As noted in yesterday's posting on the question of a bailout for the auto industry, Senator Baucus had a bill ready to provide an extension of the effective date for better funding of pensions, in response to pleas by companies (that have already benefited from the reduced wages that bargaining to provide better pensions permits) to delay making up the shortfalls in pension plans created by the drop in the market. The bill (Download BaucusBill.112008 ) would also needlessly extend the section 179 expensing provision. That tax break permits incredible front-loading of depreciation expenses. The rationale is that this will supposedly encourage more investment in capital equipment, but the fact is that no company will invest in a downturn just for a tax break. Finally, the bill would modify the rules about required distributions from retirement accounts, which is something that both political parties have discussed due to the sharp declines in the stock market. Baucus has admitted that the bill was "rushed", so Senate action has been deferred, possibly to come up in December or possibly to await the new Congress.
Meanwhile, According to BNA's Daily Tax RealTime, Nov. 20, 2008, Representative Doggett (Democrate from Texas) introduced a bill on Thursday that would reverse the giveaway for acquiring banks provided by the Treasury in Notice 2008-83 (announcing that the provision limiting use of net unrealized built-in losses would not be enforced against banks acquiring banks with such losses). BNA notes that Doggett recognized that Treasury had exceeded its authority and went on to argue that the "Paulson Panic" shouldn't be permitted to "undo 20 years of sound tax policy." He added a comment that agrees with statements I have made on this blog-- "banks already 'too large to fail' should not enjoy the added incentive of tax avoidance to get even larger." Id.
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