Does This Sound Familiar?
The Senate decided to tackle an immigration reform by using backroom deals and bypassing the normal legislative process, and the bill's backers then tried to blow it through a short debate. Instead of getting their bill passed, they got caught in a backlash of resentment, forcing the dealmakers to try again.
The American Conservative Union warns that the Senate will try the same approach with a tax bill sponsored by Charles Grassley and Max Baucus:
It never fails, whenever the free market is poised to succeed and innovate further, there is always an effort to tax or regulate it from reaching its true potential. The most recent example: efforts to impose new punitive taxes on publicly traded partnerships.In view of several pending and potential Initial Public Offerings (IPOs) by private equity firms seeking to join the public markets, U.S. Senators Max Baucus (D-MT) and Charles Grassley (R-IA) unveiled punitive legislation in S.1624 late last week to actually RAISE taxes on ALL existing and new publicly traded partnerships.
Like bad tax policy before it, this legislation was offered without the benefit of normal Congressional or Joint Tax Committee hearings or any analysis from the U.S. Treasury or the Internal Revenue Service.
The free market community is united against any new tax increases and will oppose this bill vigorously. Not only is this legislation a major tax increase, it will actually depress tax revenues as other partnerships will choose to stay private or reincorporate abroad – neither of which is good for the economy, the government or investors.
Do we really need another piece of public policy that bypasses the normal legislative process? The backroom strategy hardly helped the comprehensive immigration reform effort, so it's hard to understand why Grassley and Baucus feel the need to use it for their tax effort. After all, if the policy is good for the country, then hearings with the IRS and analysis from the Treasury should confirm it .. right?
The question answers itself, doesn't it?
In fact, the two Senators have no idea whether this will wind up raising any significant revenue for the federal government, as the Wall Street Journal reports:
But having scored their points with the public, it's possible that lawmakers will lose interest in the measure if it runs into heavy opposition or if it doesn't raise much money for the government to spend. Sens. Baucus and Grassley haven't said how much revenue they expect to raise from the measure.
Once again, the Senate -- supposedly the world's greatest deliberative body -- appears poised to rush bad public policy without any deliberative process at all. Grassley and Baucus should do their homework and allow for hearings and analysis on this legislation ... or better yet, stop looking for taxes to raise and start looking for spending to cut.
Posted by Ed Morrissey on June 18, 2007 4:07 PM | Comments (21) | TrackBacks (2)
Comments (21)
Posted by Carol Herman | June 18, 2007 4:47 PM
Grassley and Baucus sit in safe seats;
And, for all I know, they've gone fishing in the lobbyists' pool; hoping to attract bait with this bill. And, believe it or not, build their own coffers.
As to "clout" ... after I heard Tom DeLay reading his book, I've grown to understand that the whole apparatus in congress has changed. Friends aren't friends. And, deals aren't necessarily "deal."
Spending's out of sight! Bush did nothing to curb this!
And, most of the senators, if you asked me, are flummoxed. They don't know how to push through their "baby carriages." There's a real sense that it's not a smooth bath.
And, if I had to guess? Grassley and Baucus are mad as hell, now. Because the Internet is their avalanche.
It's very much what Mark Twain said about being a captian on the mighty Mississippi. The passengers stand at the rail. And, they comment about how nice the day is. While to the Captain, his eyeballs keep looking for troubles. There are no "nice days." Just something that could smack your ship.
By the way, McCain got no benefit attaching his name to Feingold's. Looks like the ship's anchor around his neck.
I'd say the same for Sarbanes and Oxley.
Being in the senate doesn't offer you much, when it comes to being trusted by the American people.
You'd think those who do get elected would spend some time being concerned over this stuff.
Heck, you'd be surprised at all the pettiness that goes around. His book is a terrific read, because he points this stuff out.
I didn't know (until today), that Monte Carlo was the original name of the roulette wheel. But it sure seems that DC congress critters are putting their bets down.
Please keep following these shinanigans. I'm curious, too, on what comes next.
Posted by Cousin Dave | June 18, 2007 5:10 PM
Well, besides the pointlessness of this whole exercise -- as the Captain points out, it would be trivial for the partnerships to reincorporate offshore -- there's this other little matter that I recall from fourth-grade civics: Aren't tax bills supposed to originate in the House?
Posted by flenser | June 18, 2007 5:16 PM
This is why the Founders designed our Congress with one rash and impeteous body and one calm and deliberative one which did not give in to rash impulses.
Admittedly they were 180 degrees off on which one would be which. It tuns out that the House, and the people they represent, have their heads screwed on a lot tighter than the plutocrats of both parties in the House of Lords.
Posted by Geraldina Winter | June 18, 2007 6:30 PM
All Revenue bills must-Thank God for the Constitution-originate in The House.
