By Ed Orlet, Guest Blogger
to the Washington Post’s Ezra Klein,
there’s a new word in the Capitol Hill lexicon: Taxmageddon. At the end of 2012,
a number of tax provisions are scheduled to change, expire or go into effect
that could have an unknowable impact on the slowly recovering economy. These
- Increase in the top marginal estate tax
rate from 35 percent to 55 percent
- Increase in individual tax rates
- Expiration of the payroll-tax holiday
- Increases in tax rates on capital gains
and dividend income
number of these provisions are routinely extended at the last minute. Cuts to
Medicare providers have been an issue since they were first enacted in 1997,
but they have never happened. Policy
makers call this the “doc fix,” which seems to indicate they never actually
plan to cut the rates.
Republicans are working to avoid the cuts to military spending they agreed to
in the recent debt ceiling debate. Some are estimating the debt ceiling will
need to be raised again before the election, but that’s a crisis unto itself. Take
a look at this chart via Klein’s Wonkblog from the Committee for a Responsible
Federal Budget. It details the
changes scheduled to lead to Taxmageddon.
you haven’t noticed, this is an election year. With divided government in DC,
any progress towards averting Taxmageddon prior to the election is, let’s say,
unlikely. Add to this “budgetary free-for-all” the United States’ recently earned
dubious distinction for having the highest corporate tax rate on the planet,
and you can see that the stakes of this debate will be very high.
many policy makers -- including the president -- have called for cuts to the
corporate tax rate (and elimination of “loopholes” read: deductions), Profit
Planning Group estimates that more than half of NAED member companies function
as “pass-through entities.” So cutting the corporate rate, raising the
individual rates and limiting deductions will actually amount to a
devastatingly large tax increase on pass-throughs.
variable for distributors to worry about in tax/budget reform is LIFO repeal.
Repeal was once again included in the president’s budget blueprint, and it will
be in play during the coming tax fight. Some policy makers paint LIFO as an “oil
company tax break” since energy companies hold the greatest amount of LIFO
reserves. Unfortunately, electrical distributors must avoid being collateral
damage in the war against Big Oil.
day is November 6. The U.S. House of Representatives has scheduled 16
legislative days for its lame-duck session before the end of the year and
Taxmageddon. That’s not a lot of time. If you thought the debt ceiling debate
was the height of hysteria, you ain’t seen nothin’ yet.
Join other NAED members as they take their voices to Washington
during the 2012 NAED Congressional Fly-in happening July 11-12. NAED staff will
help prepare you with scheduling, training and background information. All you
need to do is register and attend.
vice president, NAED Government Affairs. Contact him at firstname.lastname@example.org.