Before leaving for August recess, Senators Jack Reed (D-RI) and Richard Blumenthal (D-CT) introduced S. 1476, which would end the ability of businesses to deduct any executive salaries over $1 million. Currently, regular salaries over $1 million cannot be deducted for the five highest-paid employees, but performance-based incentives are fully deductible, per section 162(m) of the tax code.
As Senate Finance Committee Chairman Max Baucus (D-MT) and House Ways & Means Chairman Dave Camp (R-MI) continue their cross-country tax reform roadshow, they will hear a wide range of opinions on how to reform our federal tax code.
John Oliver, interim host of The Daily Show with John Stewart, opened last night's program with an update on tax reform. The segment is hilarious, but Oliver's analysis is also spot on -- special interests and political infighting are holding up a reform process that is long overdue. As we have written before, tax reform is really hard, but well worth the effort.
Update: The Tax Policy Center has released a distributional analysis of the reducing the top individual and corporate rates to 25 percent and eliminating the AMT.
Updated 8/2/2013: Newly released submissions to the Finance Committee have been added.
The deadline for Senators to make their arguments for what tax expenditures should be included in Sens. Max Baucus (D-MT) and Orrin Hatch’s (R-UT) “blank slate” approach to tax reform has now come and gone. Baucus and Hatch are going to great lengths to keep the submissions private, but some Senators have declined privacy and released letters to the public, with more expected to do so in the coming weeks.
The talk of the town in recent days has been President Obama's new plan to combine corporate tax reform with public investments in what President Obama calls a "grand bargain for middle class jobs." From a growth perspective, there is a lot to like about this proposal. But there is also a lot we find discouraging about a plan which would decouple corporate tax reform from any broader deficit reduction effort.
The tax reform debate is heating up and many groups are weighing in on what tax provisions should be kept and what the broad revenue and distributional goals of tax reform should be. But Paul Weinstein of the Progressive Policy Institute, a former senior advisor to the Fiscal Commission reminds in a new report that lawmakers should not forget about the opportunity to make the code drastically simpler for taxpayers.
Readers of The Bottom Line know that we talk frequently on the subject of tax expenditures, the deductions, credits, and other tax preferences which cost us $1.3 trillion a year relative to what a clean tax code would look like.
Today, the Campaign to Fix the Debt released a memo making the case for the “blank slate” approach to tax reform proposed by Senate Finance Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT). The “blank slate” process would eliminate all of the $1.3 trillion in tax expenditures and put the burden of proof on lawmakers to justify adding them back at the cost of higher rates.