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3 Federal Tax Policy Memo 1 (1979)

handle is hein.tera/fetxcyemo0003 and id is 1 raw text is: TAX       FOUNDATION'S
February 21, 1979                    VOL. 3   NO.
One of the beneficiaries of the 1970's style tax revolt and distrust of big
government is the sunset concept as applied to government spending and regula-
tory programs. A true sunset law would require each covered program to be re-
authorized or terminated, according to a set schedule staggered so that a fifth
or tenth of the covered programs come up for reauthorization each year. A softer
sunset approach would only require that each program be reexamined every so many
years but not necessarily expire.
Federal sulset legislation has been championed by Edmund Muskie (D.Me.) and
his S. 2 of the 95th Congress sailed through the Senate oil a 87-1 vote. Similar
measures were considered in the House but got hung up in the legislative logjam.
This session, Senator Muskie put in his bill on January 15, got the same
number, S. 2, and had 62 co-sponsors already lined up. A comparable bill in the
House, H. R. 2 by James Blanchard (D. Mich.), has 164 co-sponsors. Both bills
would subject government spending programs to a mandatory reauthorization process
over a ten-year rotating cycle. The House measure also would apply sunset to
tax expenditures. Senate supporters would like to include tax expenditures but,
mindful of Senator Russell Long's strong opposition and considerable clout, have
tried to build momentum for a straight expenditure program sunset aid then spring
a tax expenditure amendment. This almost worked last year with the Glenn amend-
ment and a similar maneuver is expected in 1979.
The business community position on sunset has been somewhat ambivalent. Many
business leaders and organizations support sunset as applied to spending programs,
and particularly to regulatory programs, but not to tax expenditures. There are
compelling arguments for not considering many special tax provisions -- such as the
investment credit, accelerated depreciation, the maximum tax on earned income, and
others -- in the same light as regular budget programs (see Federal Tax Policy
Memo 5/18/78) but the distinction may be hard to draw in political terms. The de-
feat of tax expenditure sunset in the Senate last year came on a fairly close vote
(50-41) on an amendment to the Tax Reduction Act and may have reflected Senator
Long's legislative skills and the rush to get on with the tax bill more than a true
test of Senate sentiment on the issue. Thus, a position favoring sunset for spend-
ing programs but opposing it for tax expenditures may be vulnerable.
Questions do need to be asked about the overall sunset concept. Would it really
contributeto more sensible control of government programs or would its main product,
as apparently the case with predecessors, PPB (Program-Planning-Budgeting) and ZBB
(Zero-Base-Budgeting), be another blizzard of paper work? Experience in the states

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