House Bills Aimed at Three-Step Approach To Tax Reform

On Tuesday, House Ways and Means Committee Chairman Dave Camp (R-Mich.) introduced a bill that would extend the 2001 and 2003 tax cuts for an additional year, which is intended to serve as a “bridge” to a complete tax overhaul in 2013.

In the past, Camp has said that he will introduce a three-step approach to pass and enact comprehensive tax reform in 2013, and this measure, H.R. 8, the Job Protection and Recession Prevention Act of 2012 is the first step in that process.

H.R. 8 would extend for an additional year, through 2013, the Bush-era tax reductions originally enacted in 2001 and 2003, and set to expire at the end of this year. According to Camp, this extension serves as the bridge to tax reform in 2013 and would: lower marginal rates, continue the marriage penalty relief, maintain the $1,000 child credit, uphold a 15 percent top rate on dividends and capital gains, repeal Personal Exemption Phase-out (“PEP”) and the Pease Limitation.

Additionally, the measure will keep the estate tax at its 2011 and 2012 parameters—set at 35 percent and the exemption amount  at $5 million (indexed for inflation), increase Section 179 small business expensing limits, and provide a two-year Alternative Minimum Tax (AMT) patch (covering 2012 and 2013), preventing the AMT from expanding its reach to millions of additional taxpayers.

Based on an estimate from the Joint Committee on Taxation, the measure would prevent taxes from rising by $384 billion over a 10-year period. However, most Democrats in both Chambers are opposed to extending the tax cuts for upper-income taxpayers who earn more than $200,000 for individuals and $250,000 for families. Senate Democrat leaders have circulated their own draft tax proposal.

On the same day, for the next phase of his approach, Camp and Committee on Rules Chairman David Drier (R-Calif.) introduced a companion measure that spells out principles of tax reform which reflect those adopted in the last two House-passed budgets. The measure also stablishes an expedited process for tax reform in 2013 that will direct the committees of jurisdiction to consider and act on comprehensive tax reform next year. H.R. 6169, the Pathway to Job Creation through a Simpler, Fairer Tax Code Act of 2012 is intended to provide a clear pathway to comprehensive tax reform by implementing procedures that will enable lawmakers in both the House and Senate to overcome multiple technical hurdles that often cause bills to languish during the legislative process.

Both sides of the aisle agree that real, fundamental reforms to our tax code are long overdue and, while comprehensive tax reform is difficult to achieve, this proposal provides a step-by-step process. In the House, if the Rules Committee fails to provide for consideration of an applicable tax reform bill within 15 days after the Ways and Means Committee reports the tax reform bill or is discharged, a process for floor consideration of the bill, similar to an open rule, will automatically be put in place. In the Senate, any applicable tax reform bill would not be subject to a cloture vote on a motion to proceed or on individual amendments. A cloture vote may still be required to end debate of the bill. The expedited procedures also require that amendments be relevant to the underlying bill.

The Rules Committee will likely consider the ‘Fast Track’ legislation later this week, and the House is expected to vote prior to the August recess on the extension of the Bush tax cuts.

NSBA is urging small-business owners to call their Representatives today and urge their support of the proposal.

Read the full bill text for H.R. 8 here and section by section summary here.

Read the full bill text for H.R. 6169 here.

Posted by on July 25, 2012. Filed under Latest News, Tax & Budget. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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