Congressman John Tierney, D-Mass., has introduced a bill that would eliminate about 27 different tax expenditures, including tax breaks for energy companies.
Tierney introduced the Tax Equity and Middle Class Fairness Act of 2011 on Monday, claiming the bill would terminate nearly 30 tax expenditures. Ending the tax subsidies and giveaways would save over $60 billion in the first year and nearly $483 billion over the next five years, according to Tierney’s office.
“Any serious and responsible plan to tackle the deficit must address tax expenditures,” Tierney said in a statement. “Legislation I am introducing today gives negotiators a clear blueprint for how to proceed on this critical issue.”
The bill would eliminate eight unspecified tax breaks for oil and gas companies worth an estimated $4 billion in the first year, and four tax breaks for coal producers for an estimated $136 million in the first year. The legislative text spelling out the precise tax breaks targeted was not available Tuesday, but it also includes one unspecified change in business accounting methods (probably to last-in-first-out inventory accounting) that is projected to save $9.2 billion in the first year, and five international corporate tax subsidies estimated to save $7.7 billion aggregate in the first year. Tierney's office did not immediately respond to a request for details on the legislation.
Tierney’s bill would also limit itemized deductions for top-bracket taxpayers to save $6 billion in the first year, and close the carried interest loophole that allows hedge fund managers to pay capital gains preferential tax rates on ordinary income to save $2.3 billion in the first year.
The bill also proposes to eliminate write-offs for corporate meals and entertainment to save an estimated $11 billion in the first year, and eliminate tax subsidies for agribusiness to save $770 million in the first year. Tierney’s bill would also eliminate timber subsidies to save $340 million in the first year, and remove the foreign earned income exclusion that allows U.S. citizens living overseas to avoid paying taxes, saving an estimated $5.4 billion in the first year.
The bill would also eliminate a special exemption from rules prohibiting the use of losses as a tax shelter for rental-property investors to save an estimated $13 billion in the first year. It would also convert state and local bond exclusion to direct-subsidy bonds at a 28 percent rate. In addition, the bill would eliminate medical savings accounts and health savings accounts, which Tierney said have become tax shelters for the wealthy, to save $1.9 billion in the first year.
In addition to eliminating nearly 30 tax expenditures, Tierney's bill would also require the Government Accountability Office to evaluate the effectiveness of all remaining tax expenditures under current law and report back to Congress with recommendations for the elimination of provisions that are poorly targeted or serve no public purpose
Tierney compared his proposal, which he originally announced in April, to the Republican budget proposal, authored by House Budget Committee Chairman Paul Ryan, R-Wisc. Tierney’s office said the bill demonstrates that budget savings could be achieved without slashing critical investments in job training and workforce development, health, education or community development programs.
