Proposed Tax Reforms from President Obama and His Administrative Offices

The categories used in the table are from the Administration's FY2013 Greenbook. The items for "PERAB" and "Deficit Commission" may not be advocated by President Obama, although they were derived from groups he created. The PERAB report primarily analyzes various proposals rather than promoting any of them. For all but the Greenbook and PERAB, I had to make some assumptions due to lack of details. For example, the February 2012 business tax reform framework calls to "eliminate oil and gas tax preferences" (page 9). It then lists two examples. I assumed that the intent was to eliminate all that are detailed for repeal in the FY2013 Greenbook.  The first column of the table refers to President Obama's five principles for tax reform released in September 2011. See the list at the end of the table and footnotes.

Click here for pdf of this table and analysis (May 2012).

Principle	Reports:     Proposal:	Green book	Jobs Act and Deficit Reduct ion	Business Tax Reform	PERAB	Deficit Commis sion	Revenue estimate over 10 years (if available) (millions)
TEMPORARY TAX RELIEF TO CREATE JOBS AND JUMPSTART GROWTH
4	Extend 2 percentage point FICA reduction for employees and self-employeds through 2012 (enacted, PL 112-96 (2/22/12))	X					-$31,158
4	Temporarily cut employer payroll taxes in half for first $5 million of wages and 100% payroll tax cut for new jobs/wages capped at $50 million of new wages.		X-Act				-$68,748
4	Cut employee payroll taxes in half in 2012		X-Act				-$178,847
4	Extend 100% first-year depreciation deduction for one additional year	X	X-Act				-$5,797[1]
4	Implement Veterans hiring initiative (temporary credit for hiring Veterans enacted by PL 112-56 (11/21/12)		X-Act				-$90
4	Provide a temporary 10%  tax credit for new jobs and wage increases	X					-$18,448
4	Provide jobs tax credit for hiring long term unemployed individuals		X-Act				-$10,595
	Provide additional tax credits for investment in qualified property used in a qualifying Advanced Energy Manufacturing Project	X					-$3,484
	Provide tax credit for energy-efficient commercial building property expenditures in place of existing tax deduction	X					-$1,655
	Reform and extend Build America Bonds	X					-$1,101
	Extend exemption from AMT treatment for certain tax-exempt bonds		X-Act				-$244
TAX CUTS FOR FAMILIES AND INDIVIDUALS
	Extend the American Opportunity Tax Credit (AOTC)	X					-$137,370
	Provide for automatic enrollment in Individual Retirement Accounts or Annuities (IRAs), including a small employer tax credit, and double the tax credit for small employer plan start-up costs	X					-$15,022
	Expand the Earned Income Tax Credit (EITC) for larger families	X					-$14,009
	Expand the child and dependent care tax credit	X					-$10,217
	Extend exclusion from income for cancellation of certain home mortgage debt	X					-$2,706
	Provide exclusion from income for student loan forgiveness for students after 25 years of income-based or income-contingent repayment	X					Negligible
	Provide exclusion from income for student loan forgiveness and for certain scholarship amounts for participants in the Indian Health Service (IHS) Health Professions Programs	X					-$20
1	Extend 2001/2003/2010 tax cuts for individuals with $200,000 or less of income ($250,000 if MFJ) (generally implied or included in baseline)	X	X	X			Baseline adjustment[2]
1	Lower all tax rates to 12%, 22% and 28%					X
1	Permanent AMT patch (included in baseline)	X					Baseline adjustment[3]
1	Repeal the individual AMT				X	X
INCENTIVES FOR EXPANDING MANUFACTURING AND INSOURCING JOBS IN AMERICA
4	Provide tax incentives for locating jobs and business activity in the United States and remove tax deductions for shipping jobs overseas	X		X			-$90
	Provide New Manufacturing Communities Tax Credit	X					-$4,426
4	Target the Domestic Production Deduction to domestic manufacturing activities and double the deduction for Advanced Manufacturing Activities	X		X			Negligible
4	Enhance and make permanent the Research and Experimentation (R&E) tax credit	X		X			-$108,535
	Provide a tax credit for the production of Advanced Technology Vehicles	X					-$1,995
