Energy Bill 2004: Sudden Weight Gain

February 26, 2004
09:47 AM
We draw attention to a noteworthy detail in a Senate Finance Committee staff analysis of the tax package in S.2095. It’s a piece of information that calls into question the true cost of the new energy bill, and one that is unlikely to go unnoticed by fiscal conservatives or the White House. The cost of S.2095’s tax piece is advertised at $14 billion, after $5 billion in offsets (see below) have been factored in. Trouble is, the same $5 billion worth of offsets is already in the Senate-passed $318 billion transportation bill, in one form or another. How can the same offsets cut the costs of two different bills? The answer: they can’t. You can only use an offset once. If the highway bill is enacted first with these offsets, then the true cost of the tax incentives in S.2095 is $5 billion higher -- or closer to $19 billion (give or take another $3 billion, depending on revenue estimates). Alternatively, if the energy bill is enacted first with these offsets, then either the cost of the transportation bill will be $5 billion higher, or $5 billion worth of highway projects will have to come out of that bill (an unlikely event). The exact cost of S.2095 won’t be known until the Joint Committee on Taxation issues a formal score. Watch this space for that information. From a Senate Finance Committee staff memo to Tax LAs: Revenue Raisers (total estimated offset of $5 billion) S.2095 includes the same revenue raisers passed by the Finance Committee in 2003. Revenue raisers were not included in the conference report to H.R. 6, except for the modifications to the ethanol tax incentives. (1) Modification of ethanol tax incentives (offset of $402 million); (2) Provisions to Discourage Corporate Expatriation (offset of $2.7 billion); (3) Extend the IRS User Fees (offset of $138 million); (4) Shelters–reportable transactions (offset of $1.4 billion); (5) Add Hepatitis A to list of taxable vaccines (offset of $91 million).

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