Field of Tax Dreams: Budgets, Taxes, and Takeovers
If you cut it, will it do more? The IRS budget has been cut by $1 billion over the past four years, with a subsequent loss of 10,000 IRS jobs. Late Monday night, the House GOP by voice vote voted to cut $1.14 billion for the next fiscal year, or 13 percent below last year’s budget. The funding “pressure,” according to some House Republicans, sends a message about the importance of IRS accountability and the power of Congressional oversight. The Democratic-led Senate will reject the GOP spending plan.
Or maybe if you cut it, it will grow back? Kansas GOP Governor Sam Brownback believes tax cuts pay for themselves by yielding billions in new tax revenues. With his encouragement, the state legislature cut the state’s taxes twice, dramatically, presuming the changes would spur economic growth and tax revenues. This theory didn’t work in the past, and it’s not working now. It won’t ever work, as TPC’s Howard Gleckman explains: Math has a long-standing, solid commitment to reality.
Well, if you raise an obstacle, it won’t be as easy. Some bankers in Europe are seeing an uptick in European companies seeking to defend themselves against takeovers by US firms who want lower corporate tax rates. British Business Secretary Vince Cable wants to make it harder for an overseas interest to take over a British company, out of concern for the potential loss of UK jobs. Financial penalties, proposed by Cable, might not be high enough.
On the Hill: Yesterday the House voted to approve a permanent ban on internet access taxes, which could cost states and localities $500 million a year. It overwhelmingly passed an $11 billion 10-month patch to the Highway Trust Fund. The Senate may soon consider three separate highway funding bills. Today, the House Budget Committee will hear from CBO Director Douglas Elmendorf on the long-term budget outlook. The Senate Foreign Relations Committee will review treaties with Spain and Poland to avoid double taxation and tax evasion.
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