	Provide a tax credit for Medium- and Heavy-Duty Alternative-Fuel Commercial Vehicles	X					-$1,697
	Extend and modify certain energy incentives	X					-$3,870
	Make the renewable electricity production credit permanent			X
TAX RELIEF FOR SMALL BUSINESS
4	Eliminate capital gains taxation on investments in Small Business Stock	X					-$7,991
4	Double the amount of expensed start-up expenditures	X		X			-$3,073
	Expand and simplify the tax credit provided to qualified small employers for non-elective contributions to employee health insurance	X		X			-$14,161
4	Section 179 expensing amount of $125,000 with $500,000 phase-out level (included in baseline)	X					Baseline adjustment[4]
4	Allow expensing up to $1 million of “qualified investment” per year			X
	Allow cash method for businesses with $10 million or less of gross receipts			X
	Expand simplified cash accounting to more businesses				X
INCENTIVES TO PROMOTE REGIONAL GROWTH
	Extend and modify the New Markets Tax Credit (NMTC)	X					-$3,370
	Designate Growth Zones	X					-$3,150
	Restructure assistance to New York City, provide tax incentives for transportation infrastructure	X					-$2,000
	Modify tax-exempt bonds for Indian tribal governments	X					-$176
	Allow current refundings of state and local governmental bonds	X					0
Reform and Expand the Low-Income Housing Tax Credit (LIHTC):
	Encourage mixed income occupancy by allowing LIHTC-supported projects to elect a criterion employing a restriction on average income	X					-120
	Make the Low Income Housing Tax Credit (LIHTC) beneficial to Real Estate Investment Trusts (REITS)	X					Negligible
	Provide 30% basis “boost” to properties that receive an allocation of tax-exempt bond volume cap and that consume that allocation	X					-$783
	Require LIHTC-supported housing to provide appropriate protections to victims of domestic violence	X					Negligible
CONTINUE CERTAIN EXPIRING PROVISIONS THROUGH CALENDAR YEAR 2013  (See Table 4 of Greenbook)
1	Expiring provisions to be continued through 2013.[5]	X					-$26,005
	Identify temporary provisions to either be eliminated or made permanent			X
UPPER-INCOME TAX PROVISIONS
Sunset the Bush Tax Cuts for Those with Income in Excess of $250,000 ($200,000 if Single)
	Reinstate the limitation on itemized deductions for upper-income taxpayers	X	X*				$122,985
	Reinstate the personal exemption phase-out for upper-income taxpayers	X	X*				$41,942
	Reinstate the 36% and 39.6% tax rates for upper-income taxpayers	X	X*				$441,554
	Tax qualified dividends as ordinary income for upper-income taxpayers	X	X*				$206,415
	Tax net long-term capital gains at a 20% rate for upper-income taxpayers	X	X*				$35,966
Reduce the Value of Certain Tax Expenditures
	Reduce the value of certain tax expenditures (itemized deductions and tax expenditures including foreign excluded income, tax-exempt interest, employer-provided health insurance, and a few other items)	X	X-Act				$584,197 (Greenbook)
5	“Asks the wealthiest to contribute more” / "Buffett rule"[6]		X	X			$46,714[7]
1	Repeal phase-out of itemized deductions for high income taxpayers					X
1	Repeal phase-out of personal exemptions for high income taxpayers					X
MODIFY ESTATE AND GIFT TAX PROVISIONS
	Restore estate and gift taxes and exemptions to 2009 levels.	X	X				$118,797[8]
	Require consistency in value for transfer and income tax purposes	X					$2,014
	Modify rules on valuation discounts	X					$18.079
	Require a minimum term for Grantor Retained Annuity Trusts (GRATs)	X					$3,334
	Limit duration of Generation-Skipping Transfer (GST) Tax exemption	X					Negligible
	Coordinate certain income and transfer tax rules applicable to grantor trusts	X					$910
	Extend the lien on estate tax deferrals provided under Section 6166	X					$160
REFORM U.S. INTERNATIONAL TAX SYSTEM
2	Defer deduction of interest expense related to deferred income of foreign subsidiaries	X	X	X			$37,253
2	Determine the Foreign Tax Credit on a pooling basis	X	X				$60,835
2	Tax currently excess returns associated with transfers of intangibles offshore	X	X	X			$22,973
2	Limit shifting of income through intangible property transfers	X	X				$1,623
2	Disallow the deduction for non-taxed reinsurance premiums paid to affiliates	X					$2.449
