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Line-Item Veto Rules Will Force Legislators to Limit Own Activities, Ways and Means Aide Says

Wednesday, Nov. 13, 1996

OnLine

New draft guidelines on how the line-item veto applies to tax benefits will force legislators to restrict their own behavior when proposing legislation, a senior House Ways and Means Committee staff member said Nov. 13.

Under the line-item veto statute, the President may veto targeted tax benefits, as well as spending items, without rejecting the entire measure. The Joint Committee on Taxation staff Tuesday released draft guidelines that require the conferees working on a tax bill to identify which provisions, if any, should be considered a targeted tax benefit.

A targeted benefit is defined as a revenue-losing provision that provides benefits under the tax code to 100 or fewer beneficiaries or it provides transition relief from a change in the code to 10 or fewer beneficiaries.

Generally, the tax-writing committees try to avoid proposing legislation that provides benefits to only a limited number of taxpayers, so the new guidelines "make the process self-policing," according to the aide who asked not to be identified by name.

In the draft, the committee staff noted several examples of what would have been targeted tax benefits that were enacted in 1996 as part of the Small Business Job Protection and the Health Insurance Portability and Accountability Acts.

For instance, the transition relief from the repeal of the possessions tax credit for corporations operating in Guam and American Somoa would have been subject to the line-item veto, the JCT draft said.

Similarly, extending the 50% orphan drug credit from July 1, 1996, to May 31, 1997, would have met the criteria for a targeted tax benefit under the law, according to the guidelines.

Treasury Looking At AMT Simplification: The Treasury Department would like to simplify the alternative minimum tax and is studying various legislative options to accomplish that goal for individual and corporate taxpayers, a Treasury official said Nov. 13.

Speaking at a conference sponsored by the Federal Bar Association, Assistant Treasury Secretary for Tax Policy Don Lubick declined to provide details regarding the options under study.

Treasury also is studying transportation tax issues and is working with the Ways and Means Committee task force that is looking into these issues.

A number of issues and the current bipartisan spirit in Washington could provide the impetus for the enactment of a tax bill in 1997, a House Ways and Means Committee aide said Nov. 13.

The need to re-authorize the airline ticket tax or enact some other funding mechanism for the airport trust fund could drive a tax bill in 1997, said the aide. The tax is set to expire on December 31, 1996.

Similarly, the need to re-authorize Superfund, the toxic waste clean-up program, also could help enact legislation this year, the aide said. However, House Ways and Means Committee Chairman Bill Archer, R-Texas, has said that he does not want to reauthorize the Superfund tax until the authorizing committees take action.

The Ways and Means Committee task force charged with examining transportation tax issues most likely will issue recommendations to the chairman and they could provide the vehicle for a tax bill next year, the aide said.

The expiring provisions, particularly the exclusion for employer-provided education expenses, probably will be considered this year if Congress decides not to let them phase-out, he said.

Corporate Welfare Creates Jobs: Taxpayers who want to prevent Congress from restricting corporate welfare need to explain to legislators that these provisions create jobs, an aide to a Senate Finance Committee member said Nov. 13.

Since closing corporate loopholes probably will be a revenue source for any upcoming tax bill, advocates of these tax benefits must point out that they are "not just loopholes," said the aide who spoke on the condition of anonymity.

Likely Successors on Finance: Sens. Jim Jeffords, R-Vt., and Dan Coats, R-Ind., are in line to claim the two open Republican seats on the Senate Finance Committee, CongressDaily news service reports. Other GOP Senators interested in the openings include: Sen. Connie Mack, R-Fla., and Sen. Conrad Burns, R-Mont.

On the Democratic side, Sen. Richard Bryan, D-Nev., has been promised one of the two vacant slots by Senate Minority Leader Tom Daschle, D-S.D., who may take the other open Democratic slot.