Tax simplification and historical context

AHF's own John Zipperer and Donna Kimura have posted comments to Wednesday's item on an early-stage advisory proposal for radical tax simplifications that would include dropping the low-income housing tax credit (LIHTC). Both suggest any such plan is extremely unlikely to take effect as proposed, but Donna adds: "That said, I still would be surprised if a couple of curve balls didn't get tossed the program's way. Intentional or not. Remember the dividend-tax controversy?"

What she's talking about is a kerfuffle from 2003 that might be interesting as historical context, though Donna wants to be extremely clear that it's old news. AHF editor Cynthia Hunter summarizes: "Basically, about two years ago there was a proposal to eliminate taxes on corporate dividends on the premise that the corporation had already been taxed on its earnings, so taxing stockholders for distribution of those earnings was a form of double taxation. The fear was that LIHTCs would become less attractive investments because stocks would become more attractive with untaxed dividends." As Donna wrote at the time, a good bit of worry was relieved by the passage of a tax bill that didn't contain the measure after all.

...and then of course, there was the 1986 tax overhaul lampooned long ago by the Capitol Steps as "Baker-Packwood-Rostenkowski tax simplification..." (to a tune from "Mary Poppins"), which as we well know didn't simplify much of anything. Policy and sausage, ya don't wanna watch 'em being made...