2	Limit earnings stripping by expatriated entities	X	X				$4,432
2	Modify tax rules for dual capacity taxpayers	X	X-Act				$10,724
2	Tax gain from the sale of a partnership interest on look-through basis	X					$2,561
2	Prevent use of leveraged distributions from related foreign corporations to avoid dividend treatment	X					$3,323
2	Extend Section 338(h)(16) to certain asset acquisitions	X					$960
2	Remove foreign taxes from a Section 902 corporation’s foreign tax pool when earnings are eliminated	X					$389
1	More to a territorial system but continue to tax passive foreign-source income under Supbart F				X	X
1	Income of foreign subsidiaries of US companies subject to a minimum tax that can be reduced by foreign tax credit			X
1	Move to a worldwide system with a lower corporate tax rate				X
	Limit or end deferral with the current corporate tax rate				X
1	Retain the current system but lower the corporate tax rate				X
REFORM TREATMENT OF FINANCIAL AND INSURANCE INDUSTRY INSTITUTIONS AND PRODUCTS
	Impose a Financial Crisis Responsibility Fee	X					$61,342
2	Require accrual of income on forward sale of corporate stock	X					$303
2	Require ordinary treatment of income from day-to-day dealer activities for certain dealers of equity options and commodities	X					$2,911
2	Modify the definition of “control” for purposes of Section 249	X					$192
2	Modify rules that apply to sales of life insurance contracts	X	X				$811
2	Modify proration rules for life insurance company general and separate accounts	X					$7,706
2	Expand pro rata interest expense disallowance for Corporate-Owned Life Insurance	X	X				$5,567
2	Reform "treatment of insurance companies and products to improve information reporting, simplify tax treatment, and close loopholes."			X
2	Modify dividends received deduction for life insurance separate accounts		X				$5,478
ELIMINATE FOSSIL FUEL PREFERENCES
Eliminate Oil and Gas Preferences:
2	Repeal Enhanced Oil Recovery (EOR) Credit	X	X-Act	X			$0
2	Repeal credit for oil and gas produced from marginal wells	X	X-Act	X			$0
2	Repeal expensing of Intangible Drilling Costs (IDCs)	X	X-Act	X			$13,902
2	Repeal deduction for tertiary injectants	X	X-Act	X			$100
2	Repeal exception to passive loss limitation for working interests in oil and natural gas properties	X	X-Act	X			$82
2	Repeal percentage depletion for oil and natural gas wells	X	X-Act	X			$11,465
2	Increase geological and geophysical amortization period for independent producers to 7 years	X	X-Act	X			$1,400
2	Repeal the Section 199 deduction for production of oil and gas		X-Act				$16,423
2	Separate basket treatment taxes paid on foreign oil and gas income		X-Act
Eliminate Coal Preferences:
2	Repeal expensing of exploration and development costs	X	X	X			$440
2	Repeal percentage depletion for hard mineral fossil fuels	X	X	X			$1,744
2	Repeal capital gains treatment for royalties	X	X	X			$422
2	Repeal use of the Section 199 deduction for production of coal and other hard mineral fossil fuels		X				$389
OTHER REVENUE CHANGES AND LOOPHOLE CLOSERS
	Increase Oil Spill Liability Trust Fund Financing Rate by One Cent and Update the Law to Include Other Sources of Crudes	X					$717
	Reinstate and extend Superfund excise taxes	X	X				$8,225
	Reinstate Superfund Environmental Income Tax	X					$12,733
	Make Unemployment Insurance surtax permanent	X	X				$13,936
4	Provide short-term tax relief to employers and expand Federal Unemployment Tax Act (FUTA) base	X					$47,843
2	Repeal Last-In, First-Out (LIFO) method of accounting for inventories	X	X	X		X	$73,782
2	Repeal Lower-Of- Cost-or-Market (LCM) inventory accounting method	X	X				$13,059
2	Repeal the Section 199 manufacturing deduction					X
2	Eliminate special depreciation rules for purchases of general aviation passenger aircraft	X	X-Act	X			$2,206
2	Repeal all business credits					X
2	Repeal all business tax expenditures					X
	Modify accelerated depreciation schedules to better reflect economic lives			X
2	Repeal gain limitation for dividends received in reorganization exchanges	X					$874
2	Tax carried (profits) interests as ordinary income	X	X-Act	X			$13,496
2	Expand the definition of substantial built-in loss for purposes of partnership loss transfers	X					$64
