Federal tax policy reform took one step back and a significant step forward this week. Early in the week, news reports announced that House Speaker Boehner instructed his tax reform negotiators to indefinitely delay releasing draft legislative language. Then, on November 21, Senate Finance Committee Chair Max Baucus (D-MT) released a sweeping 70 page draft capital cost recovery reform plan that requests public comment on everything from depreciation rules, expense deductions for small businesses, repeal of the LIFO method of accounting, repeal of the “like-kind exchange rules, and repeal of special accounting methods for farming businesses.”
Other hot-button tax reform proposals not yet embraced by Chairman Baucus were nevertheless highlighted in his released “Discussion Draft” document with a request for public comment. Included in this list of potential tax reforms is: repeal of the corporate alternative minimum tax (AMT); expanding and possibly making permanent the research and development credit which is scheduled to expire at the end of 2013; and making permanent certain energy tax credits also scheduled to expire on December 31, 2013.
While these proposals on cost recovery and accounting tax reforms are described as revenue neutral when viewed as an overall package, clearly the real world impact will be higher taxes on some businesses and lower taxes on others, depending on how they currently take advantage of today’s tax code.
With the House of Representatives’ leadership committed to adjourning for the year in mid-December, and pressing federal budget and appropriations decisions needed by mid-January, it is clear that a comprehensive federal tax reform bill is still far from becoming a reality. Nevertheless, Chairman Baucus’ release this week of such a detailed proposal is proof that much groundwork has already been laid. The stage could well be set for a major tax reform bill to be enacted in 2014.
The Senate Finance Committee requests that comments on these proposals be submitted by January 17, 2014 to: email@example.com.
For additional information, please contact Joe Orlet.