FALLS CHURCH, VA -- With the release of President Obama’s FY 2013 Budget to Congress, Tax Analysts’ contributing editor Martin A. Sullivan finds little movement toward reform and more ‘politics as usual’ in tax provisions. According to Sullivan:
- "As expected in an election year, the tax proposals in President Obama's proposed 2013 budget serve his short-term political purposes. His major tax proposals -- from providing tax benefits for domestic manufacturing, alternative energy, and small business, to ending tax benefits to multinational corporations that move jobs offshore – are staples of his emerging re-election campaign.
Tax reform is on the back-burner. Details of corporate tax reform—including significant rate reduction and the closing of loopholes — will be released at the end of this month. This 'framework' for corporate reform will include much needed tightening of international tax rules to help keeps jobs and profits in the United States. The details of tax reform beyond the corporate sector — including a minimum tax on millionaires that would essentially eliminate the capital gains preference for the wealthy — have no definite release date and are unlikely to appear before the election.
Included in the budget is a 10-month extension of the payroll tax cut which will provide necessary stimulus to keep the economy from falling back into recession. After that there is smorgasbord of small, targeted, and extremely complex proposals that will do more harm than good. These provisions implement through the tax code an industrial policy that favors certain types of manufacturing, certain types of alternative energy, and certain types of small businesses to the detriment of the rest of the economy. So, while talking up its commitment to base-broadening and simplification, the Administration's actual proposals increase complexity and create new loopholes."
Martin Sullivan is a contributing editor to Tax Analysts' daily and weekly publications and a regular blogger on Tax.com. He is also the author of Corporate Tax Reform: Taxing Profits in the 21st Century. Previously, he served on the staff of the Treasury Department and the staff of the Joint Committee on Taxation and has testified before Congress multiple times on major tax issues. He is frequently quoted and interviewed by the media; recent mentions include The New York Times, Businessweek.com, as well as appearances on ABC's World News With Diane Sawyer, NPR's On Point, and CBS's 60 Minutes.
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