House Democrats’ Wish List of Revenue Proposals
Last week, the House Democrats proposed an unofficial summary of revenue raising provisions to the Joint Select Committee (Super Committee) of Congress, most of which are not new at all, but some of the main proposals for individual taxpayers and businesses are listed below.
Tax Changes for Individuals: A surtax which would reduce a taxpayer’s savings from “expenditures” by 5% of the amount by which AGI exceeds some threshold amount. Tax expenditures would include special exclusions, exemptions, or deductions from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.
* A new proposal would also authorize the government to DENY the application for a new US Passport application or renewal of an existing passport if the individual owes more than $100K in unpaid federal income taxes. The government can also revoke a passport upon reentry into the US for such individuals.
Tax Changes for Businesses: Proposed changes for businesses would repeal the depreciation method (MACRS) or accelerated cost recovery system, and instead, allow only the slower alternative depreciation system (ADS). Corporate business jets would depreciate over seven years rather than five as they do currently.
* A crackdown on service professionals who are avoiding Medicare and Social Security taxes by routing their self-employment income through S corporations and paying themselves a nominal salary, with remaining earnings paid as dividends. The proposal would address this abuse where: (1) an S corporation is engaged in a professional service business that is principally based on the reputation and skill of three or fewer individuals; or (2) an S corporation is a partner in a professional service business.
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