Summaries of Tax-Related Products Issued Summary of Related In 1992, the intangible asset amortization provisions of the July 1991 bill (H.R. 3035) were incorporated into another bill (H.R. 11) and passed by Congress on October 8, 1992. However, on November 4, 1992, the President vetoed the bill. As of December 31, 1992, no further action had been taken. Related GAO Product(s) GAO/GGD-91-88, 08/09/91 Summaries of Tax-Related Products Issued Proposed Tax Credit Summary of Related GAO/GGD-92-14BR, 11/01/91 In response to a request from the Chairman and Ranking Minority Member of the Senate Committee on Banking, Housing, and Urban Affairs, GAO reviewed a proposed tax credit program intended to facilitate the sale of distressed commercial real estate property held by the Resolution Trust Corporation (RTC). GAO also discussed RTC strategies to dispose of properties by lowering their price and using other available alternatives. GAO evaluated the cost-effectiveness of the proposed tax credit program that would begin on January 1, 1992, and have a cap of $1 billion. The credit would be earned in five equal annual installments and would have a present value of up to 80 percent of the purchase price plus the cost of necessary rehabilitation of the property. GAO found that this tax credit is not a cost-effective way for RTC to dispose of its commercial real estate assets. The federal government would lose about $127 million on a present-value basis with the proposed $1 billion tax credit program. Although the tax credit would increase sales revenue to RTC, these gains would be exceeded by the lost tax revenue to the Treasury. This result was obtained by comparing the proposed tax credit with RTC's current policy of obtaining sales by pricing real estate assets according to market values. GAO reported that RTC has several programs in place to dispose of real estate properties. These include reducing prices to reflect current market values and providing seller financing. In March 1991, RTC approved new guidelines that gave officials more flexibility in setting prices for properties to reflect market values. As of December 31, 1992, legislation authorizing the tax credit program had not been reported out of committee, and no further action had been taken. Related GAO Product(s) GAO/GGD-89-100FS, 07/10/89 and GAO/T-GGD-91-43, 06/11/91 Summaries of Tax-Related Products Issued Summary of GAO GAO/T-GGD-92-11, 01/28/92 This testimony summarized GAO's work on 5 of the 12 tax provisions that were extended by the Tax Extension Act of 1991. The statement was provided to the House Committee on Ways and Means for its January 1992 hearing, which focused on whether the provisions should be extended. Qualified Mortgage Revenue Bonds (QMB)—GAO concluded that QMBS Targeted Jobs Tax Credit-About half of the employers GAO interviewed followed their normal hiring practices, but they were able to take the tax credit when those hired happened to be in the targeted groups. Thus, the targeted jobs program goals were not achieved to their full extent. GAO also found no substantial differences in participants' earnings before and after a targeted job compared to others who were not in the program. If Congress extends this program, GAO Suggested it may wish to consider improved targeting. Low-income Housing Tax Credit-Building or rehabilitating housing in Qualified Research Tax Credit-In 1989 Congress revised the base used in calculating the qualified research credit. This should generate a greater stimulus for research expenditures. Because the base is not subject to periodic reviews and many companies have had substantially different growth rates in their spending and sales over extended periods of time, the revised base may become deficient after a few years. Therefore, if the research tax credit is permanently extended, GAO suggested that Congress may want to ensure that the credit continues to provide an attractive Summaries of Tax-Related Products Issued Related GAO Product(s) incentive to most taxpayers at an acceptable revenue cost by requiring that the base be periodically reviewed and adjusted as needed. Employer-provided Educational Assistance-Sufficient information is not available to adequately measure whether the educational assistance provision effectively meets its objectives. If this provision is extended, GAO suggested that Congress may wish to modify the reporting requirement and maintain it for a sufficient period to establish a basis for evaluation. GAO/RCED-88-111, 03/28/88; GAO/RCED-88-190BR, 06/27/88; Summaries of Tax-Related Products Issued Luxury Excise Tax GAO/GGD-92-9, 02/26/92 In response to a request from several Members of Congress, this report provided information about the luxury excise tax. GAO examined the effect of the luxury tax on the luxury boat, car, aircraft, jewelry, and fur markets. The report provided information on the anticipated tax revenues, IRS' actual collections, and the costs and issues associated with administering this tax. It also discussed other products that have been taxed as luxury items in the United States or that are taxed as luxuries by other countries. GAO found that diverse factors interacted to affect both demand for and supply of the five luxury products. GAO could not disentangle the effects of these factors from the effects of the tax and therefore could not quantify the tax effects. Boat, jewelry, and fur sales began declining before the luxury excise tax took effect on January 1, 1991. Sales of all five products were probably depressed by the 1990-91 recession. Luxury car sales were also affected by an increase in the gas guzzler tax, and airplane sales decreased in the 1980s due to product liability costs. Therefore, although some portion of the decline in sales during 1991 may have resulted from the price effect of the luxury excise tax, it is likely that other factors also significantly affected these markets. IRS collected $168,404,000 in luxury excise taxes during fiscal year 1991. IRS |