2	Extend partnership basis limitation rules to nondeductible expenditures	X					$826
2	Limit the importation of losses under Section 267	X					$767
2	Deny deduction for punitive damages	X					$319
2	Eliminate the deduction for contributions of conservation easements on golf courses	X					$593
2	Deny deductions for interest allocable to life insurance policies except where the policy is on an officer, director or employee who owns at least 20% of the business.			X
	Reduce deductibility of interest expense by corporations to reduce bias for debt over equity			X
2	“Greater parity between large corporations and their large non-corporate counterparts” to “improve equity, reduce distortions in how businesses organize themselves, and finance lower tax rates.”			X
2	Repeal all itemized deductions, all individuals claim standard deduction					X
2	Repeal mortgage interest deduction and replace it with a 12% non-refundable credit for all taxpayers. Credit capped based on $500,000 mortgage amount. No credit for home equity loans or mortgage not on a principal residence.					X
2	Repeal charitable contribution deduction and replace with 12% non-refundable credit for all taxpayers on contributions that exceed 2% of AGI					X
2	Exclusion for employer-provided health insurance capped at 75th percentile of premium levels for 2014; cap frozen through 2018; phased out by 2038.					X
2	IRC Section 4980I, Excise tax on high cost employer-sponsored health coverage, with 40% tax on "excess benefit" effective starting in 2018 ("Cadillac" tax) reduced to 12%					X
2	Tax capital gains and dividends at ordinary income tax rates					X
2	Interest on newly issued state and municipal bonds subject to tax					X
2	Retirement accounts consolidated with tax-preferred contributions capped at lower of $20,000 or 20% of income.					X
	Saver's credit expanded					X
2	Most tax expenditures repealed					X
2	Cut inefficient and unfair tax breaks (principle)		X
2	Eliminate or reduce tax expenditures				X
REDUCE THE TAX GAP AND MAKE REFORMS
Expand Information Reporting:
	Require information reporting for private separate accounts of life insurance companies	X	X				$10
	Require a certified Taxpayer Identification Number (TIN) from contractors and allow certain withholding	X					$1,413
	Delay application of withholding on government contractors (IRC �3402(t) was repealed by PL 112-56 (11/21/12)		X-Act				-$497
Improve Compliance by Businesses:
	Require greater electronic filing of returns	X					$0
	Authorize the Department of the Treasury to require additional information to be included in electronically filed Form 5500 Annual Reports	X					$0
	Implement standards clarifying when employee leasing companies can be held liable for their clients’ federal employment taxes	X					$65
	Increase certainty with respect to worker classification	X	X		X		$8,372
2	Repeal special estimated tax payment provision for certain insurance companies	X					Negligible
	Eliminate special rules modifying the amount of estimated tax payments by corporations	X					$300
Strengthen Tax Administration:
	Streamline audit and adjustment procedures for large partnerships	X					$1,714
	Revise offer-in-compromise application rules	X					$20
	Expand IRS access to information in the National Directory of New Hires for Tax Administration Purposes	X					$0
	Make repeated willful failure to file a tax return a felony	X					$10
	Facilitate tax compliance with local jurisdictions	X					$8
	Extend statute of limitations where state adjustment affects federal tax liability	X					$25
	Improve investigative disclosure statute	X					$10
	Require taxpayers who prepare their returns electronically but file their returns on paper to print their returns with a 2-D bar code	X					$0
	Allow IRS to absorb credit and debit card processing fees for certain tax payments	X					$19
	Improve and make permanent the provision authorizing IRS to disclose certain return information to certain prison officials	X					negligible
	Extend IRS math error authority in certain circumstances	X					$173
	Impose a penalty on failure to comply with electronic filing requirements	X					$10
	Strengthen IRS tax enforcement and compliance		X
	Dedicate more resources to enforcement and enhance enforcement tools				X
