Tax Ideas from Citizens for Tax Justice

The Citizens for Tax Justice (CTJ) just released a new report detailing their own estimates of a  number of options for raising revenue through eliminating or reducing tax preferences or enacting new taxes. The CTJ argued that many of these tax expenditures were inefficient and revenues could be spent elsewhere in recovery measures or to reduce the federal deficit. They proposed a wide scope of policies, ranging from changes with large revenue impacts to small-change loophole-closers.

As they explain:

Even when lawmakers agree that the tax system has too many loopholes, they cannot agree on how to get rid of them. Some lawmakers oppose legislative proposals that would close one or two small tax loopholes and say that such changes should be done as part of a sweeping tax reform that overhauls the entire tax code. Other oppose sweeping tax reform as too radical a change and prefer to focus on the more limited proposals to close one or two small tax loopholes.

...[This paper] includes options that are compatible with either approach. Some of the revenue raisers suggested here are so large that they are most likely to be enacted as part of a sweeping tax reform or some other major initiative. Others are relatively small and might be used to, for example, offset the costs of a temporary increase in infrastructure spending, food stamps, unemployment insurance or some other economic recovery measure.

CTJ offers the following options:

Revenue Options (billions)
Policy 2013-2022 Savings
Tax Capital Gains as Ordinary Income $533
Repeal Deferral for Offshore Profits $583
Eliminate Accelerated Depreciation $569
Eliminate Domestic Production Deduction $163
Enact Buffett Rule $171
Eliminate LIFO and LCM Inventory Accounting $98
Enact President Obama's Fee on Banks $61
Eliminate Fossil Fuel Preferences $38
Disallow Business Deduction for Stock Options Paid $25
Eliminate Carried Interest Loophole $21
Close Payroll Tax Loophole for S Corporations ("John Edwards Loophole") $11

As a side note, CTJ assumes a different behavioral response to raising capital gains taxes than does Joint Committee on Taxation. A greater capital gains tax could cause individuals to hold onto investments longer and therefore reduce the actual revenues of this tax increase, at least within the ten-year window. The CTJ paper argues that JCT overestimates the impact of this response, and therefore their estimates of repealing the capital gains break are larger than estimates from the JCT.