Sen. Jay Rockefeller, D-W.Va., offered 18 proposals to cut $1.29 trillion from the federal budget deficit over 10 years, including closing corporate tax loopholes and eliminating special tax breaks for wealthy Americans and big companies.
Jay Rockefeller
Rockefeller said last Thursday he would work with fellow senators and White House officials to consider these proposals in lieu of cuts to programs for the elderly, poor and working families.
“There’s lots of talk about reducing the deficit and cutting spending, but we have seen very few specific ideas, especially when it comes to revenues,” Rockefeller said in a statement. “The American people are willing to make some sacrifices to help secure a better future by reducing the deficit, but those who are already struggling cannot shoulder the bulk of that burden themselves and it’s shameful to suggest otherwise. Big corporations and the very wealthy must start paying their fair share.”
Rockefeller’s proposals for reducing the deficit include: ending tax breaks for corporations that ship jobs overseas, replacing the corporate Alternative Minimum Tax with a baseline 10 percent tax on profits over $25 million a year; eliminating tax breaks for major oil companies; and ending special five-year tax deductibility treatment for corporate executives with private jets. Rockefeller also called for eliminating the tax loophole for yachts that allows some buyers of big yachts to claim them as second homes for tax purposes.
Rockefeller also urged eliminating ethanol subsidies, and providing equitable treatment for racehorse owners, in line with the owners of livestock. Racehorse owners currently receive accelerated depreciation for two-year-old racehorses, allowing owners to deduct the full purchase price of a racehorse over three years.
Rockefeller urged a crackdown on illegal Internet gambling by establishing online gambling regulations to protect consumers, state’s rights and state sovereignty, and eliminating a market that today benefits only countries and companies overseas.
Rockefeller also called for closing the “Reverse Morris Trust” corporate tax loophole, a tax shelter that has been used by corporations seeking to sell unwanted assets without paying taxes on the money they make. Rockefeller’s bill to fix this has been introduced in past years. It would close this corporate tax loophole, saving taxpayers $260 million over 10 years, according to Congress’s Joint Committee on Taxation.
Other proposals include stopping tax inequity among states. State income taxes are deductible from federal tax returns to prevent double taxation. But in nine states (like Alaska, Florida, and Texas) where there are no state income taxes –– residents have lobbied for a special carve-out that allows them to deduct sales taxes instead.
Rockefeller also urged an end to the Bush tax cuts for the wealthy. The Bush tax cuts for those making more than a quarter of a million dollars per year have not helped create jobs or stimulate the economy, he pointed out. They are scheduled to expire at the end of 2012, but if that date is moved up by just one year – to 2011 – the Treasury can save $41 billion right away.
He also said there should be o new tax cuts for the very wealthy until the deficit is gone, and there should be an early return to pre-Bush estate tax levels. He noted that estate taxes are already scheduled to return to pre-Bush levels in 2013. If that date is moved up by just two years, while still granting a $1 million exemption and applying the long-standing 55 percent rate to estate wealth above that threshold –the Treasury can save $32 billion right away.
Rockefeller also proposed the creation of a new tax bracket for millionaires and billionaires that is just 3 percent higher than existing levels, saving $200 billion over 10 years.
He also called for restoring the pre-Bush capital gains rate, noting that today a steelworker pays the full tax rate on his income (a salary or wage), but a Wall Street trader pays only 15 percent on his income (from investments). He said the U.S. should align income taxes for the wealthy more closely with income taxes for workers by re-establishing the capital gains tax at the pre-Bush level of 28 percent, saving an estimated $125 billion over 10 years.
Rockefeller also called for capping itemized deductions for the wealthy at 28 percent, and repealing tax perks for wealthy families’ health savings accounts. He noted that HSAs and high-deductible health plans have been proven to increase consumers’ out-of-pocket health care costs and benefit mostly wealthy people. Eliminating the tax advantage given to HSAs would save $16 billion over 10 years.
Rockefeller also proposed a temporary soda tax for deficit reduction. Adding a 3 cents tax to a 12-ounce soda would generate $24 billion in savings over four years, he noted.
14 Comments
It is interesting that many of the people opposed to any changes that affect business or high income earners keep telling us that "Half of the taxpayers pay no federal taxes..."
While that is correct, we should also point out that approximately half of the corporations pay no federal taxes.
