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.

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.