By Kevin Bogardus - 11/29/09 02:59 PM EST
While lawmakers are enjoying their turkey leftovers, a
healthcare reform bill is not the only issue waiting for them when they
return to Washington.
Annual year-end tax extenders legislation has not been considered by Congress yet. And without action by Capitol Hill, businesses across the country could see their taxes rise by next year if lawmakers do not approve a new round of credits, exemptions and incentives included in the extenders for next year.
In addition, lawmakers are looking for new revenue to help pay for new government programs and pare down the national deficit. Further, taxes on everything from online gambling to soda have been suggested to help fund healthcare reform.
“At some point, when the economy gets going, the Feds are going to want some of that money. We are going to have to start paying for things to make people believe that we have our fiscal house in order,” said John Raffaeli, founding partner for Capitol Counsel. “You can’t get there on the income tax.”
Tax lobbyists, however, predicted there would be little time in December to garner votes for new tax proposals before the end of this year. Only measures that could pass Congress with little controversy could move next month, they said. Instead, alongside healthcare reform, tax extenders and an omnibus appropriations bill will see the most attention from lawmakers since they will require congressional action before 2010 is rung in.
Here is a selection of some of the tax proposals working around in Washington that could pop up in December as well as next year in the halls of Congress.
The estate tax will lapse in 2010 without congressional action this year. But it will return in 2011, restoring to what it was before President George W. Bush signed his first round of tax cuts in 2001. Afraid of that tax hike, lobbyists for farmers and small businesses have shifted from advocating for a full repeal of the estate tax and are now supporting legislation sponsored by Reps. Shelley Berkley (D-Nev.) and Kevin Brady (R-Texas) that would make the tax less burdensome.
Wall Street Tax
Reps. Peter DeFazio (D-Ore.) and Ed Perlmutter (D-Colo.) are drafting a bill that would tax at 0.25 percent the sale and purchase of financial instruments such as stocks, options, derivatives and futures. $150 billion would be raised that then would help pay down the federal deficit as well as help fund job-creation programs. Unions will likely get behind the legislation who often feel the financial sector has gotten off light in the wake of the economic collapse. But lobbyists for Wall Street banks will push back hard, arguing this harms the economy just as it is beginning to recover.
‘Black Liquor’ Tax
“Black Liquor” is not a fine bourbon. Instead, it is a byproduct made by pulp processors and paper mills that they then use for fuel to earn a biofuel tax credit. Some estimate its worth at $24 billion over the next 10 years. That loophole might be closed, though, after the House Ways and Means Committee cut it off in an amendment they added to their chamber’s healthcare reform bill with the support of Rep. Chris Van Hollen (D-Md.). Paper companies who have used the tax credit in the past will most likely lobby to keep it, supporting legislation by Rep. Steve Kagen (D-Wis.) that will make the tax credit permanent for the industry.
Online Gambling Tax
Sen. Ron Wyden (D-Ore.) considered offering before ultimately withdrawing an amendment to the Senate Finance Committee healthcare reform bill that would tax online gambling. The practice was made illegal by a provision in a 2006 port security bill that was backed by conservative Christian groups and professional sports leagues. Legalizing Internet gaming has been a cause for Rep. Barney Frank (D-Mass.), and his House Financial Services Committee is scheduled to hold a hearing the Thursday after Thanksgiving break on the issue. Taxing online gambling would bring in $42 billion over 10 years to the federal government, according to a Joint Committee on Taxation estimate.
A soda tax was included in a Senate Finance Committee document released this past spring to help pay for healthcare reform. One proposal had soda taxed at a rate of 10 cents per can, which could generate $112 billion over ten years, according to some estimates. But the tax met heavy resistance from beverage makers, who upped their Washington lobbying significantly and sponsored an ad campaign opposing it. The tax on sugary beverages, designed to decrease childhood obesity, was soon excluded from the bill. Administration officials, including President Barack Obama, have said it is an idea worth considering in the future, though.
Rep. James Oberstar (D-Minn.), chairman of the House Transportation Committee, has been a stubborn advocate for new surface authorization legislation, otherwise known as the highway bill. When Congress’s latest extension of current law ends in mid-December, Oberstar and other lawmakers could consider raising the federal tax of 18.4 cents per gallon of gas to fund his six-year, $450 billion plan. Usually tax-averse business associations, such as the U.S. Chamber of Commerce and the American Trucking Association, also favor raising the gas tax to pay for a new highway bill. But they have met opposition from the Obama administration, including Transportation Secretary Ray LaHood, who believe upping the gas tax will hurt rather than help those affected by the recession.