Senate Finance Committee Contemplates the Repeal of All Special Expenditure Provisions
On June 27, 2013, Senate Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) proposed to begin the formal legislative process on tax reform by eliminating all special tax expenditure provisions. Some of the most significant special tax expenditures that could be eliminated include:
preferential rates on long-term capital gains and qualifying dividend income
research and development credit or expensing
exclusion of interest on public purpose state and local government debts
credit for low-income housing
exclusion of benefits provided under cafeteria plans
exclusion of employer contributions for health care, health insurance premiums, and long-term care insurance premiums
This "blank slate" approach proposed will have a drastic impact on all individuals and businesses. The Dear Colleague letter
released by Senators Baucus and Hatch requests senators provide comments to the committee by July 26, 2013, detailing proposals for the maintenance of certain special tax expenditure provisions. Absent a request for retention, there is an increased risk that the so called "special expenditure provision" may be unavailable in the future.
This publication is intended for general information purposes only and does not and is not intended to constitute legal or tax advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
A complete list of these special tax provisions as defined by the non-partisan Joint Committee on Taxation can be found here
Next Steps on Tax Reform, Chairman Max Baucus and Ranking Member Orrin Hatch, U.S. Senate Committee on Finance (June 27, 2013), available here.