The Little Secret Hidden in the Recently Passed Federal Tax Cut
By now we have all heard about the recently enacted Federal income tax cut officially called the “Tax Increase Prevention and Reconciliation Act of 2005.” The Joint Committe on Taxation has estimated the tax cut at -$69 billion over the next 10 years. What you won’t hear about is the $21.8 billion of “Revenue Offset Provisions” otherwise know as tax increases. Looking over these tax increases is not for the faint-at-heart as they are full of tax minutia that only a tax accountant could love. There are 13 of these tax increases including the “Application of earnings stripping rules to partners which are C Corporations ($284 million over ten years)” and “5-year amortization of geological and geophysical costs for major integrated oil companies ($189 million over ten years).” Huh? Anyone want to guess what these mean? As usual, the government gives with one hand and takes with the other. More disturbingly, many of these tax increase provisions result in the shifting of the tax burden from individuals to businesses thereby further reducing tax transparency.