As part of the White House’s proposed $2.9 trillion budget plan for the 2008 fiscal year, President Bush announced an effort aimed at significantly tightening the tax gap.
The president is proposing expanded information gathering on securities sales -- requiring corporations, investors and merchants to report more details of their dealings to the Internal Revenue Service. The Bush budget outlines few details of the plan.
The tax gap, the difference between taxes owed and taxes paid, was estimated at $290 billion for the 2001 tax year -- a compliance rate of about 86 percent. IRS estimates say that underreporting of capital gains resulted in about $11 billion of that gap. Over the past year, members of Congress have clamored especially loudly for a concrete plan to reduce that dollar figure.
Overall, the president’s 2008 budget calls for $1.85 trillion in tax cuts over the next decade. Among those breaks, would be the permanent repeal of estate taxes, reductions in income tax rates, and lower capital gains and dividends taxes. Most of those were part of the president’s first-term tax cuts, which are due to expire in 2011.
President Bush’s budget plan would also expand a variety of tax penalties to deter wrongdoing by tax preparers, punish failure to comply with electronic filing requirements, or for filing erroneous tax refunds.
Other proposals in the budget include:
- A previously-announced proposal to change the tax treatment of employer-provided health care, which would cost $121 billion through 2012, but pays for itself by 2017;
- Another one-year patch for the Alternative Minimum Tax, for fiscal 2008, at a cost of $47.9 billion;
Expansion of Health Savings Accounts; - The repeal of two energy tax breaks;
- A $69.7 billion tax cut changing the funding of the Federal Aviation Administration, beginning in the 2009 fiscal year; and,
- More than $30 billion in incentives to boost savings and charitable giving, make health care more affordable, strengthen education and help the environment, as well as permanently extending the corporate research and development tax credit.
