Rep. Pete Stark, D-Calif., the ranking Democratic member of the House Ways and Means Health Subcommittee, has introduced a new bill aimed at closing what he considers a “tax loophole” exploited by former House Speaker Newt Gingrich.
The bill would close off a wrinkle in the Tax Code that allows self-employed individuals, including lobbyists, to lower their Medicare payroll tax liability by classifying earnings as profits or dividends, instead of as wages. Stark has named the bill the Narrowing Exceptions for Withholding Taxes, or NEWT, Act, after Gingrich, whose taxes and those of rival Republican Presidential candidate Mitt Romney have recently attracted extra scrutiny in light of the release earlier this month of their tax returns. The bill would also apply to accountants and other professional service providers.
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