This week's bulletin (7/2/01) features a news story on Republican efforts to make
permanent some or all of the recently enacted tax relief measures.
Please send any comments or suggestions to individual.group@tax.org. 
David Moore, moderator

1. W&M Republicans Design Bills to Make Tax Relief Act Permanent

Republican House members have introduced several bills that would make
permanent all or some of the tax relief measures in the Economic Growth and
Tax Relief Reconciliation Act of 2001 that are set to expire after December 31,
2010.

House Majority Leader Richard K. Armey, R-Texas, signed on to a bill
(H.R. 2212) sponsored by Rep. Patrick J. Tiberi, R-Ohio, that would make the
income tax rate reductions permanent and another bill (H.R. 2143) to make repeal of
the estate tax permanent. Rep. Dave Weldon, R-Fla., sponsored the latter with 48
cosponsors, including taxwriter J. D. Hayworth, R-Ariz.

Other taxwriters recently introduced legislation to eliminate the sunset
for all provisions in the $1.35 trillion tax cut, bringing the full cost to
$1.81 trillion over 10 years, according to the Joint Committee on Taxation.
In a June 28 "Dear Colleague" letter, taxwriter Kenny C. Hulshof, R-Mo., blamed
the sunset on an "arcane" budgetary procedure known as the Byrd Rule, which
requires 60 votes in the Senate to alter revenue beyond a 10-year period. (Democrats
have argued that Republicans purposely sunset the tax cut to hide its true cost.)
Asking members to support his "common-sense proposal," Hulshof wrote:
"Regardless of whether you voted for or against the tax relief bill,
taxpayers deserve the certainty of knowing that they will not be subjected to a
massive tax hike in ten years."

Like Hulshof, taxwriter Paul Ryan, R-Wis., introduced a bill on June 27
that would make the entire tax relief package permanent, including the
alternative minimum tax exemption. According to the JCT figures, extending
AMT relief from 2005 through the entire budget window would cost $206 billion.
Ryan said he thought Congress should eliminate the sunset for all the provisions
in one bill rather than breaking them out piece by piece. Otherwise, he said,
the politically popular items could be made permanent at the expense of other
tax relief measures.

Ryan said Republicans would ultimately work together to support
elimination of the sunset because it would send a signal to taxpayers that Congress will
eventually make the necessary changes. "We had planned all along to make the
tax cut permanent," he said, pointing to the budget resolution instructions.
"For tax planning and estate planning, it is important to have certainty."

To eliminate the sunset provisions, however, lawmakers would have to
make room in the budget or rely on future Congressional Budget Office estimates
that may or may not forecast higher surpluses. Also, advocates for eliminating
the sunset provisions would face opposition from Democrats who argue that too
much of the budget has already been spent on tax cuts. Therefore, Republicans
would face the same procedural obstacle in the Senate that caused the sunsets in
the first place, because 60 votes are required in the Senate to override a point
of order restricting revenue changes beyond a 10-year period.

Senate taxwriters have not introduced similar legislation and it is
unclear whether they will propose anything soon. In general, Senate Republicans have
indicated they support the idea. A spokesman for Phil Gramm, R-Texas, said
the taxwriter views elimination of the sunsets as a "logical step to take."
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