Daily Tax Update - April 11, 2013: Treasury Secretary Testifies on President’s Budget Blueprint

TREASURY SECRETARY TESTIFIES ON PRESIDENT’S BUDGET BLUEPRINT:  Today, Treasury Secretary Jacob (Jack) Lew testified on President Obama’s Fiscal Year 2014 budget proposal. Lew said that the budget framework, “does not represent the starting point for negotiations.  It represents a fair balance between tough entitlement savings and additional revenues from those with the greatest incomes.  The two cannot be separated, and were not separated last December when we were close to a bipartisan agreement.” 

In his opening remarks, Committee Chairman Dave Camp said, “America’s tax code is broken and I’m committed to working with anyone—Republican or Democrat—to fix it.  That’s why I was encouraged that the President put forward a plan to tackle a few of the challenges facing our tax code.  But the simple truth is that the President’s proposal isn’t the real reform we need –and it doesn’t go nearly far enough to address the needs of all job creators.”  Camp added, “Our tax code needs to be genuinely user friendly. You shouldn’t have to pay a professional to figure out your taxes.  Yet, the code is so riddled with layer upon layer of complexity that nine out of 10 Americans don’t feel comfortable doing their own taxes – they are forced to either pay a professional or go buy commercial software.  Americans should have faith that their government is taxing them effectively and efficiently.  Instead, they fear the IRS and the potential of being audited. Our tax code needs to be fairer.  At a time when American families are just trying to make ends meet, we shouldn’t be taking more of their money to bailout Washington’s inability to control spending.  Let’s put an end to the special interest loopholes and the handouts and use that revenue to create a simpler, fairer tax code that lower rates for all Americans.”  Camp added, “We don’t have to settle for the same old game of giving Washington more taxpayer money and calling it ‘reform.’  It has been 27 years since this town cleaned up the tax code.  It is time for us to do our job again.  Hardworking taxpayers deserve real solutions that make our tax code simpler and fairer for every American.  Let’s work together to accomplish that.”

Treasury Secretary Jacob (Jake) Lew testified, “The proposals in the Budget are targeted at growth and opportunity – cutting where we can and investing where we will see the strongest return, both now and into the future.  Specifically, the Budget calls for increased investment in innovation and infrastructure to make the United States a more attractive place for job creation.  It introduces initiatives to bolster education and worker training so Americans have the necessary skills to compete in a global economy.  And it puts forward policies that are designed to give all Americans the opportunity to share in the benefits of economic growth.  These measures will help grow and strengthen the middle class, which has been the key engine of prosperity in the United States.  Additionally, they are fully paid for, so they will not add to the deficit.”  Yew continued, “We must continue to achieve deficit reduction in a balanced way.  It must include entitlement reform and spending reductions.  We must also pursue tax reform that closes loopholes and addresses deductions and exclusions that allow the wealthy to pay less in taxes as a percentage of income than many middle-class families.  Individual tax reform must be coupled with reform of the U.S. business tax system to enhance American competitiveness, lower rates, broaden the tax base, and level the playing field for companies without losing any revenue.  All told, these initiatives constitute a balanced approach to deficit reduction.”

The Treasury Secretary elaborated on tax reform stating, “As a first step toward balanced deficit reduction and tax reform, the President proposes enacting two individual tax reform measures that would raise $580 billion by broadening the tax base for high-income taxpayers, and ensuring that the very wealthy pay federal tax rates at least equal to those paid by middle-class Americans.  The first measure sets a 28 percent maximum rate at which upper-income taxpayers could benefit from itemized deductions and certain other tax preferences to reduce their tax liability.  The second puts in place the Buffet rule, which requires those individuals with incomes over $1 million to pay no less than 30 percent of income after charitable contributions in taxes.  At the same time, the Budget includes business tax reform that will provide greater certainty and improve global competitiveness while preserving the revenue collected today.”

FINANCE RELEASES OPTIONS PAPER ON BUSINESS INVESTMENT AND INNOVATION:  Today, the Senate Finance Committee released the second in a series of options papers on tax reform.   

The document can be accessed via: Business Investment and Innovation

TAX BILLS INTRODUCED APRIL 10:

1.[113rd] H.R.1465 : To amend the Internal Revenue Code of 1986 to provide for an energy investment credit for energy storage property connected to the grid, and for other purposes.
Sponsor: Rep Gibson, Christopher P. [NY-19] (introduced 4/10/2013)      Cosponsors (1) 
Committees: House Ways and Means 
Latest Major Action: 4/10/2013 Referred to House committee. Status: Referred to the House Committee on Ways and Means.


2. [113rd] H.R.1476 : To amend the Internal Revenue Code of 1986 to allow penalty-free withdrawals from individual retirement plans for adoption expenses.
Sponsor: Rep King, Peter T. [NY-2] (introduced 4/10/2013)      Cosponsors (5) 
Committees: House Ways and Means 
Latest Major Action: 4/10/2013 Referred to House committee. Status: Referred to the House Committee on Ways and Means.


3. [113rd] H.R.1479 : To amend the Internal Revenue Code of 1986 to remove the deduction for charitable contributions from the overall limitation on itemized deductions.
Sponsor: Rep Sensenbrenner, F. James, Jr. [WI-5] (introduced 4/10/2013)      Cosponsors (1) 
Committees: House Ways and Means 
Latest Major Action: 4/10/2013 Referred to House committee. Status: Referred to the House Committee on Ways and Means.


4. [113rd] S.701 : A bill to amend the Internal Revenue Code of 1986 to modify the definition of full-time employee for purposes of the individual mandate in the Patient Protection and Affordable Care Act.
Sponsor: Sen Collins, Susan M. [ME] (introduced 4/10/2013)      Cosponsors (None) 
Committees: Senate Finance 
Latest Major Action: 4/10/2013 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.