
Vol. 2 No. 7 April 2, 2001
by Guest Blogger, 7/17/2002
In This Issue
Senate Budget Resolution
Public Opinion and the Bush Tax Cuts
Estate Tax Repeal On House Floor This Week
"Contractor Responsibility" Rule to be Repealed
Bush Administration Rolls Back Drinking Water Standard
Administration to Repeal Mining Restrictions
Campaign Finance Reform Legislation Clears Senate
More Charitable Giving Bills Introduced In Congress
Charitable Choice Legislation Introduced in the House
PBS's Moyers Goes After Chemical Manufacturers
Bush Buries Chemical Accident Information
Ehlers Moves to Create High-Level Science Czar at EPA
Report on Congressional Attitudes Towards Constitutent E-mail
Tech Help: Online Gaming and Nonprofits
SIDE BAR: Taxes: How Not to Pay Taxes; Tax Day and You; Sign on to Oppose Repeal of the Estate Tax; Fair Taxes for All Website Launches; Budget: Bush Budget Impact on You; Green Scissors 2001; RTK: NCLIS Comprehensive Assessment of Public Information Dissemination; Whistleblowers REGS TRI Lead Rule Next to Go Down? Announcements: Conference and Papers
Senate Budget Resolution
So far, the House has passed, with slight modifications, two major elements of President Bush's tax plan:
- On March 8, HR 3, an across the board, phased in (effective in 2006), cut in income tax rates, including a new lower tax rate of 12% effective immediately (2001) at a cost of $938 billion over ten years.
- On March 22, HR 6, marriage penalty relief increasing the income level for the 15% tax bracket for married couples, increasing the standard deduction for married couples to twice the standard deduction for single filers, expanding the EITC, and a phased-in expansion of the child tax credit from $500 to $1000, with a $600 credit effective immediately (2001), at a cost of $400 billion over ten years.
- The public generally supports the Bush tax cut. 57% said they support a $1.6 trillion tax cut, 32% said they oppose it, and 11% said they weren't sure. Graph: Reaction to Bush Tax Cuts
- However, 7 in 10 felt if the surplus is not as big as forecasted, the tax cut should automatically be scaled back. Graph: If Surplus is Less Than Expected ...
- Roughly two-thirds of adults prefer a smaller tax cut if additional money went to education or Social Security. Graph: Tax Cut or Spending on Education Graph: Tax Cut or Spending on Social Security
- Increases the exemption from estate taxation from the current $675,000 to $1 million in 2006 through 2010.
- In 2002, immediately repeals any tax rates in excess of 53%. Under current law, the increase to $1 million was already scheduled to occur.
- In 2003, repeals rates in excess of 50%. From 2004-2006, reduces each rate by 1% and from 2007-2010, reduces each rate by 2%. In the year prior to repeal, 2010, the highest rate would be 39%.
- Decreases state death tax credits accordingly. This reduces state revenues.
- Makes changes in the way inherited assets are taxed. Without the estate tax, capital gains included in an estate would never be taxed at all. Recognizing this, the bill tries to recapture some of the loss of revenue by requiring that capital gains tax be paid on part, but not all, of any inherited assets that are subsequently sold by an heir. As if repeal of the estate tax were not enough of a benefit to the wealthiest two percent of the United States, the bill provides for what amounts to an exemption by allowing for $1.3 million (with an additional $3 million to a surviving spouse) of an estate's assets to be transferred on a "step-up in basis." This means that the value of property, for purposes of taxation, up to that amount would include the appreciation of assets during the decedent's lifetime - so if it were sold by the heir(s), capital gains tax would only be paid on appreciation from the date of death onward. Essentially, no taxes would ever need to be paid on the appreciation of an asset from the time it was purchased until death, only on appreciation during an heir's lifetime. After that amount, if inherited assets are sold, the taxable basis for capital gains taxes would include the amount of appreciation during the decedent's lifetime - a very complicated matter, since several generations may hold an asset before selling it and since, in order to determine the amount of assets subject to capital gains tax, it is necessary to establish the initial cost.
- Ban on Soft Money Contributions to Political Parties. "Soft money," or funds used for partisan electioneering that have been unregulated because there is no specific language asking voters to "vote for" or "vote against" candidates, has been a vehicle for political parties to avoid campaign finance spending and contribution limits. The Senate voted 60-40 to ban soft money contributions to political parties, rejecting a proposal that would have capped these donations at $60,000 per year per donor.
- Hard Money Contribution Limits Increased. A compromise forged by Sen. Diane Feinstein (D-CA) and Sen. Fred Thompson (R-TN) led to 84-16 approval of increases in contributions made directly to candidates, PACs and party committees. Supporters said the increase was necessary to offset losses in soft money contributions. Under this scheme, individuals can give $2,000 per election to a federal candidate, with a total limit of $37,500 such contributions in any one year. This is double the current limit of $1,000. Contributions to PACs are not increased, remaining at $5,000 per election, but contributions to state and local parties will double from $5,000 to $10,000 per election. Contributions to national party committees would increase from $20,000 per year to $25,000. The amount parties can give a candidate would be doubled, going from $17,500 to $35,000.
- Issue Advocacy. An amendment by Sen. Paul Wellstone (D-MN) tightened the ban on broadcast media communications that mention a federal candidate made within 60 days of an election or 30 days of a primary to apply to all corporations (including charities organized under Section 501 (c)(3) of the tax code) and labor unions, eliminating an exception for 501(c)(4) organizations that was contained in the original bill. Also approved, late in the debate, was an amendment sponsored by Sen. Arlen Specter (R-PA) that would provide an alternate provision if the ban on "electioneering communications" is held unconstitutional. This language would define an "electioneering communication" as one that "is suggestive of no plausible meaning other thanan exhortation to vote for or vote against a specific candidate."
- Coordination With Candidates. An amendment offered by Sen. John McCain (R-AZ) addressed problems with the vague definition of prohibited coordination with candidates contained in the original bill. In at 57-34 vote the Senate approved the amendment, which directs the Federal Election Commission (FEC) to draft new regulations addressing specific criteria. Current FEC rules on coordination would become void 90 days after the effective date of the legislation. The original coordination language had been criticized by nonprofits, including OMB Watch, for prohibiting legitimate, non-electoral communications with lawmakers.
