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My dad always said, “Spare me exciting
times.” By April first, the country will or
will not have survived four near-death
experiences. We have already survived
the fiscal cliff with last minute legislation entitled the
American Taxpayer Relief Act of 2012 (ATRA). Both parties
grumble that the other side won. The Democrats got
higher taxes on the rich while holding the Bush cuts on
the not so rich. The Republicans did not lose their pressure
points – the coming battles over the debt ceiling,
sequestration and the budget. The rest of the Americas
grumbled over the unmitigated gall of Congress to call
the act “The American...”
First, Congress will take up an increase in the debt ceiling.
This week, the House passed a three-month extension.
It was anticipated that the ceiling would have to
be raised sometime in February. Now it looks like it may
be sometime in May.
The President has said he won’t negotiate over the
debt ceiling. He argues that Congress passed the spending
bills and it is up to them to increase the debt ceiling.
In so doing, he has rejected the idea of coining a platinum
one-trillion-dollar coin or raising the ceiling by fiat
under the 14th Amendment, theories that would skirt
the debt ceiling issue. The Republicans say they won’t
raise the debt ceiling until they get spending cuts sufficient
to cover the debt increase. Experts claim that a failure
to raise the debt ceiling would end the world as we
know it and would certainly change the way the world
views us. Please spare me these exciting times.
Second up is the fight over the sequester, a result of a
Congress that could not come to a compromise on the
debt ceiling increase last time around. To resolve the
gridlock, Congress passed spending cuts in 2011 so onerous
to both parties that a compromise seemed guaranteed
before the January 31, 2013, effective date. A gridlocked
Congress could not reach a compromise before
2013 and the ATRA extended the effective date to March
first, expecting that they can still reach a compromise.
Einstein defined insanity as doing the same thing over
and over again and expecting a different result. Enough
said.
Finally we face congressional confirmation of a budget.
Don’t forget that Newt Gingrich shut down the government
by blocking the passage of a budget. Just this
week the House passed an act mandating that senators
and representatives must pass a budget by April 15th to
get paid. The Senate has been unwilling to pass a budget
these last three years. Maybe this is the impetus needed.
Mark Ericsson
Guest Editor
In this issue, we looked around for someone that
could answer the question “How do we fix the congressional
process?” and posed the question to the chair of
the California Republican Party, soon to publish a book
on the subject. We also asked Perry Novak to scare us
with facts about the upcoming demographic changes
in our society. In our feature article, Scott Haislet explains
the American Taxpayer Relief Act in detail. In a
companion piece, we look at the impact when you combine
the effects of ATRA with California tax rates. George
Cabot reviews the corporate landscape and the debate
over lowering our internationally high tax rates. Ralph
Jacobson brings us up to date on the rights of domestic
partners under insurance policies. Warren Peterson
warns us that tax preparers no longer must be registered
with the IRS.
I’m afraid to say that these are going to be very exciting
times. My father must be turning over in his grave.
One last thought: Is it a coincidence that there is no
ethics credits being given in this issue? s
Mark Ericsson is a partner in the tax and business
firm of Youngman & Ericsson, has served as the 2006
president of the Bar Association and is currently the
chair of the Taxation Section. He has written over 30
articles on tax and business issues.
6
MARCH 2013