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JOINT COMMITTEE ON TAXATION

Congress of the United States

JOINT COMMITTEE ON TAXATION
Washington, DC 20515-6453

January 8, 1993

Honorable Vic Fazio

Chairman

Subcommittee on Legislative
Committee on Appropriations
U.S. House of Representatives
Washington, D.C. 20515

Dear Mr. Chairman:

I am writing in regard to the fiscal year 1994 appropriation for the Joint Committee on Taxation.

Attachments A through D provide a summary of the activity of the Joint Committee on Taxation staff for calendar year 1992. The Joint Committee staff drafted 42 Committee Reports and 7 miscellaneous legislative reports during 1992 (see Attachment B). Included in these reports were several major legislative initiatives requiring significant staff resources. These initiatives included H.R. 4210, the Tax Fairness & Economic Growth Act of 1992, H.R. 11, the Revenue Act of 1992, H.R. 776, the Comprehensive National Energy Act, and H.R. 5260, the Unemployment Compensation Amendments of 1992. Further, the Joint Committee staff published 51 other documents during the year, including pamphlets prepared at the request of the House Committee on Ways and Means or Senate Committee on Finance for hearings held by those committees and pamphlets prepared for the benefit of the Members of Congress and their staffs in connection with tax issues of current interest (see Attachments C and D).

One of the statutorily mandated functions of the staff of the Joint Committee is the review of IRS' proposed refunds or credits of income tax, estate and gift tax, or any tax on public charities, foundations, pension plans, or real estate investment trusts in excess of $1,000,000. The staff makes a report on each refund case in excess of $1,000,000, and makes comments or recommendations with respect to the proposed refund case to the IRS. During 1992, the Joint Committee refund staff reviewed 641 proposed refunds.

Finally, the Joint Committee staff faced a significant increase in the number of requests for estimates of the revenue

Honorable Vic Fazio

Page 2

January 8, 1993

Congress of the United States

JOINT COMMITTEE ON TAXATION

Mashington, DC 20515-6453

effects of various legislative proposals during 1992 (see Attachment A). In fact, the Joint Committee staff had a 61 percent increase in requests for revenue estimates in 1992 over 1991, from 1,461 to 2,350. This large percentage increase placed an enormous strain on the resources of the Joint Committee revenue estimating staff.

It is likely that the demand for Joint Committee staff services will be unprecedented in 1993 and 1994. The days of new massive, direct spending programs appear to be over. Instead, tax proposals are put forth as the preferred legislative response to social problems. If the major initiatives of the new Administration include such items as short term economic stimuli (e.g., investment tax credits) and overhaul of the U.S. health care delivery system critical demands will be placed on the staff of the Joint Committee on Taxation.

The Joint Committee staff received no increase in appropriations for fiscal 1993 over fiscal 1992. This freeze will (1) hamper the Joint Committee's efforts to fill authorized positions at a time when its need for qualified professional staff has never been greater, and (2) prevent the upgrading of computer equipment and services that enable the Joint Committee staff to respond promptly to requests for assistance from Members of Congress.

Accordingly, the appropriation request for fiscal year 1994 has three major components: (1) an increase in the amount dedicated to data preparation contracts; (2) the costs attributable to implementing fully the installation of an electronic document storage and tracking system; and (3) proposed increases in personnel expense to (a)

cover the cost of filling available staff slots, (b) provide cost-of-living and merit increases for existing staff, and (c) increase the starting salaries for new professional staff

Honorable Vic Fazio

Page 3

January 8, 1993

Congress of the United States

JOINT COMMITTEE ON TAXATION

Washington, DC 20515-6453

A. Summary of Budget Request

In a letter to the Clerk of House, dated November 5, 1992,

I requested a total fiscal year 1994 appropriation of $6,593,000. This represents an $833,000 (14.5%) increase over the fiscal year 1993 appropriation. Because of the appropriation freeze for FY 1993, this increase effectively covers two fiscal years, rather than one. Details of this appropriation request are outlined below with justifications for the levels requested.

B. Details of Fiscal Year 1994 Appropriation Request

1. Nonpersonnel expenses

I am requesting a $452,000 increase in total nonpersonnel expenses. Although requested increases for many of the nonpersonnel items represent inflation adjustments only, certain of the items for which there are significant increases merit specific discussion.

a. Other services.--I am requesting an increase of $200,000 for other services. In addition to normal inflation increases, a significant proportion of the requested increase is intended to finance the cost of contracts with consultants.

This element of the request relates directly to the increased demands for assistance placed on the staff of the Joint Committee on Taxation by the Members of Congress. The needs of the Members for immediate responses to requests for revenue estimates and the substantial increase in the number of requests for revenue estimates that the Joint Committee staff receives has placed tremendous burdens on the Joint Committee's revenue estimating staff. To perform efficiently, the staff of the Joint Committee on Taxation has found it necessary to contract with certain private sector organizations to do work that the Joint Committee staff does not have the time or

Honorable Vic Fazio
Page 4

January 8, 1993

Congress of the United States

JOINT COMMITTEE ON TAXATION

Washington, DC 20515-6453

The Joint Committee has budgeted $245,000 for consultant services. These funds are needed to hire consultants capable of assisting in the implementation of our document storage and tracking system (discussed in greater detail below) which will enable us to follow more closely the status of Member request and respond more quickly to such requests.

Also, the Committee will need outside assistance in converting to a new data retrieval and sampling procedure to be implemented by the Statistics of Income (SOI) division of the Internal Revenue Service. This extensive sample of taxpayer information forms the basis for most of the computer models utilized by the staff in conducting its revenue analysis work. The advanced tracking and new SOI sample design will require significant software development.

b. Equipment.--I am requesting a $240,000 increase in the appropriation for equipment expenses. We anticipate new equipment costs of $200,000 with additional costs for maintenance and repair of $40,000, for a total increase of $240,000. In addition to normal inflation increases incorporated into the appropriation request, there are two additional components to this request.

During FY 1993, the Joint Committee will install the first stage of an electronic document storage and tracking system that will improve the Joint Committee's ability to respond to Member requests in a timely manner. This system will run on equipment and software purchased with funds from FY 1992 and earlier years. Because of the funding freeze for FY 1993, no additional equipment purchases are planned for FY 1993. However, the success of the first stage will lead to additional equipment requirements in FY 1994. Full implementation of this system will not be possible without additional funds for equipment purchases in FY 1994.

Second, as the number of staff economists employed by the Joint Committee on Taxation has increased, the staff's needs for the computer equipment that these economists use on a daily

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