate Finance Committee. It has no cost.
S. 2260, The EXPIRE Act of 2014
S. 2260 is another Wyden bill. It extends laws that have recently expired or are about to expire dealing with individual taxes, business taxes, energy taxes, and tax collection through collection agencies. Total savings per U.S. family (we treat tax reductions as savings): just about $825.
That $825 in savings per U.S. family is an average and its across a variety of taxes, so it’s not anything you can expect to see in your income tax refund. It’s also an $825 increase in the national debt, which will have to be made up somewhere, someday.
H.R. 4457, The America’s Small Business Tax Relief Act of 2014
H.R. 4457 would make permanent higher, $500,000 limitations on the amount of investment that small and medium-sized businesses can immediately deduct from taxable income. That means they don’t have to spread the costs out over time. The quicker deductability means less revenue for the federal governmemt—to the tune of about $610 per U.S. family.
Once again, the money doesn’t go directly into American families’ bank accounts, and $610 in savings on taxes is $610 in greater national debt. The bill is Rep. Patrick Tiberi’s (R-OH).
H.R. 4454, The Permanent S Corporation Charitable Contributions Act of 2014
H.R. 4454 makes permanent an IRS rule requiring a decrease in the basis of a shareholder’s stock in an S corporation that makes tax deductible charitable contributions of property. That means lower revenues to the government of about $5 per U.S. family, and the same increase in the national debt. Rep. David Reichert (R-WA) is the sponsor of the bill.
H.R. 4438, The American Research and Competitiveness Act of 2014
H.R. 4438 would make the research and development tax credit permanent. Renewed on a temporary basis many times over years, the R&D tax credit is intended to make American companies more willing to spend on things that produce innovation. The author of this bill is Rep. Kevin Brady (R-TX), and it would save just shy of $1,200 per U.S. family. The money is not saved by families directly, but by businesses doing research and development, of course. Families own these businesses and buy products from them, and would theoretically benefit from the credit—and also bear the burden of the increases in national debt.
H.R. 4429, The Permanent Active Financing Exception Act of 2014
H.R. 4429 would permanently extend the subpart F exemption for active financing income. Yeah. We don’t know what that is. The sponsor of the bill is Rep. Patrick Tiberi (R-OH), and it would save a bit over $450 per U.S. family.
H.R. 4453, The Permanent S Corporation Built-in Gains Recognition Period Act of 2014
H.R. 4453 would make permanent the reduced recognition period for built-in gains of S corporations. We also don’t know what that is, but Rep. David Reichert’s (R-WA) bill would save the average U.S. family about $12.
H.R. 4464, The Permanent CFC Look-Through Act of 2014
The “look-through rule” determines the tax treatment of payments between related controlled foreign corporations (CFCs) under foreign personal holding company rules. Under this rule, dividends, interest, rents, and royalties received or accrued by one CFC from a related CFC are not treated as foreign personal holding company income for tax purposes if they meet certain characteristics. H.R. 4464 would make it permanent. Voilà! Savings: about $150 per U.S. family. The bill is product of Rep. Charles Boustany (R-LA).