Catching up with tax legislation

Wow! A person takes a few days off and goes to a remote part of Texas where there’s no radio, no TV and the Internet is available only by sitting in the hotel gift shop, and all sorts of tax things happen!

Like Charlie Rangel’s mother of all tax reforms, H.R. 3970, introduced on Thursday.

I knew it was coming, as mentioned in my tax legislative preview last Monday. And I could have taken time away from my vacation to surf and gather the relevant information and post it instead of my Santa Elena Canyon adventure.

But to the hubby’s surprise, I stayed mostly true to the vacation spirit. Hiking, birding, eating and just a tiny bit of blogging about taxes and money.

I’m back now, though, and catching up. So, if like me you’ve been cut off from modern news outlets for the last few days, let me direct you to some resources that can fill you (and me) in on the Tax Reduction and Reform Act of 2007.

• The Ways & Means press release
• The W&M summary of the bill
• The text of the bill
• The Republican press release

Quick highlights of the proposal:

• One more year of tax relief for folks who might otherwise face the AMT and, in 2008, repeal of the parallel tax system.
• Increase in the standard deduction amount.
• Increase the child tax credit.
• Extend various expiring tax breaks, including deductions for private mortgage insurance, state/local sales taxes, tuition and fees, educators expenses, as well as allowing for continued direct rollover from IRAs to charities and allowing military personnel the option to include combat pay as earned income for earned income tax credit purposes.

Spend as much time as you like perusing H.R, 3970, but be warned: It’s going nowhere fast. And Rangel knows it.

That’s why he’ll introduce another bill this week that deals only with the AMT short-term fix. Extenders also will be considered separately.

Tax policy vs. tax politics: Why the machinations? 2008 is an election year, and taxes are more useful as a political tool than as legitimate public policy.

The GOP, as noted in the press release cited earlier, obviously is against the bill introduced by the Democratic chair of the Ways & Means Committee. First, on principal because it’s a Democratic idea, but also because it includes some tax hikes. And the "no tax" stance is the standard Republican credo, election year or not.

Even within Rangel’s own party, there is trepidation about such an overhaul.

Many Democrats also wouldn’t be that sad to see the mother of all tax reforms stall; it would give them some cover on the touchy tax hike area. Plus, if it fails because of a concerted GOP effort, the Dems could use that against the opposing party, characterizing Republicans as the ones who don’t want to do away with the alternative tax system that’s becoming a middle-class tax problem.

And Newsday reported that Democratic presidential hopeful Hillary Clinton "is, at best, lukewarm to the idea and is highly unlikely to support the plan."

So stay tuned and buckle up. It looks like it’s going to be the usual bumpy year-end tax legislation ride.