Wednesday, December 23, 2009

Upping the ante

Tax Notes Today ($) reports that Senate Finance Chair Max Baucus has promised early action on the $31 billion "tax extenders" bill, already passed by the House. "We intend to extend the provisions without a gap in coverage, just as the House did on December 9th of this year," said Baucus.

On the other hand, permanent estate tax reform may have to be folded into a larger tax reform effort for 2010. Baucus continues to say that the estate tax will be reformed retroactively. There will be serious pushback on that idea, and the longer the Congress dithers the harder it will be to impose a retroactive tax.

The stakes for general tax reform in 2010 are especially high, as all the Bush tax cuts will be expiring at year end. If estate tax reform gets attached to huge tax reform measure, it will be August at the earliest before it is enacted, and it could easily run up against election season.

It's too bad the Congress dedicated all of 2009 to health care insurance reform. I would have preferred positive steps to restore economic growth. If the Democrats freeze out the Republicans on tax reform the way they did on health care, I suspect the leading scenario is that they pass nothing at all.

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