Interesting items from yesterday’s political tax news:
The Wall Street Journal reports that the President’s Advisory Panel on Federal Tax Reform is considering eliminating five popular deductions in order to fund AMT repeal:
- Employer-Provided Health Insurance
- State and Local Taxes
- Home-Mortgage Interest
- 401(k) Contributions
- Charitable Contributions
But some question whether any relief from the AMT would generate enough support to counter opposition from taxpayers who benefit from the big deductions. Former Sen. Robert Packwood of Oregon, who helped craft the landmark 1986 tax overhaul, says lowering basic income-tax rates — as the 1986 overhaul did — would likely be required. "You can do it, but you cannot do it with halfway measures," Mr. Packwood says. "Little ideas don’t excite anyone."
Tax Analysts reports that although Senate Majority Leader William H. Frist (R-Tenn) is still insisting that he will schedule a vote next week on repealing the estate tax, Senate Finance Committee Chair Chuck Grassley (R-Iowa) says that the odds of passage of such a bill are “zero” because they are well short of the 60 votes needed. Instead, Sen. Grassley reports that compromise efforts are progressing, with the “boundaries” of a “nebulous” deal likely encompassing a $4 – $6 million exemption and a 15% – 35% tax rate. Primary Republican negotiator Jon Kyl (R-Ariz) is sticking with his call for an $8 million exemption and 15% tax rate.
