Tax Law Changes: What’s Your Opinion?

Posted by Kelley LearcloseAuthor: Kelley Lear Name: Kelley Lear
Email: kelley.lear@redmoonsolutions.com
Site: http://blog.redmoonsolutions.com
About: Kelley is a member of the executive leadership team and leads our sales and marketing efforts at Red Moon Solutions. Kelley’s extensive experience in project management, product management, and consulting with Fortune 500 and Global 1000 clients is extremely important in this role.See Authors Posts (127) on Jan 5, 2011 | 0 comments

I was just reading the AccountingToday’s article titled “GOP Changes House Rules on Tax Laws and ‘Accounting Gimmicks’”, Washington, D.C. (January 3, 2011), By Michael Cohn…and I had a “good grief” moment I thought I would share for this Wednesday’s Red Whine Wednesday post. My “whine” is really based on the state of our current legislative process and the frustration at our inability to make positive changes. I am feeling somewhat optimistic, yet with experience comes some measure of cynicism.

It seems that with the Republicans taking control of the House this Wednesday, leadership will be introducing new rule changes that would make it harder for Congress to pass tax increases or close tax loop holes. There will be proposed changes in the “pay-as-you-go,” or “pay-go,” rules that the Republican’s say the Democratic leadership had put in place in the previous Congress. That rule required that all new spending or tax cuts be paid for with corresponding tax increases, the closing of tax loopholes, or spending cuts.

Under their proposal, members will not be able to introduce a bill or joint resolution without a “statement citing as specifically as practicable the power or powers granted to Congress in the Constitution to enact” it. Imagine that! That statement was the beginning of my “good grief”…and honestly it does not matter what side of the fence you sit on or if you sit on the sidelines in terms of political affiliation and/or beliefs, our rules and tax law changes have been increasingly complex, harder to understand, too cumbersome to actually practically implement, and just plain a head scratcher in many cases. Often times, the laws are pushed so quickly through the process that no one has time to think of the repercussions, nor do they fully understand all the repercussions politicians are pressured to make moves fast. Therefore, Democrats and Republicans are both trying to do things put changes in place. The original Democratic rules were an attempt to make us more “fiscally responsible” while the Republicans are now stepping up with their version for “change”. Again, optimistic, yet cynical. I can’t wait to see how this plays out.

The proposal also purports that no bill will be voted upon without being available online for at least three calendar days. The rules package reads, “it shall not be in order to consider a bill or joint resolution which has not been reported by a committee until the third calendar day…on which such measure has been publicly available in electronic form.” This is an attempt to ensure that members, the media, and the American people have an opportunity to read the bill before any vote. They will also require that the long term budget impact is laid out for four decades longer than it is today. This is expressly intended to “prevent lawmakers from using accounting gimmicks and sleight of hand to hide the true cost of big government proposals.”

Here are the summary bullet points on the proposal for change:
• Must post online their committee rules
• Provide 3 days notice for all markups
• Circulate the text of legislation to be marked-up no less than 24 hours before the markup
• Post online all votes in the committee 48 hours after a markup (A proposal from Rep. Reichert)
• Make available online the text of any amendments adopted in a markup (A proposal from Rep. Jenkins)
• Post online “truth in testimony” information, “with appropriate redactions to protect the privacy of the witness” so that any conflicts of interest with hearing witnesses are made public
• Make available online the member attendance record for each hearing and markup within 24 hours
• Webcast and make available online their hearings and markups

As with the Healthcare proposal…I can’t wait to see if I truly understand the details of proposed bills. The intent is to increase public scrutiny and accountability and yield a better legislative process…what a concept.

Lastly, under new House rules, each appropriations bill would be required to have a “spending reduction account.” An amendment to strike money from a portion of a spending bill could be pushed to the account to reduce the actual amount of money appropriated. At this time, amendments to strike spending from a bill reduce the amount allocated to that program or account, but do not lower the overall spending level for the bill. The rule change would also prevent a member from spending savings from a previously adopted amendment to strike spending. Very interesting…looks like some ideas are being put forth to throw up some barriers to tricky maneuvering and political posturing. We will have to see what happens.