Second Stimulus Package?

The House and Senate are working towards completion of a housing tax bill that may include other tax items.  H.R. 5720 (the housing tax bill with $11.6 billion in benefits) and H.R. 5830 (the FHA housing Stabilization and Home Ownership Act of 2008 that proposes to provide federal guarantees for home mortgages) are to be combined into one bill and then sent back to the Senate, which passed its version of housing relief in H.R. 3221 some time ago.  The Bush Administration has threatened to veto the bill.

Meanwhile, the request for corporate welfare continues.  A coalition of S corporations is asking Congress to provide more tax cuts for their businesses.  The specific tax cut requested--the built-in gains tax that is required when domestic C corporations become S corporations.  Of course, that built-in gains tax is a tax that the C corporations essentially are permitted to defer when becoming S corporations.  To permit S corporations to forego paying it would be inappropriate--it would improperly reward conversion to S corporation status with relief from taxes due. 

What's the rationale given by the S corporation coalition for this new corporate welfare request?  They argue that the tax prevents sales of assets when they should be sold, and thus distorts decision making.  One doubts that is true, since a business has to make decisions that make sense for the business, and the S corporation status already eliminates the corporate tax generally.  What seems to be more accurate is that these businesses will lobby for the reduction or elimination of any tax. 

Congress's role is to recognize that these requests for tax reductions will never cease and that they do not necessarily merit much attention.  Providing further tax reductions for S corporations that already enjoy pass-through taxation simply should not be a priority, especially when the reductions requested are an unreasonable default on the basic agreement allowing C corporations to convert to S corporation status.