Posted by Unscripted Thoughts | June 18, 2007 6:33 PM
Cap'n:
While I would not be surprised to see a few Wall Street types writing some large contribution checks to try and derail this thing...I suspect there maybe more. If Trent Lott is any indicator, my guess is Baucas and Grassley et.al., are p.o.'d that the public (gasp!) has started paying attention and (even worse) now have a platform that has enough responsiveness and clout (i.e., the Interne & Bloggers) to actually force the Congress critters to do what is right, not what is expedient.
Or maybe it's all just wishful thinking...
Posted by Unscripted Thoughts | June 18, 2007 6:35 PM
Cap'n:
While I would not be surprised to see a few Wall Street types writing some large contribution checks to try and derail this thing...I suspect there maybe more. If Trent Lott is any indicator, my guess is Baucas and Grassley et.al., are p.o.'d that the public (gasp!) has started paying attention (oh, the horror!) and (even worse) now have a platform that has enough responsiveness and clout (i.e., the Internet & Bloggers) to actually force the Congress critters to do what is right, not what is expedient.
Or maybe it's all just wishful thinking...damn where is Thomas Jefferson when you need him?
Posted by exdem13 | June 18, 2007 6:36 PM
Those two idiots in the Senate remind me of Townsend and the other Lords in George III's Government while they planned to put the tea duty in place against opposition while claiming not to know how much revenue they were going to raise. Arrgh.
Time to get busy with the telephone and faxes again. Some more elected officials seem to need reminding AGAIN that they are ELECTED, not appointed for life.
Posted by onlineanalyst | June 18, 2007 6:53 PM
Pay very close attention to the Energy Bill being cobbled in the Senate. Its various aspects promise to raise the price of everything through taxation and more regulation. To appease the rabble over high gasoline taxes, the boogeyman once again will be Big Earl, and Congress's solution will be to punish energy corporations with punitive taxes, which of course are passed along to the consumer. Aren't those senators slick?
Too few of them know anything about economics, and I would wager that their eyes glaze over when figures are laid out before them... if they bother to do the research or attend to the facts presented by think tanks.
Our Senate is made up of a lot of lawyers schmoozing with fellow lawyers, and they are all looking to create the loopholes that keep their "brothers in law" churning the big bucks of litigation.
Why else is that shamnesty bill bigger than the Manhattan telephone book?
Posted by Adjoran | June 18, 2007 7:48 PM
This is a ridiculous overreach. Hopefully there are enough sane men in the Senate to derail it.
The energy bill is a hoot, too - it envisions "lessening our dependence on foreign oil" by INCREASING CAFE standards. That means mandating higher gas mileage in new vehicles.
Excuse me, but wouldn't higher MPG vehicles actually LOWER the effective cost of gas, thereby INCREASING demand for the commodity? So how could that do anything except INCREASE our demand and reliance upon foreign oil?
We need a Constitutional Amendment to add to the qualifications for both Representative and Senator that no candidate may be elected without successfully completing Econ 101.
Posted by brooklyn | June 18, 2007 7:53 PM
Charles Grassley is actually a pretty good man, so i have to question the sources and the reporting.
The problem remains hyperbole pushed by so many, on all sides of the political spectrum.
Conservatives are no longer a source of responsible insight, and some have become peddlers of pure baseless alarmism.
However, on the suggestion the reporting is accurate, they want to hide the proposal from debate, it is absurd.
In regards to the REID attempt to force immigration reform through without proper debate and opportunity for changes, the Republicans received little thanks in rebuking the folly.
But then what can one expect, with such an emotive responses about everything these days.
Thankful a President is in Office who will veto tax increases...
Posted by Drew | June 18, 2007 7:57 PM
Why did Grassley and Baucus do this?
You mean, other than the fact that they are complete idiots?
It is actions such as these that prove that the direct election of Senators is a grave mistake, and needs to be repealed.
Posted by Rovin | June 18, 2007 8:51 PM
"And, if I had to guess? Grassley and Baucus are mad as hell, now. Because the Internet is their avalanche."
Carol, do you think they might come after bloggers like Lott's displeasure with talk radio?
"Thankful a President is in Office who will veto tax increases"...
Unless the legislation was attached to an immigration bill Brooklyn, -------be very worried.
Posted by Rose | June 18, 2007 8:58 PM
The Captain is right - there are hundreds, prolly thousands of programs that deserve to be shredded.
But Govt does not need any new taxes - they are having problems finding LEGITIMATE uses for the taxes they have - we can tell by the TRASH they are always trying to pass into law that steals our money from our pockets, with no consideration for lives destroyed in the process.
Posted by dwyvan | June 18, 2007 10:21 PM
I remember many midnight bills being shoved down our throats the past 6 years, with no debate at all. We know for a fact that all tax legislation must originate in the House, so this seems like a dead issue. But to make any claim that the dems are doing something wrong is a one sided argument.
As far as the coming Energy Bill, it is about time we took away the tax credits given to Big Oil the past 6 years. They have had record breaking income for the past 16 quarters or so, but our fuel bills have gone up every quarter. So to say that this bill will cause a raise in fuel prices is also a dead issue. Regardless of what congress does, our fuel prices will go up. Count on it.
