Tax reform, ice cream trucks, PLRs, oh my

The final report of the President's Advisory Panel on Federal Tax Reform is posted today. Download isn't working well from here, but the report could make interesting reading for folks who can get all the files open. Per previous accounts, the report was expected to recommend doing away with most tax credit incentives, including the low-income housing tax credit (LIHTC). The BBC is calling the proposal "radical," but industry folks on our side of the pond have been noting that it's a very long way from becoming legislation. The conference call that was to have preceded the report was canceled.

I haven't been able to open all the sections of the document here, but in the first section, the only reference to the LIHTC is in a "Tax Basics" sidebar in Chapter 3 that raises more questions than it answers. In an example that may be intended as entirely hypothetical, it posits the existence of a housing credit that, contrary to the current tax code, would be claimed by low-income tenants themselves. This is the text:

Box 3.3. Determining Who Bears the Burden of a Tax
Imagine that the government imposed a special tax on ice cream sold from ice cream trucks. If the ice cream truck drivers are able to pass on the tax to their customers in the form of higher prices, the economic incidence of the tax would be on their customers. In this case, the price of ice cream sold from trucks would increase by exactly the amount of the tax. If customers resisted the price increase by buying their ice cream in stores to avoid the tax, and ultimately the only way the truck driver could sell ice cream was by matching the retail price at the store, then the truck driver would bear the economic burden of the tax. In this case, the legal incidence and economic incidence of the tax would be identical.
Understanding the difference between the economic and legal incidence of taxes is important in analyzing both taxes and subsidies. Take the example of tax credits for low-income housing that could be claimed by low-income taxpayers. If the price of low-income housing increases by the amount of the credit, the credit would provide no benefit whatsoever to the low-income household, but enormous value to builders of low-income housing. In this case, market forces would have passed the full benefit of the credit to builders.

Hard to tell if a specific point about the existing LIHTC is intended here, but offered for your perusal in case it's interesting. [LATER THOUGHT: Wonder if they had in mind something like California's "homeowner and renter assistance" and renter's credit tax provisions, which unlike the LIHTC involve claims filed by low-income residents on their own tax returns.]

Meanwhile back in the more ordinary tax world, Private Letter Ruling No. 200543010, issued this past Friday, granted a taxpayer extra time to file IRS 8693 forms and post corresponding surety bonds to avoid recapture of low-income housing tax credits after disposing of two tax credit properties. Private letter rulings may not be cited as precedent.

...and Rep. Mike Oxley, R-OH, the House Financial Services chairman, has announced he'll retire at the end of his curent term. Treasury Sec'y Snow's comments here.