Capital Corner: Upon Further Review

Jim Brandenburg, CPA, MST Shareholder - Tax   email | bio 
February 2011

The battle lines are drawn. The game is about to begin. No, it's not the big game you're thinking about in Dallas, Super Bowl XLV, but the political games in Washington. Instead of the Packers and Steelers battling it out, it will be the Republicans and Democrats. While there has been some talk of bipartisanship with less confrontation and more cooperation, don't count on it. Calls for more civility may be ignored as several significant controversial reform efforts kick off in Congress. Here are a few of the major possible legislative issues and, to keep with the football theme, a few of the penalties that may be imposed. 

"False Start" Health Care Reform.  The health care legislation enacted last year is already facing challenges by the new Congress. A full repeal bill has already passed in the House, but it may be blocked by the Senate and the president.  Other bills may also follow which seek to eliminate, modify, or delay parts of the health care bill.  One likely early scoring opportunity is the Form 1099 reporting mandate for corporations (part of the Health Care Reform bill) which will likely be repealed this year. In addition, court challengers to last year's bill will continue on several fronts.

 "Helmet-to-Helmet Contact" Budget Cuts.  Federal budget deficits that used to be measured in the billions of dollars have now mushroomed into the trillions. Many "rookie" legislators in Washington are seeking to tackle the deficit and seem committed to reining in federal spending. Look for a goal line stand, however, by those parties that receive federal funds and are opposed to any proposed cuts.

 "Clipping, a Block in the Back" Comprehensive Tax Reform.  Many are advocating an overhaul of the country's tax system. The president has proposed a cut in the corporate tax rate, but it would come with the elimination of many special tax incentives, credits and "loopholes." As with any proposed spending cut, certain groups receiving various tax breaks now will look to protect their backs and fight any proposed changes.

 "Holding" Holding the Current Tax Rates. As you may recall, Congress pushed us into overtime by waiting until late December before passing legislation that held all tax rates in 2011 and 2012 to 2010 levels. This timeout will expire shortly, and Congress will need to replay this down at some time over the next year or so. 

 It will be interesting and exciting times in Congress, as it will be on Sunday. Go Pack Go!