Weekly WastebasketFiscal Frights and Delights for TaxpayersWashington’s Halloween tricks and treats in 2021

With Halloween approaching, it’s time to review some tricks that have been played on taxpayers through the year as well as a few treats they have received. Reconciliation and infrastructure are playing center stage, but other spending decisions may come to haunt taxpayers. For the faint of fiscal heart, be aware that some of these are quite frightening.

TRICKS

  • Constantly moving payfors: First it was higher taxes on corporations and individuals, then it was a sort of hard to administer, and believe wealth tax on unrealized capital gains income on super (billionaire plus – less than 1,000) individuals, now it’s back to minimum corporate tax…
  • Biofuels boogiemen: $1 billion for biofuels infrastructure projects is just one of many biofuels boogiemen in the most recent budget reconciliation package. The U.S. Department of Agriculture (USDA) already pulled more than $200 million out of thin air for specialized gasoline pumps that dispense corn ethanol. Taxpayers shouldn’t be tricked into believing these subsidies – nor others for biodiesel, aviation biofuels, and other bioenergy tax credits – will do any good for the climate, one of the main goals of the budget bill.
  • Pentagon poltergeist: Senator Shelby (R-AL) says his own committee isn’t spending enough money on the Pentagon. The draft Pentagon spending bill for Fiscal Year 2022 would already increase funding by 5 percent over last year. Instead, Senator Shelby wants “parity” with increases for non-defense discretionary accounts (as much as 14 percent). That would be an expensive trick for taxpayers, and one we can’t afford.
  • Tax Cut disappearing acts: The reconciliation package follows the playbook Republicans used in their reconciliation-passed 2017 tax cut and only “temporarily” authorizes many of the costly, but popular provision. See the Enhanced child tax credit only supposed to be one-year, but magically reappears in the future. History shows these types of provisions seldom actually go away, haunting the tax code.  
  • Sweet magic tricks: Congress added $10 billion for agriculture disaster aid in the recent Continuing Resolution, mostly sweetening the deal for big producers who don’t need taxpayer support. Past disaster aid has lined the pockets of large landowners and subsidized everything from sugar beets to milk.
  • Big Oil wants candy. But we’re hoping the porch light is off this go around. Outdated oil and gas leasing rates and tax breaks have provided big oil with a sweet deal for too long. It might be time for taxpayers to get in on those goodies though with the reconciliation package including several reforms that have bipartisan support like increasing onshore oil and gas royalties, minimum bids and rental rates. The House Rules print also proposed to eliminate noncompetitive leasing and require expression of interest fee for nominating acres for leasing.

TREATS

  • The deal is supposedly paid for: The various provisions the Democrats put out purport that this reconciliation package is more than paid for. We will reserve judgement (and a Joint Committee on Taxation score) on whether that is the case, but at least paying lip service to this is a plus these days (sadly).
  • Sweet deal for ag conservation: The reconciliation package includes increased spending on agriculture conservation programs. This can be a treat – for producers, the climate, and taxpayers alike – if implemented the right way. If USDA targets spending to conservation practices with a track record of helping farmers increase their resilience, instead of dependence on subsidies, taxpayers will get a sweeter deal.
  • A Royal Treat on Mining: Or make that royalty. The reconciliation package includes a royalty for hardrock minerals removed from federal lands from new (4 percent) and existing (2 percent) mines. For the last 150 years taxpayers have been tricked out of any compensation for gold, silver, and other hardrock minerals removed from federal lands.
  • Treat for Congress, not you: Demanding Design in certain military construction projects. Certain legislators – cough, appropriators, cough — putting themselves first in line to get their favored candy construction projects.
  • Treat for Contractors, also not you: a MASSIVE Zero to Hero list of procurement projects would spend many billions more on projects the Pentagon didn’t request, at all! Spoiler alert: if the Pentagon couldn’t fit it in to a more than $700 billion budget request, maybe they don’t actually need it.

There’s still a long way to go on the reconciliation package and spending bills. The Halloween tricks and treats we’ve outlined above will probably still be relevant when we write about a cornucopia of provisions in the Thanksgiving Weekly Wastebasket. As for the spending bills, well those will likely be gifts and baubles around Holiday time. Stay tuned.

 

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