New tax bill proposed in the senate

February 13—Senate bill would repeal looming sequester & close tax loopholes.

In light of the budget sequester scheduled to take effect on Mar. 1, Senator Sheldon Whitehouse (D-RI), with co-sponsors Carl Levin (D-MI), Tom Harkin (D-IA), and Bernie Sanders (I-VT), introduced two bills that would replace the across-the-board spending cuts with tax reform targeting higher-income Americans and large corporations.

One of the bills provides a short-term option that would replace the sequester for 2013 only. According to a fact sheet from Sen. Whitehouse's office, this bill would:

... require taxpayers earning over $2 million to pay at least a 30% effective federate rate, with a minimum tax phasing at a $1 million (the “Buffett rule”);

... prevent high-income professionals from using S corporations to avoid payroll taxes;

... repeal the special depreciation rules for private jets;

... close various tax expenditures/loopholes for big oil and gas companies; and

... prohibit deferral for manufacturers that produce goods overseas for sale to U.S. customers.

The other bill provides a nine-year option that would replace the sequester for its entire duration. In addition to the above, it would also:

... provide international tax reform;

... limit the value of itemized tax deductions to 28% for families making over $250,000 and individuals making over $200,000;

... impose a 0.03% financial transactions tax on transfers of securities, with a credit to offset the new tax for transfers within tax-preferred savings accounts;

... end the “last in, first out” (LIFO) method of taxing inventories, as well as the “lower of cost or market” (LCM) method of inventory valuation; and

... prevent corporations from taking tax deductions for executive stock options at amounts greater than the expenses shown on their books.

The bills were both referred to the Senate Finance Committee on Feb. 11.

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