May 11, 2006
Final tax legislation uses proposed rural schools fundingto provide more tax cuts to the wealthy
Wyden, Baucus identified a full-funding source for county payments,but todays tax bill instead uses it to offset more capital gains tax cuts Washington, DC A major tax bill expected to be approved by Congress this week uses a funding provision proposed by U.S. Senators Ron Wyden and Max Baucus (D-Mont.) as a full-funding source for the rural county payments bill to instead provide tax cuts for the wealthy. To date, the Senators proposal has been the only full-funding proposal for county payments on Capitol Hill. Wyden will vote against the tax bill in the Senate, citing the use of the county payments funding provision as well as other troubling aspects of the bill.I can't support raiding a scarce funding source to benefit the fortunate few when rural counties across Oregon need this money to keep their heads above water, Wyden said. I thought it was a logical idea to use money from tax dodgers to keep the Federal government from dodging its commitments to our nations school kids. But once again, Congress is proving to be a logic-free zone.In March, Wyden cosponsored legislation that would fully fund a reauthorization of the county payments law, without a new tax or raising existing taxes, by ensuring that a portion of Federal taxes are withheld from payments by the Federal government to government contractors. The Federal government currently does not withhold taxes when it pays government contractors and a recent study by the Government Accountability Office shows that a surprisingly large number of those contractors never pay their federal taxes.Apparently, the Congressional leadership agrees we had a good funding idea, Wyden said. They liked it so much they used it for their own priorities.In early 2005, Wyden and others introduced a bipartisan bill to reauthorize for another seven years the county payments law that provides a stable revenue source for education, roads and other county services in rural areas (the original law is due to expire at the end of this year). In February 2006, the Administration proposed reauthorizing the law for only five years while cutting funding by 60 percent and funding that reduced portion with a controversial Federal land sale scheme.Stung by bipartisan criticism of its land sale proposal, the Administration challenged supporters of the law to identify a different funding source, a challenge Wyden and Baucus met with their full-funding proposal. Instead of acting on their proposal, the tax bill conferees chose to use the funding proposal to offset an extension of capital gains and dividend tax cuts that do not expire until 2008.Todays tax bill, HR 4297, passed the U.S. House of Representatives last night; following Senate passage it will be sent to the President for his signature. Due to Senate procedural rules, Wyden could only vote yea or nay, and was not allowed to offer an amendment to redirect funding to the county payments law.