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Friday, August 04, 2006
Reading the Tea Leaves

The defeat of the "trifecta" last night bodes well for those opposed to gutting the estate tax. This threat to the long-term fiscal health of the nation, has been staved off - for now. Senate Majority Leader Bill Frist (R-TN) voted "Nay" on cloture to reserve to the right to reconsider this bill in September. While passage of an estate tax cut remains highly in doubt, there is a non-zero chance that this zombie legislation will be resurrected by Frist.

I thought it would be interesting take a look at what some of the reactions from yesterday's vote to perhaps have a glimpse the future - especially from those Senator's targeted by the bill's, umm, inducements:

Sen. Mark Pryor (D-AR): "I cannot ignore our $300 billion deficit, and the ongoing costs to support the wars in Iraq and Afghanistan and reconstruction in the Gulf Coast."

Sen. Daniel Akaka (D-HI)(BNA sub. req'd): "I am talking about opposing cloture on a bill that would mortgage future generations by adding more than $300 billion to already alarming federal deficits."

Sen. George Voinovich (R-OH): "Repealing the estate tax, which would cost $267 billion from 2007 to 2016, would be incredibly irresponsible when we must fund the war, secure the homeland and when we know the tidal wave of entitlements are coming due. The numbers just don’t add up."

I would say that the "vulnerable" Senators who Frist thought he could persuade to pile on more debt, have thought better of this irresponsible tax scheme, and it's hard to imagine that Pryor, Akaka, or Voinovich would change his mind and decide that $750 billon of revenue loss is somehow conducive to fiscal sanity.
Posted by Craig Jennings

Estate Tax Dies (Again)

A coalition of fiscally responsible Senators stood up last night against the budget-shredding Estate Tax Caucus. By a vote of 56-42, a motion to end debate on the "trifecta" bill failed.

And thanks to everyone who contacted their Senators and urged them to vote against this horrendous bill!
Posted by Craig Jennings

Thursday, August 03, 2006
Estate Tax Vote Could Be Tonight: OMBW Letter Opposes Bill

In advance of the vote on the "trifecta" estate tax bill in the Senate, which rumors say could be as early as tonight, OMB Watch sent a letter in strong opposition to the bill to the full Senate.
Although the vote was originally slated for tomorrow (Friday) morning, there are rumors from the Hill that Sen. Reid (D-NV) may agree to move the vote up to this evening. This is a good sign as it probably indicates Reid is confident he has the votes to sustain a filibuster of the bill.
Posted by Adam Hughes

Momentum Swings Against Frist and 'Trifecta' Bill

Sen. Maria Cantwell (D-WA) - a key swing vote on the upcoming "trifecta" bill - has publicly announced she will vote against the bill. Cantwell's bold decision to stand up for working-class families in Washington and around the country who would get a bad break with this legislation is a significant blow to Sen. Frist's (T-RN) attempts to pass this crass and manipulative bill.

Sen. Cantwell should be praised for her brave leadership in speaking out against this effort. Kudos to her!
Posted by Adam Hughes

Dear Commissioner Everson

Sen. Christopher Dodd (D-CT) has written a letter IRS Commissioner Everson to perform a cost-benefit analysis of estate tax auditors. Following up on a story in The New York Times, Dodd is concerned that plans to cut estate tax auditors - a group that is considered the most productive at the IRS in terms of revenue collected per hour of work - was politically motivated. He is requesting from Everson a "detailed justification of the job cuts" and a "quantitative description of the impact the proposed cuts will have on enforcement."

According to Dodd's press release, "The National Taxpayer Advocate has estimated that as much as $250-$350 billion per year in taxes that are legally owed goes uncollected, an amount that translates to an extra $2,000 that the average taxpayer must pay every year in order to cover the tax avoidance of others."

BNA (subscription required) has the full text of Dodd's letter.
Posted by Craig Jennings

Wednesday, August 02, 2006
Bush, Blacks, and the Estate Tax

Fantastic op-ed article from William Spriggs, chairman of the economics department at Howard University and former executive director at the National Urban League, on the chutzpah President Bush displayed urging help in repealing the estate tax in front of the NAACP. Spriggs finds Bush's tactics insulting, and pulls no punches in suggesting so:

There's a sense of pandering in his tactic of identifying a prominent black, Robert L. Johnson, who is wealthy and who supports repealing the estate tax, and then pretending that the group of intelligent, educated blacks in the room before him doesn't know about the budget choices repealing the estate tax would entail. It is disturbing, to say the least...

...It's too easy to mention Robert Johnson and then not have to mention the facts of wealth inequality or the budgetary impacts of estate tax repeal.

It is a disturbing disconnect that the president would talk about the difficulty his party has in reaching blacks ­ and then give an economic example that benefits no blacks, at the cost of great benefit to programs that serve blacks well.

Frist and his wife are the sole trustees in charge of a family foundation bearing the senator's name, according to Internal Revenue Service forms.

[The] foundation had more than $2 million in assets in 2004, the last year for which a tax form was available.

Frist...set up the organization about 12 years ago. It did not have much money until 2001 when Frist inherited HCA Inc. stock from his mother.

Janne Gallagher, vice president and general counsel at the Washington-based Council on Foundations, said assets that go directly from an estate into a private family foundation, as in this case, are generally not taxed, unlike money distributed directly to heirs. She said once in the foundation, the money is largely tax exempt.

His foundation did not make charitable contributions in 2004 or 2003. However, but that was allowed under IRS payout rules that generally require annual donations because the foundation in 2002 made a large contribution of roughly $877,000.

That went to the Montgomery Bell Academy, a private boys' school in Nashville that Frist attended.

The 400-page report recommends eight changes, some of them aimed at going after the law and accounting firms, banks and investment advisers that the report says enable tax schemes that rely on complexity, secrecy and compartmentalizing information so that advisers can claim they had no idea that the overall transaction was a fraud.

"We need to significantly strengthen the aiding and abetting statutes to get at the lawyers and accountants and other advisers who enable this cheating," Senator Levin said, adding that "we need major changes in law to stop the use of tax havens" by tax cheats.

[...]

[Sen. Levin] said that during the investigation he grew angry as he learned how common cheating had become and how existing government rules aided tax cheats. He said that complex schemes were broken into discrete pieces, allowing professional advisers working on each piece to assert that they had no idea that, taken as a whole, a scheme was improper.

[The Economic Policy Institute] estimates that the average yearly wage increase for the 6.6 million workers who would benefit directly from the minimum wage change would total about $1,200.

[...]

The Tax Policy Center estimates that in 2011 an estate tax with a $10 million per couple exemption ($5 million per individual) and with tax rates of 15 percent and 30 percent - similar to the proposal under consideration in the House - would yield an average tax cut of $1.4 million for the 8,200 beneficiaries