Tax and financial fun throughout 2011
Thursday, December 22, 2011
Since Congress has sputtered to a stop as 2011 draws to a close over, among other things, the payroll tax issue, I thought it would be fun to look back at the rocky road lawmakers have stumbled along throughout this year as they tried to deal with other financial, tax and deficit reduction plans.
Payroll tax rate cut extension: Since it's freshest, let's start with the competing payroll tax extension proposals.
You can examine the House and Senate payroll tax plans in my cleverly named post Comparing the competing House and Senate payroll tax cut proposals.
There's still a very little bit of time to resolve the payroll tax issue before the rate goes up on Jan. 1, 2012.
For tax and political geeks, not to mention those affected by Congress' inaction, it's sort of like waiting for a Bizarro World Santa.
Not so Super Committee: This latest fiscal fight came on the heels of the failed Super Committee, which was supposed to come up with a deficit reduction plan.
Lots of folks had hoped to tag their financial and tax favorites -- such as extension of the payroll tax rate cut and unemployment benefits -- onto any Super Committee bill, easing passage of those controversial measures under the Joint Select Committee on Deficit Reduction's expedited procedures.
The old saying "man plans and God laughs" is never more evident as when Congress plans.
The ol' blog kept a Super Committee Countdown, which began as a hopeful run up to an eventual deficit reduction plan. Alas, we all -- at individual, state and federal levels -- know what happened.
Debt ceiling debates: The Super Committee was created after the bitter Capitol Hill fight to raise the country's debt ceiling.
The protracted battle produced the special debt committee, but no winners.
And we saw America's credit rating downgraded for the very first time.
Deficit reduction plans: During Super Committee discussions, some folks brought up past proposals.
We had Simpson-Bowles, officially known as The National Commission on Fiscal Responsibility and Reform. This deficit panel was a bipartisan group of Washington bigwigs tasked by Obama to come up with a way to get the country's spending under control.
The panel's chairmen, Alan Simpson and Erskine Bowles, issued their own plan for deficit reduction, which included the so-called Zero Plan to do away with all tax expenditures -- that's tax breaks you and I and businesses enjoy -- in exchange for markedly lower tax rates.
But they couldn't get enough of the members to sign off, so officially the proposal was DOA.
At the same time, other lawmakers came up with their own debt reduction proposals.
Sen. Tom Coburn, the Oklahoma Republican known as Dr. No for his consistent opposition to, well, just about everything, came up with his own Back in Black budget plan.
Many of Coburn's ideas were ones he pitched to the Gang of Six, a group of three Republican and three Democratic Senators who met during the summer to find a budget solution that incorporated both taxes and spending cuts.
Yeah, crazy talk.
No tax pledge: Even crazier talk is the no tax pledge that most Republicans on Capitol Hill signed.
Concocted by Grover Norquist's Americans for Tax Reform, this nonbinding political gimmick has been a roadblock in efforts to devise equitable budget and deficit reduction plans.
The former budget adviser to GOP hero Ronald Reagan chastised the GOP for going too far with anti-tax 'religion'.
One Congressman denounced the no tax pledge for paralyzing Capitol Hill.
And a few lawmakers walked away from the no-tax edge.
But the center held. So did legislative gridlock.
Presidential plans: Of course, the leader of the country put forth his own tax and budget wish lists this year.
It began with Obama's fiscal 2012 budget proposal, which reiterated his prior year's plan to end the Bush-era's lower rates on top earners.
Then came the president's 2011 masterwork, Living Within Our Means and Investing in the Future, which was Obama's plan for creating jobs and eventually reducing the deficit.
Like so many proposals before it, the plan had no chance of passage, but portions of it did generate a lot of discussion.
Buffett Rule, aka millionaires' tax: The big attention grabber was the president's so-called Buffett Rule.
Also known as the millionaires' tax, the idea was to create a new tax bracket for folks who earned this magic number.
The Buffett moniker came from the Oracle of Omaha himself, who earlier raised hackles among his fellow well-to-do and the anti-tax groups by saying he and other rich individuals should pay more taxes.
Warren Buffett's involvement in tax talk was a nice diversion. And it kept the higher tax rate idea alive long enough for Democrats seek a millionaires' surtax in their ill-fated payroll tax proposal.
Tax reform: Of course, the Holy Grail of all these measures is eventual comprehensive tax reform.
Everyone agrees that our tax code has gotten out of control.
And everyone agrees that big changes need to be made.
No one, however, can agree on just how to do that.
We can expect to hear about such grand tax reform plans from various campaigns during the 2012 election year.
But don't expect to see anything really happen on the tax reform scene until 2013 at the earliest.
A rocky road indeed. Thanks for the great read! Keep it up!
Posted by: Greg Holbert | Thursday, December 22, 2011 at 10:29 AM