We might also point out that while the Republicans are very happy to operate the U.S. government using the excess payroll tax receipts from Social Security and Medicare, they are also happy having GE, Bank of America, and other very prosperous corporations pay zero federal taxes.
One of the reasons half of the working Americans pay no federal taxes is because George Bush was very happy to double their credits for children, and and increase child care credits that were initially put into law with Republican votes as well as Democrat votes.
Posted by: ThoseWhoServe | July 7, 2011 12:02 PM
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Jay, wow thanks for your new idea of Class warfare. very novel on your part. let's not forget that 51% of Americans do not pay any tax and 30% TAKE from the treasury. Let them pay their fair share! They use the roads and more government services than the so called rich. We do not have a revenue problem. we have a government that Has a spending problem.
Posted by: fair and balanced | July 7, 2011 11:11 AM
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I admire wealthy corporations and individuals who have millions and billions who created millions of jobs, and for that they deserve their names to be splashed across the sky. However, we need them at this time to rescue America to become big time heroes for all our children.
rumacpa
Posted by: Unknown | July 7, 2011 10:31 AM
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I'd suggest that Jay read "Bar Stool Economics" by David R. Kamerschen, Ph.D. Professor of Economics, University of Georgia. I found a copy here http://doc.cat-v.org/economics/bar_stool_economics. The wealthy are also the most mobile - numerous US companies have moved their corporate headquarters off shore to save taxes. What's to stop Gates, Buffett and all the rest?
Posted by: mgmcpa | July 7, 2011 9:36 AM
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As a personal matter, I am not overly sympathetic to the plight of the wealthy; however, punitive taxation is not a good policy. In my opinion, lower corporate tax rates will benefit the middle class in terms of the creation of jobs and in the effect that increased corporate profitability will have on the retirement investments of the middle class. I suspect that Senator Rockefeller knows that waging war against corporations and the wealthy is counterproductive; unfortunately he is stuck in the old "class warfare" political paradigm.
Posted by: Taxnerd404 | July 7, 2011 9:09 AM
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Wow. The more I learn about this proposal the more sense it makes. Taxing soda is a very good idea. It's another unhealthy beverage. I love soda as much as the next guy, but we should have to be taxed for the added health costs such consumption causes..
Posted by: Ken S | July 7, 2011 9:06 AM
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The math is pretty simple. Yes, those who have benefited most from living here will have to pay the most. Sorry about that. Nothing against the very wealthy, we just need to pay a little bit more for the privilage of having more opportunities.
Posted by: Ken S | July 7, 2011 8:54 AM
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Morand, how are we going to get fair taxation with people like Jay writing the laws?
Ray Busch
Posted by: raybusch | July 7, 2011 8:46 AM
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My new hero! If only . . .
Posted by: helenschmelen | July 6, 2011 5:55 PM
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If those who don't like our Government of "All of the People", and not just the "Self Chosen Few" would just leave for their most desired place, of course leaving all of their gains "Protected by our Nasty Government."
Seems they want the protected opportunities, but not any responsibilities.
I could go on, but I probably talking to deaf ears.
Posted by: Tedego | July 6, 2011 2:19 PM
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Ray Busch, CPA Thankfully most CPA's are not as obtuse as you are. Turn in all revenue streams?...... come on and stick with the issue. The government does not need our revenues it needs fair taxation.
Posted by: moranrd | July 6, 2011 10:28 AM
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So, raising taxes would "SAVE" millions or billions. The very essence of that statement in this article is that all of the income belongs to the government and only by their benevolence are we allowed to keep some of it. This truly shows the financial and economic illiteracy that is rampant in DC and in those who cover and write about the goings on in DC.
Posted by: Bruce1953 | July 6, 2011 10:23 AM
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Jay can rail all he wants against the wealthy as soon as he turns all of his wealth (inherited I may add)and income streams over to the government as an example for the wealty, lead by example Jay, otherwise shut up!
Ray Busch CPA
Posted by: raybusch | July 6, 2011 8:05 AM
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It is time to end corporate welfare. The economy can no longer sustain a system that rewards the top 5% and damages the integrity of the middle class. Tax loopholes and the GOP ideology must end. http://t.co/ofco6s8
Posted by: lordbedlam | July 5, 2011 2:15 PM
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