Senate panel eyes IRS tax reform options: draft
WASHINGTON (Reuters) - A list of tentative tax reform options was floated on Thursday in the U.S. Senate, including repealing the alternative minimum tax and requiring insurers to report more financial data, along with a range of modest administrative improvements.
Focused largely on making the Internal Revenue Service and the tax system generally more efficient, the nine-page list was being circulated among lobbyists and members of the tax-writing Senate Finance Committee. It was obtained by Reuters.
Max Baucus, the committee's Democratic chairman, has said he hopes to produce tax reform legislation this year, along with his Republican counterpart in the House of Representatives, Ways & Means Committee Chairman Dave Camp.
Analysts said the options in the Senate document were fairly small steps that would go only a short way toward streamlining the massive and highly complex U.S. tax code.
Still, the document said it was "the first in a series of papers compiling tax reform options that finance committee members may wish to consider." More, tackling more complex topics, are expected in coming weeks.
The document said the options listed were not endorsed by either Baucus or the committee's top Republican. Other options included requiring better data collection by banks and revoking passports for seriously delinquent taxpayers.
The prospects for a comprehensive tax code rewrite - which has not been accomplished since 1986 - are murky. Democrats and Republicans are deeply divided over tax-and-spending policy, as well as the future role and size of the federal government.
One problem targeted is the tax gap, or the tens of billions of dollars in taxes that go uncollected each year.
The document also lists as an option a repeal of the individual and corporate alternative minimum tax systems, parallel tax regimes that ensure a minimum tax is paid.
Another option listed is repeal of two provisions that seek to limit tax benefits for high income taxpayers, known as the personal exemption phase-out (PEP) and the phase-out of itemized deductions, known as Pease.
Both of these provisions were included in the New Year's Day fiscal cliff legislation. The phase-out of personal exemptions and itemized deductions apply to couples with income above $300,000, or individual income above $250,000.