Tuesday, April 22, 2008

Baucus Starts Senate Finance Work on Tax Reform and AMT Patch

Senate Finance Committee Chair Max Baucus (D-MT) announced a series of hearings for May through July on tax reform principles for the 2009 Congress. Baucus said that global competitiveness, tax impact on working families and the sunset of the early decade tax cuts in 2010 were some factors which caused the hearings to be needed. In May, the committee will consider individual taxation, including whether social-based tax provisions have been effective. June hearings will address non Subchapter C businesses and how the present pass-through approach for these businesses affect the economy. July hearings will look at multinational companies headquartered in the U.S. and how to balance equity and competitiveness. Additionally, Baucus intends to send forth a one-year AMT patch as quickly as possible.

Certainly getting the patch done before college basketball season starts would be a positive development and it will be interesting to see how the hearing progress, especially in an election year. Baucus seems to be wondering whether non-C businesses should be allowed to avoid double taxation; my guess is that if he does threaten to limit LLCs, Subchapter S entities, etc. that he will have a MAJOR fight on his hands. Finally, many taxpayers might be willing to accept a small loss in the number of socially-driven tax incentives IF the result is a simplified tax system; otherwise, any action on these tax incentives will flounder.


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