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NOW HE TELLS US

April 06, 2005

Senator Grassley joined the parade of speakers at the Tax Executives Institute party yesterday, where he mentioned that the production deduction he shepherded through Congress last year really isn't such a hot idea. Tax Analysts reports:

Backtracking on a provision he helped to write, Senate Finance Committee Chair Chuck Grassley, R-Iowa, expressed hope on April 5 that Congress would erase the recently enacted deduction for domestic production activities by reducing all corporate tax rates.

...

Before the provision was enacted, a number of influential lawmakers argued that separate tax rates for differing activities would be impossible to enforce and further complicate an already burdensome tax code. Grassley helped overcome those objections in conference negotiations last year, but speaking at an April 5 Tax Executives Institute (TEI) meeting in Washington, Grassley acknowledged that the domestic production activities deduction was not the ideal solution

OK, now we have to implement a complicated, confusing and ill-conceived provision that affects every factory and farm in the country. Now what?

“So now you get out there two or three years and you get away from what we were trying to do -- then I think the situation is you get all corporate tax down to around 31 or 32 percent,” Grassley said.

OK, so we go through the effort of complying with this mess, but then say "never mind" after three years? I love the tax law.

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