Clinton budget proposals raise fundamental issues of tax policy and administration.

• Position: Tax Executives Institute Federal Tax Committee and International Tax Committee

On December 13, 1995, Tax Executives Institute filed the following comments with the budget negotiators from the White House, Senate, and House of Representatives, concerning certain of the Clinton Administration's budget "counterproposals." TEI'S comments were prepared under the aegis of its Federal and International Tax Committees.

As Congress and the Clinton Administration work together to craft a budget agreement, Tax Executives Institute is concerned that the Administration's counterproposal raises major issues concerning the process by which laws are enacted. The Administration's 11th-hour proposals would work fundamental changes in the tax system, disrupt myriad business relationships, and impose tremendous costs on the business community. TEI has grave reservations about the hurried, almost slap-dash, manner in which the proposals have been presented.

Background

Tax Executives Institute is a volunteer association of nearly 5,000 professionals who are responsible for managing the tax affairs of their companies. TEI's members represent more than 2,700 of the leading corporations in the United States and Canada, all of which must contend daily with business tax laws, from both planning and compliance perspectives.

Discussion

On December 7, 1995 -- one week before the deadline for passing a budget agreement -- the Clinton Administration unveiled its counterproposal to H.R. 2491. Included in that proposal are several untried, even radical, changes in the way in which corporations are taxed. Many of these proposals -- which range from a denial of an interest deduction on certain debt instruments, to a reduction in the dividends-received deduction, to a modification of the loss carryover rules, to an increase in the penalties for failure to file information returns -- have not been subject to public scrutiny.

Indeed, the Administration's need to "clarify" several provisions within days of their announcement -- and the unavailability of legislative language to scrutinize for oversights and mis-steps -- speaks volumes about the policy and administrative problems caused by a rush to enact hastily conceived ideas. In an area where reasonable people counsel restraint and caution, the proponents too often speak in sound bites and offer up unsubstantiated claims. If ever the axiom "marry in haste, repent at leisure" had application in the legislative sector, it is here -- and we fear that it is the economy as a whole that will be called to...