Senator Tom Coburn, R-Okla., has proposed a deficit reduction plan estimated to save $9 trillion over the next 10 years by slashing hundreds of government programs, but also increasing taxes in some areas.
Unlike most of his Republican colleagues in Congress, Coburn has pushed for ending some tax subsidies, particularly the Volumetric Ethanol Excise Tax Credit for ethanol blenders (see Senators Introduce Bill to Repeal Ethanol Tax Credit). The plan was released Monday, at a time when the Obama administration is urging Congress to raise the debt limit by about $2.4 trillion to avert a government default. Republican congressional leaders are insisting on spending cuts to offset the debt limit increase, but have been firm in resisting any tax increases.
The 614-page plan contains recommendations for eliminating a number of programs that could be considered wasteful uses of government resources, such as Hollywood liaison offices for various government agencies and military branches. The agencies have at least 14 employees with a combined salary total of $1.2 million, the report noted.
However, the report includes a number of other more substantive spending cuts, including a three-year freeze on pay and bonuses for federal employees, and reducing the size of the federal workforce by 15 percent, or 300,000 people.
The plan includes an agency-by-agency description of areas that can be cut. It also includes the elimination of a number of tax credits, particularly for the energy industry, energy conservation businesses and energy efficiency. Among the tax credits targeted are the Enhanced Oil Recovery Tax Credit, the Advanced Nuclear Power Credit, the Marginal Well Tax Credit, and the Energy Efficient Appliance Tax Credit for manufacturers.
The plan would also get rid of the residential energy conservation subsidy exclusions for businesses and individuals, the Residential Energy Efficient Tax Credit for existing homes, and the Energy Efficient New Homes Tax Credit for homebuilders. Coburn’s plan would also eliminate the Energy Star program for energy efficient appliances, claiming that it misleads consumers.
“Both parties will no doubt criticize portions of this plan and I welcome that debate,” Coburn said in a statement. “My goal is not to replace the work of the budget committees but to show the American people what is possible and necessary. What is not acceptable, however, is not having a plan and delaying reform until some perfect political moment that will never arrive. The fact is doing nothing is a tax increase, a benefit cut for seniors and the poor, and a betrayal of the core values both parties hold dear.”
For billionaires like Warren Buffett who have advocated higher taxes for the wealthy, the plan recommends that a new check-off box be added to individual tax forms “allowing an individual who may not think they are taxed enough to volunteer to contribute more to the federal coffers.” The “donation” would be directed toward deficit reduction.
Coburn's report also recommended ending several other tax breaks, such as for foreigners who gamble at horse and dog tracks in the United States, and for motion picture and TV producers, who are able to deduct up to $15 million in costs when at least 75 percent of their compensation costs are performed on U.S. soil. He also recommended eliminating a tax break for Eskimo whaling captains, a railroad tax credit for track maintenance expenses, IRS tax exemptions for financial crisis bailout recipients like AIG and GM, and tax breaks for manufacturers and importers of fishing tackle boxes.
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