The President delivered his proposed budget for fiscal 2013 this Monday. The budget included as one of its five tax “reform” principles the following:
- Simplify the Internal Revenue Code
Sounds good. Here are some proposed tax “simplifications”:
- Provide a temporary 10% tax credit for new jobs and wage increases
- Provide additional tax credits for investment in advanced energy manufacturing
- Provide tax credit for energy-efficient commercial building property expenditures
- Reform and extend Build America Bonds
- Provide for automatic enrollment in IRAs, including a small-employer tax credit
- Expand the earned income tax credit for larger families
- Expand the child and dependent care tax credit
- Provide tax incentives for locating jobs and business activity in the United States
- Provide new manufacturing communities tax credit
- Target the domestic production deduction to domestic manufacturing activities
- Provide a tax credit for the production of advanced technology vehicles
- Provide a tax credit for medium- and heavy-duty alternative-fuel commercial vehicles
- Modify certain energy incentives
- Eliminate capital gains taxation on investments in small business stock
- Expand the tax credit provided to qualified small employers for nonelective contributions to employee health insurance
- Extend and modify the new markets tax credit
- Designate growth zones
- Provide tax incentives for transportation infrastructure
- Modify tax-exempt bonds for Indian tribal governments
- Allow current refundings of state and local governmental bonds
- Reform and expand the low-income housing tax credit
- Defer deduction of interest expense related to deferred income of foreign subsidiaries
- Determine the foreign tax credit on a pooling basis
- Tax currently excess returns associated with transfers of intangibles offshore
- Limit shifting of income through intangible property transfers
- Disallow the deduction for nontaxed reinsurance premiums paid to affiliates
- Limit earnings stripping by expatriated entities
- Modify tax rules for dual capacity taxpayers
- Tax gain from the sale of a partnership interest on a lookthrough basis
- Prevent use of leveraged distributions from related foreign corporations to avoid dividend treatment
- Extend Sec. 338(h)(16) to certain asset acquisitions
- Remove foreign taxes from a Sec. 902 corporation’s foreign tax pool when earnings are eliminated
- Require a certified taxpayer identification number (TIN) from contractors and allow withholding if the contractor does not provide a TIN
- Require e-filing by any entity that must file Schedule M-3
- Authorize Treasury to require additional information to be included in Form 5500, Annual Return/Report of Employee Benefit Plan
- Allow the IRS to require prospective reclassification of misclassified workers
- Extend the statute of limitation where a state adjustment affects federal tax liability
- Require taxpayers who prepare their returns electronically but file their returns on paper to print a 2D bar code
- Impose a penalty on failure to comply with electronic filing requirements
Don’t worry too much about this. The Senate hasn’t passed a budget in years.
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