Super Committee Discusses Tax Reform

Published by Michael Novogradac on Thursday, September 22, 2011 - 12:00am

The Joint select Committee on Deficit Reduction (Super Committee) held a hearing today, September 22nd, where they discussed the current corporate and individual income tax system and tax reform.  Here are some interesting points that came out of the hearing.  Send me an e-mail with any thoughts you have regarding the hearing. 

  • Senators Kerry, Portman, and Toomey suggested the Super Committee should tackle tax reform.  To quote Toomey, the Super Committee should “make every effort to do something substantial on the tax reform side”.
  • Senator Max Baucus and Representative Dave Camp tilted toward the need to do tax reform in the Senate Finance and Ways & Means Committees.  To quote Senator Baucus, tax reform is “more complicated than we think.”
  • Congressman Xavier Becerra noted that elimination of the low-income housing tax credit (LIHTC) would have adverse impacts on housing (Video here: 64:45).
  • Joint Committee on Taxation (JCT) Chief of Staff (COS) Thomas Barthold noted that repeal of the low-income housing tax credit would generate less net revenue than the estimate of the cost of the tax expenditure might imply.
  • In his prepared testimony, COS Barthold noted that the LIHTC is the 7th largest corporate income tax expenditure.  A fact I have blogged about extensively.
  • Members of the House and Senate and Democrats and Republicans generally agreed that the top corporate tax rate of 35% was too high.
  • There was a lot of discussion of reducing corporate income tax expenditures in order to lower the top marginal corporate income tax rate.
  • There was also considerable agreement that tax reform should involve both individual and corporate income taxes, given the increasing use of pass-through entities, which contributes to significant amounts of business income being taxed at the individual level.
  • Senator Baucus noted that a major tax overhaul would cause ‘big dislocations” as “some industries would hurt a lot and some industries would benefit”.
  • Senator Toomey labeled green energy and ethanol tax expenditures as “egregious loopholes”.