Posted by Douglas V. Gibbs | June 19, 2007 12:03 AM
This stopped being about Immigration a long time ago. This bill is about taking the next step toward globalization. The authors wish to erase the borders so that the United States is forced to join a North American Union molded in the same fashion as the EU. Our sovereignty is at risk.
Posted by Michael Smith | June 19, 2007 6:45 AM
dwyvan said:
Regardless of what congress does, our fuel prices will go up. Count on it.
Not true. There are many things congress could do that would lower fuel prices. Here are just a few.
1) Repeal all taxes on fuel and oil company profits. Those taxes are simply built into the price of every gallon of gasoline you buy. Repealing those taxes would cause an immediate drop in fuel prices and attract more and more investment and competition into the oil industry.
2) Repeal the massive environmental regulations that have made the construction of new refineries virtually impossible in the United States.
3) Repeal the regulations that prohibit additional drilling for oil in the Gulf of Mexico. It is preposterous that Castro can drill for oil there but American oil companies cannot.
4) Repeal the regulations that prohibit drilling in the wasteland know as the Arctic National Wildlife Refuge.
5) Repeal the disastrous environmental regulations that force refineries to produce, store and transport 16 different grades of gasoline.
Democrats in Congress won't let any of this happen because they are beholden to environmental groups. Until and unless the American people wake up and realize that the environmentalists are motivated solely by a hatred of man and a hatred of civilization, and that their goal is nothing less than the destruction of the technology on which western civilization depends, our politicians will remain in their grip and we will pay the price.
Posted by redherkey | June 19, 2007 7:58 AM
Actually, Grassley's and Baucus's initiative provides critical parity in corporate taxation, eliminating a distortion that allows limited partnerships to have an inappropriate financial advantage to the detriment of other legal forms (corporations and LLCs).
While I'd much rather see them eliminate corporate taxation entirely, pursuing legal parity so that one company doesn't suffer through governmental financial discrimination due to the form it took is quite appropriate.
Now if they would only extend all the other taxes and mandates (e.g. employee regulation) to non-US firms to level that playing field. Let's see a Malaysian textile firm pay the same minimum wage and benefits and provide the same safe workplace under OSHA regulations that the US firm does, or not be permitted to conduct any business in the US.
Posted by MarkW | June 19, 2007 10:12 AM
This bill is not about raising revenue, it's about pleasing the liberals and the populists back home. It's about punishing people for the sin of succeeding too well.
Posted by onlineanalyst | June 19, 2007 11:03 AM
dwyvan:
It's time for some basic economics lessons. Oil companies have had record breaking profits because the demand for oil has increased. "Big Earl" does not set the price per barrel in the world market.
Here is a trivia tidbit from www.willisms.com:
"A lot of folks, like Hillary Clinton, would also want to take those profits. Who wouldn't, especially if it were legal and/or ethical? Think of all the gold-plated Nintendo Wiis you could buy with that sort of money. The government, though, actually has the power to compel this sort of price gouge-- this unfair wealth confiscation-- without regard to legality or ethics.
What's more, they have the nerve to say that this level of taxation is lower than it ought to be. And-- this is the kicker-- the difference between where the taxation level is (atrociously high) and where they think it ought to be (atrociously and insanely high) becomes known as a "subsidy."
Read the whole thing and notice the handy-dandy graph that demonstrates the gouging by taxation in contrast to the amount of profits earned by oil companies: http://www.willisms.com/archives/2007/02/trivia_tidbit_o_413.html
Roam around the site in the search the archives section to locate further information (ie., facts) on oil company/energy profits relative to the profits in other sectors.
Then again, "profits" seems to be a dirty word among those wanting to see the federal government micromanage our economy through collectivism.
Carter made a mess of the economy with these top-down tricks (probably before your time on earth). The Dems don't learn their own lessons from past experience.
Posted by Classical Liberal | June 19, 2007 1:52 PM
Redherkey, as I understand it, LLCs have exactly the same tax situation as partnerships: no income taxes are paid at the company level, and profits flow through to the partners, who are taxed. In any event, nobody held a gun to the corporations head and forced them to incorporate, instead of organizing as partnerships or LLCs. This bill is all about demagoguery, in just exactly the same vein as Canada's so-called Conservatives reversing an election promise and imposing taxes on canadian business trusts. Or so it seems to me, anyway.
Posted by Classical Liberal | June 19, 2007 1:56 PM
Redherkey, as I understand it, LLCs have exactly the same tax situation as partnerships: no income taxes are paid at the company level, and profits flow through to the partners, who are taxed. In any event, nobody held a gun to the corporations head and forced them to incorporate, instead of organizing as partnerships or LLCs. This bill is all about demagoguery, in just exactly the same vein as Canada's so-called Conservatives reversing an election promise and imposing taxes on canadian business trusts. Or so it seems to me, anyway.