Tuesday
Jun162009
Tax Experts Spar Over “Cap And Trade” Policy
By Learned Foote- Talk Radio News Service
The Senate Committee on Finance held a hearing to assess what impact the Obama administration’s carbon cap and trade program might have on tax legislation.
The committee’s testimony dealt with a narrow set of questions such as whether or not carbon allocations should be distributed for free or auctioned off, and whether or not carbon allocations should be considered income or capital asset. In addition, the committee debated whether or not previous legislation governing the emission of sulfur dioxide can be used as an analogy to carbon taxes.
A panel of tax policy experts offered contradictory pieces of advice to the committee.
“In considering the direction for the tax treatment of CO2 allowances, the most logical place to start is with the current treatment for SO2 [sulfur dioxide] and NOX [nitrous oxide] allowances. These allowances were established under Title IV of the Clean Air Act Amendments of 1990,” said Keith Butler, Senior Vice President of Tax at Duke Energy. “These allowances should be granted with zero-tax basis and they should not be taxed upon granting it, because that just creates an ultimate cost that I don’t think we need to create,” he said.
“To use that distant stuff from the past for this new market which is so vast is, you know, I mean, why don’t we bring over the laws from Amsterdam and apply them in New York today,” said Gary Hufbauer of the Peterson Institute for International Economics. He added that carbon allocations should be treated as income rather than capital gains, and that following the precedent set by SO2 caps is “mind-boggling.” “What you’re gonna do is throw out a couple hundred billion dollars,” he said.
According to committee chairman Senator Max Baucus (D-Mont.), the SO2 cap governed less than 120 facilities, whereas a carbon cap and trade program would affect over 7,000 entities if enacted. All of the panelists agreed that the analogous legislation would have to be revised if a carbon cap and trade proposal is enacted, and Hufbauer said that a “blank slate” would be most appropriate.
The Senate Committee on Finance held a hearing to assess what impact the Obama administration’s carbon cap and trade program might have on tax legislation.
The committee’s testimony dealt with a narrow set of questions such as whether or not carbon allocations should be distributed for free or auctioned off, and whether or not carbon allocations should be considered income or capital asset. In addition, the committee debated whether or not previous legislation governing the emission of sulfur dioxide can be used as an analogy to carbon taxes.
A panel of tax policy experts offered contradictory pieces of advice to the committee.
“In considering the direction for the tax treatment of CO2 allowances, the most logical place to start is with the current treatment for SO2 [sulfur dioxide] and NOX [nitrous oxide] allowances. These allowances were established under Title IV of the Clean Air Act Amendments of 1990,” said Keith Butler, Senior Vice President of Tax at Duke Energy. “These allowances should be granted with zero-tax basis and they should not be taxed upon granting it, because that just creates an ultimate cost that I don’t think we need to create,” he said.
“To use that distant stuff from the past for this new market which is so vast is, you know, I mean, why don’t we bring over the laws from Amsterdam and apply them in New York today,” said Gary Hufbauer of the Peterson Institute for International Economics. He added that carbon allocations should be treated as income rather than capital gains, and that following the precedent set by SO2 caps is “mind-boggling.” “What you’re gonna do is throw out a couple hundred billion dollars,” he said.
According to committee chairman Senator Max Baucus (D-Mont.), the SO2 cap governed less than 120 facilities, whereas a carbon cap and trade program would affect over 7,000 entities if enacted. All of the panelists agreed that the analogous legislation would have to be revised if a carbon cap and trade proposal is enacted, and Hufbauer said that a “blank slate” would be most appropriate.
Obama Will Grant Limited Benefits To Same-Sex Couples
President Obama will sign a memorandum on June 17th granting limited federal benefits to same-sex couples, and requesting that the Office of Personnel Management issue guidance within 90 days preventing discrimination against federal employees based on factors other than job performance.
John Berry, Director of the U.S. Office of Personnel Management and the highest-ranking openly gay member of the Obama administration, said that he and the Secretary of State have “conducted internal reviews to determine whether the benefits they administer may be extended to the same-sex partners of federal employees within the confines of DOMA [Defense of Marriage Act].”
These benefits will not include health insurance, survivor or retirement benefits, or any other benefits outlawed by the Defense of Marriage Act. The Obama administration recently defended DOMA using arguments and language condemned by the ACLU, the Human Rights Campaign, Lambda Legal, and other advocates for LGBT rights. Obama has promised to repeal DOMA if the appropriate legislation reaches his desk.
The benefits granted to civil-service employees will include long-term care insurance and sick leave to care for ailing partners. Foreign service employees and their partners will gain the use of medical facilities, medical evaluations from abroad, and consideration of family size in housing units. The memorandum also requests that the heads of executive departments and agencies conduct an internal review to locate other benefits that may be legally extended to same-sex couples.
The Clinton administration issued guidance requiring that many executive agencies grant some of the benefits identified in Obama’s memorandum. Berry said these benefits thus far have been “subject to the whim of a supervisor.” Berry said that “what the president is doing today is making this no longer optional; he is making it mandatory and is making it clear that this is now the policy of the federal government.”
Within 90 days, the OPM will issue guidance regarding civil service laws that make it illegal to discriminate against federal employees for reasons other than job performance. Berry said this guidance will not impact "Don’t Ask, Don’t Tell," a law that prevents openly gay people from serving in the military.
“This is a first step, not a final step,” said Berry.