Don't Mess With Taxes

It's still in the just talking about stage, but Capitol Hill is starting to toss around ideas about what might be in a second stimulus package.

At yesterday's Ways and Means hearing (previewed here) suggestions included infrastructure projects and more unemployment insurance money. Yep, you guessed it, those were on the wish lists of the state and city officials who testified.

Links to the testimony presented at the hearing can be found at this Ways and Means Web page.

Support for more rebate checks: But of more interest to most taxpayers are the suggestions from those who didn't make a personal appearance at the hearing.

The National Retail Federation (NRF), in written testimony submitted to the tax-writing panel, called on Congress to authorize a second round of tax rebate checks.

"With most economists predicting a weak economy into 2009 and consumer spending at record lows, NRF believes additional Congressional action would help the economy and soften the negative impact on the American people," NRF Vice President and Tax Counsel Rachelle Bernstein said.

"We believe an immediate stimulus that will put money into the pockets of consumers where it can have a ripple effect throughout the economy is needed. That stimulus could be accomplished in a number of different ways including more rebate checks, a nationwide sales tax holiday, a payroll tax holiday or other alternatives."

The business group noted that the first round of checks resulted in a "modest" increase in retail sales. Some of the money distributed via the first economic stimulus payments was diverted by unexpected increases in the prices of food and fuel earlier this year, Bernstein said, but results were nonetheless better than if Congress has not enacted the tax rebates.

Realtors want in on the act, too: Housing, which is a major component of our current economic troubles, also should be considered for additional stimulus relief, say some of that sector's representatives.

The National Association of Realtors (NAR) didn't have a representative testify at yesterday's Ways and Means hearing, but it has come up with its own four-point plan, which it would like to see addressed in a lame-duck session and which it says would reinvigorate the housing market.

The NAR's proposals are:

1. Remove the requirement in the current law that first-time home buyers repay the $7,500 tax credit and expand the tax credit to all buyers of a primary residence.
2. Revise the FHA, Fannie Mae and Freddie Mac 2008 stimulus loan limit increases to make them permanent. This would affect home buyers in high-cost areas.
3. Use a portion of the $700 billion economic recovery package to extend credit down to Main Street banks, expedite the process for short sales and accelerate the resolution of banks' real estate owned properties.
4. Make permanent the prohibition against banks entering real estate brokerage and management, further protecting consumers and the economy.

Ways and Means Chair Charles Rangel (D-NY) also favors a post-election session to hammer out a second stimulus package. He urged the leadership of both parties to commit to the lame-duck session and to working out more economic relief legislation.

I hate to keep saying it, but stay tuned. After the election next week, we'll have a better idea of how motivated Congress will be to come back to Washington, D.C.