Daily Tax Update - March 21, 2013: Finance Committee Releases List of Tax Reform Options

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RETURNS APRIL 9

FINANCE COMMITTEE RELEASES LIST OF TAX REFORM OPTIONS:  Today, the Senate Finance Committee released a nine-page list of tax reform options after the Committee’s first closed-door session on tax reform. The introduction to the document stated, “This compilation is a joint product of the majority and minority staffs of the Finance Committee with input from Committee members’ staffs. The options described below represent a non-exhaustive list of prominent tax reform options suggested by witnesses at the Committee’s 30 hearings on tax reform to date, bipartisan commissions, tax policy experts, and members of Congress. The options listed are not necessarily endorsed by either the Chairman or Ranking Member.  Members of the Committee have different views about how much revenue the tax system should raise and how tax burdens should be distributed. In particular, Committee members differ on the question of whether any revenues raised by tax reform should be used to lower tax rates, reduce deficits, or some combination of the two. In an effort to facilitate discussion, this document sets this question aside.”

The reform options are:

 I.     COLLECTION AND ENFORCEMENT

A.  Reduce tax fraud and taxpayer identify theft

B.  Reduce the tax gap

C.  Improve the taxpayer experience in IRS audit and collection procedures

II.   FILING PROCESS

A.  Enable the IRS to verify information on taxpayer returns against third-party information as returns are processed

B.  Reduce compliance costs by having the IRS fill out simple returns for taxpayers

III.  SIMPLIFICATION

A.  Repeal provisions that require taxpayers to calculate their tax liability multiple times, including repealing the Alternative Minimum Tax, the personal exemption phase-out, the phase-out of itemized deductions, and corporate AMT.

B.  Simplify and conform definitions in tax code

C.  Identify and remove “deadwood provisions” – repeal more than 100 provisions identified by the Joint Committee On Taxation that are “no longer necessary”

IV. MISCELLANEOUS

A.  Update the taxpayers’ bill of rights

B.  Improve Tax Court operations and protect taxpayer rights before courts

C.  Improve government transparency by providing taxpayers with a receipt for taxes paid

D.  Streamline JCT’s review of large refunds

Additional information can be accessed via: Simplifying the Tax System for Families and Businesses

HOUSE APPROVES RYAN BUDGET AND BILL TO AVERT GOVERNMENT SHUTDOWN: Today, the House passed Budget Committee Chairman Paul Ryan’s FY 2014 budget plan.  Ryan's budget calls for cutting taxes, repealing the 2010 healthcare law and slowing the rate of growth in government spending to achieve a balanced budget in 10 years.

Ryan’s budget proposes to:

  • Simplify the tax code to make it fairer to American families and businesses.
  • Reduce the amount of time and resources necessary to comply with tax laws.
  • Substantially lower tax rates for individuals, with a goal of achieving a top individual rate of 25 percent.
  • Consolidate the current seven individual-income-tax brackets into two brackets with a first bracket of 10 percent.
  • Repeal the Alternative Minimum Tax.
  • Reduce the corporate tax rate to 25 percent.
  • Transition the tax code to a more competitive system of international taxation.

Today, the House also passed a $984 billion continuing resolution to fund the government through the end of the fiscal year.  The Senate passed the bill yesterday. The bill now goes to President Obama for his signature. House Appropriations Committee Chairman Hal Rogers said, “This legislation provides funding for essential federal programs and services, it maintains our national security, and takes a potential government shutdown off the table.” The bill does not reverse the $85 billion in sequestration cuts that went into effect on March 1.

TAX BILLS INTRODUCED MARCH 20:

1. [113rd] H.R.1292 : To amend the Internal Revenue Code of 1986 to clarify that wages paid to unauthorized aliens may not be deducted from gross income, and for other purposes.
Sponsor: Rep King, Steve [IA-4] (introduced 3/20/2013)      Cosponsors (6) 
Committees: House Ways and Means; House Judiciary; House Education and the Workforce 
Latest Major Action: 3/20/2013 Referred to House committee. Status: Referred to the Committee on Ways and Means, and in addition to the Committees on the Judiciary, and Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.


2. [113rd] H.R.1293 : To amend the Internal Revenue Code of 1986 to establish and provide a checkoff for a Breast and Prostate Cancer Research Fund, and for other purposes.
Sponsor: Rep King, Peter T. [NY-2] (introduced 3/20/2013)      Cosponsors (6) 
Committees: House Ways and Means; House Energy and Commerce 
Latest Major Action: 3/20/2013 Referred to House committee. Status: Referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.


3. [113rd] H.R.1295 : To amend the Internal Revenue Code of 1986 to repeal the excise tax on medical devices, and for other purposes.
Sponsor: Rep Maffei, Daniel B. [NY-24] (introduced 3/20/2013)      Cosponsors(1) 
Committees: House Ways and Means 
Latest Major Action: 3/20/2013 Referred to House committee. Status: Referred to the House Committee on Ways and Means.