Your taxes and the
new Capitol Hill

So what does the political power shift in Washington, D.C. mean to you and me and our future tax returns?

First, Congress and its old cast of characters have some outstanding issues to wrap up, starting with the
expired tax breaks.

Dubya talked about bipartisanship on Nov. 8, but
yesterday he met with his party’s Senate and House leaders to discuss
ways to push through legislation that won’t have a chance in January
when the Democratic Congress is sworn in. High on that agenda is the estate tax.

Will Frist et al again
try to force repeal through by tying it to the other more popular tax breaks?
I hope not, but since it’s the last chance the GOP will get to go for
full repeal for at least a couple of years, I wouldn’t be surprised.

Given Congress’ antics, I’m stunned that C-SPAN
doesn’t get better ratings. Capitol Hill is the ultimate reality show
and one that actually matters to our lives.

Then you add the absurd
comedy, plenty of tragedy and the unpredictability factor. You never
know when some government official will profanely tell a colleague what
to do and where to go to do it.

Same place, next year: The next question is just what will happen on the tax front when the
110th Congress convenes? Will we get the massive, across-the-board tax
increases that rapid Republicans used as a campaign cudgel to try to
scare sway voters? I doubt it.

We’re more likely to see targeted tax legislation that, yes, will cause
higher IRS bills for some, specifically the wealthy who’ve had a freer tax
ride for the last six years.

Of course, the chances that the president will actually sign such measures into law are remote zero. Yes, Dubya will finally get a second (and third and …) veto in the books. So realistically, we’re simply going to face tax stagnation (as MauledAgain describes it) for the next couple of years.

That will eventually change, though. When tax legislation does start to move, the driver, notes William Perez at About Taxes, will be 2010.

Nope, that’s not a new tax form. It’s the year that most of the tax
breaks we’ve been enjoying since 2001 will expire. The deadline,
referred to as a sunset date, was inserted in order to meet
revenue/expenditure rules.

Essentially, it’s Congressional book
juggling, robbing Peter to pay Paul if you will, so we can enjoy the
tax relief now and worry about paying for it — or more accurately, let
someone else worry about paying for it — down the road.

While Congress this year did remove the sunset provision from some tax
breaks, many more tax laws will disappear unless lawmakers
take additional steps.

TaxProf links has a link roundup to
stories on the new-look House and just what those tax steps might be. One of the items notes that incoming Ways and Means Chair Charles Rangel wants to tackle the alternative minimum tax.

If the parallel tax isn’t altered, 45 million households will find that the AMT will force them to pay around $1.35 trillion in additional taxes over the
next decade.

Committee musical chairs: On a personal note, I’m looking forward to Rangel’s tenure atop
the tax-writing committee. He was there when I worked in Washington, D.C., as a staffer with another Congressman who served on the Committee and then for the
Committee itself. Rangel never pulled punches and sometimes single-handedly
kept hearings interesting.

According to the New York Times’ political
blog The Caucus, Charlie’s already back in fighting form.

The newspaper also has a nice feature on the
expected new committee chairs in the Democratic Senate (full story here; direct
link to the chairman/woman chart here).

The Senate Finance Committee transition from Charles Grassley to
Max Baucus should be pretty seamless. Baucus supported the GOP 2001 tax
cuts, although he’s been a recent critic of the party’s machinations
that delayed revival of the expired ones.

But the Senate committee I’m most pleased to see change hands is Commerce, Science and Transportation, which next year will have Daniel
Inouye as chair.

The Hawaiian Senator is a full and refreshing 180
degrees from the current chair, Ted Stevens of Alaska.

Ah yes, the poster boy for irascibility. Mr. Bridge to Nowhere. The Internet Tubes king.

Goodbye, Ted, and good riddance!