Suitably Flip

Tax Bill Passes Senate, Possibly Muster

Sometime after midnight on Friday, the Senate passed by a vote of 64-33 a $60 billion dollar tax bill that could be called the "Tax Increase Prevention Act" if you're Rick Santorum, or a regressive, oppressive, tax cut for the wealthy, if you're a Democratic Senator or left wing pundit with a casual regard for accuracy.

Most of the provisions in the bill do indeed seek to extend duly enacted tax reductions that would otherwise sunset over the next several years, so Santorum's characterization is apt.

Nomenclature may prove a moot point, however, if the President makes good on his veto threat.  Bush takes issue with the bill because it alters accounting standards for oil companies (specifically, it disallows them from deducting their full inventory costs, raising their stated income and likewise, their tax liability), to the tune of $4.3 billion in estimated incremental annual tax burden.

Alert readers will recall I sympathize with Bush on this issue, but at least the Senate majority succeeded in putting a stop to the "windfall profit taxes" some Democrats were angling for.  When a similar plan was put in place in 1980, its annual drain on oil companies was more than $20 billion, and the ripple effects on consumers, the economy, and indeed the long-term growth and operating efficiency of the energy industry were costlier still.

Answering my question at yesterday's Senate Blog Row on the mysterious newfound attention to windfall taxes, Sam Brownback (R-KS) agreed such tax policy is "a terrible idea to even be considering."

So the accounting change-up seems somewhat less terrible, both in magnitude and in so much as there's an ostensible accounting standard case to be made (though a filmsy one), compared with a hike imposed simply on the basis of excessive profitability.

All in all, this bill (while falling short of the kind of substantive, overdue tax reform Republicans ought to be able to put through with bicameral majorities and the White House) has a lot of nice features.  And with the Senate getting ready to recess and their cups runnething over with Patriot Act items on their remaining agenda (and Alito items upon their return), it would be somewhat disheartening to see the non-2/3-majority-getting bill thrown back into an already frenetic Upper House.

That said, I can't say I'll hold it against the President if he makes good on his veto threat (though I'm sure the deluded "Bush will do anything for his oil buddies" brigade will).  Thin veneer of accounting rationale notwithstanding, $4+ billion of incremental tax liability heaped on the energy industry is anti-growth policy applied right where we need it the least.

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Tax Bill Passes Senate, Possibly Muster

Sometime after midnight on Friday, the Senate passed by a vote of 64-33 a $60 billion dollar tax bill that could be called the "Tax Increase Prevention Act" if you're Rick Santorum, or a regressive, oppressive, tax cut for the wealthy, if you're a Democratic Senator or left wing pundit with a casual regard for accuracy.

Most of the provisions in the bill do indeed seek to extend duly enacted tax reductions that would otherwise sunset over the next several years, so Santorum's characterization is apt.

Nomenclature may prove a moot point, however, if the President makes good on his veto threat.  Bush takes issue with the bill because it alters accounting standards for oil companies (specifically, it disallows them from deducting their full inventory costs, raising their stated income and likewise, their tax liability), to the tune of $4.3 billion in estimated incremental annual tax burden.

Alert readers will recall I sympathize with Bush on this issue, but at least the Senate majority succeeded in putting a stop to the "windfall profit taxes" some Democrats were angling for.  When a similar plan was put in place in 1980, its annual drain on oil companies was more than $20 billion, and the ripple effects on consumers, the economy, and indeed the long-term growth and operating efficiency of the energy industry were costlier still.

Answering my question at yesterday's Senate Blog Row on the mysterious newfound attention to windfall taxes, Sam Brownback (R-KS) agreed such tax policy is "a terrible idea to even be considering."

So the accounting change-up seems somewhat less terrible, both in magnitude and in so much as there's an ostensible accounting standard case to be made (though a filmsy one), compared with a hike imposed simply on the basis of excessive profitability.

All in all, this bill (while falling short of the kind of substantive, overdue tax reform Republicans ought to be able to put through with bicameral majorities and the White House) has a lot of nice features.  And with the Senate getting ready to recess and their cups runnething over with Patriot Act items on their remaining agenda (and Alito items upon their return), it would be somewhat disheartening to see the non-2/3-majority-getting bill thrown back into an already frenetic Upper House.

That said, I can't say I'll hold it against the President if he makes good on his veto threat (though I'm sure the deluded "Bush will do anything for his oil buddies" brigade will).  Thin veneer of accounting rationale notwithstanding, $4+ billion of incremental tax liability heaped on the energy industry is anti-growth policy applied right where we need it the least.