While much of the conversation on tax increases in a debt ceiling budget deal has seemed to focus on corporate jet owners, Sen. Jay Rockefeller (D-WV) has offered up a broader range of tax increases to reduce future deficits.
These tax increases focus almost exclusively on the wealthy, but they would raise a lot more revenue than the $3 billion saved from repealing accelerated depreciation for corporate jets. Some of the bigger ticket items (with ten-year savings relative to current law) are:
- Repeal the 2001/2003/2010 tax cuts for people making over $250,000 at the end of 2011, instead of waiting until the end of 2012 for them to expire ($41 billion)
- Raise capital gains rate to pre-1997 level of 28 percent ($125 billion)
- Revert to pre-2001 estate tax parameters this year ($32 billion)
- Cap itemized deductions at 28 percent ($300 billion)
- Enact a three percent millionaires' surtax ($200 billion)
- Repeal oil and gas subsidies ($35 billion)
Other small measures include a possible soda tax, repealing the ethanol tax credit, legalizing and taxing internet gambling, disallowing yachts to be claimed as second homes for the mortgage interest deduction, and repealing accelerated depreciation for racehorses and (yes) corporate jets.
Combined, Sen. Rockefeller's office claims that these measures would raise $1.3 trillion relative to current law; in other words, they could pay for roughly half of the extension of the 2001/2003/2010 tax cuts for people making under $250,000. That would certainly be an improvement over the December tax cut extension that fully extended the tax cuts (among other policies) without any offsets.
We applaud Sen. Rockefeller for coming up with specific revenue proposals. Sen. Rockefeller touches on closing some of the special credits, deductions, and exclusions in the tax code, but could make the code even simpler and fairer by taking an even harder look at the $1 trillion in tax expenditures. While his proposal would be a good start on deficit reduction, it will be impossible to get a grip on future deficits and debt if the rise in health care costs and retirement spending is not tackled. A balanced, comprehensive tax reform plan combined with spending cuts in all areas of the budget of at least $4 trillion in savings would be a great start. Nonetheless, Sen. Rockefeller has provided some individual provisions that could be useful for lawmakers to consider in current discussions.