	Increase information reporting and source withholding				X
	Small business bank account reporting				X
	Voluntary disclosure programs				X
	Examine multiple tax years during certain audits				X
SIMPLIFY THE TAX SYSTEM
	Simplify the rules for claiming the Earned Income Tax Credit (EITC) for workers without qualifying children	X					-$5,355
	Eliminate Minimum Required Distribution (MRD) rules for Individual Retirement Account or Annuity (IRA) plan balances of $75,000 or less	X					-$355
	Allow all inherited plan and Individual Retirement Account or annuity (IRA) balances to be rolled over within 60 days	X					Negligible
	Clarify exception to recapture unrecognized gain on sale of stock to an Employee Stock Ownership Plan (ESOP)	X					Negligible
	Repeal Non-Qualified Preferred Stock (NQPS) designation	X					$388
	Repeal preferential dividend rule for publicly offered Real Estate Investment Trusts (REITS)	X					Negligible
	Reform excise tax based on investment income of private foundations	X					-$54
	Remove bonding requirements for certain taxpayers subject to federal excise taxes on distilled spirits, wine and beer	X					Negligible
	Simplify arbitrage investment restrictions for tax-exempt bonds	X					-$431
	Simplify single-family housing mortgage bond targeting requirements	X					-$15
	Streamline private business limits on governmental bonds	X					-$110
	Consolidate family credits and simplify eligibility rules				X
	Simplify and consolidate tax incentives for education				X
	Simplify the "kiddie tax"				X
	Simplify rules for low-income credits, filing status, and divorced parents				X
	Consolidate retirement accounts and harmonize statutory requirements				X
	Simplify taxation of capital gains				X
	Simplify capital gains rate structure				X
	Limit or repeal Section 1031 like-kind exchanges				X
	Adjust amount for gain exclusion on sale of a principal residence for inflation				X
	Simplify tax filing for individuals				X
	Simplified home office deduction				X
	Simplify recordkeeping for cell phones, PDAs, and other devices (partially enacted by Small Business Jobs Act of 2010 (P.L. 111-240; 9/27/10))				X
	Modify and simplify the AMT				X
USER FEES
	Reform Inland Waterways Funding	X					$1,100
OTHER INITIATIVES
	Allow offset of federal income tax refunds to collect delinquent state income taxes for out-of-state residents	X					$0
	Authorize the limited sharing of business tax return information to improve the accuracy of important measures of our economy	X					$0
	Eliminate certain reviews conducted by the U.S. Treasury Inspector General for Tax Administration (TIGTA).	X					$0
	Modify indexing to prevent deflationary adjustments	X					$0
PROGRAM INTEGRITY INITIATIVES
	Increase levy authority for payments to Medicare providers with delinquent tax debt	x					$717
	Implement a program integrity statutory cap adjustment for IRS	x					$43,652
ITEMS THAT DO NOT FIT WITHIN THE ABOVE CATEEGORIES USED IN THE FY2013 GREENBOOK
1	Lower corporate tax rate to 28%		X No rate specified		X	X
1	Lower corporate tax rate to 28% (lower for manufacturers and even lower for advanced manufacturers via higher Section 199 deduction amounts)			X
	“Improve transparency and reduce accounting gimmicks” and provide “greater disclosure of annual corporate income tax payments.”			X
	Clarify and harmonize employment tax rules for businesses and the self-employed (SECA conformity)				X
	Extend holding period for capital gains exclusion on primary residences				X
4	Increase incentives for new investment/direct expensing[9]				X
	Provide more level treatment of debt and equity financing				X
	Review the boundary between corporate and non-corporate taxation				X

The reports:

"Greenbook" - General Explanations of the Administration's Revenue Proposals for FY2013. Additional information on the FY2013 proposals is provided in a report related to President Obama’s January 2012 State-of-the-Union speech – Blueprint for An America Built to Last, 1/24/12 (8 pages).

September 2011 - Office of Management and Budget, Living Within Our Means and Investing in the Future - The President’s Plan for Economic Growth and Deficit Reduction, Sept. 2011. This report lays out a plan to pay for President Obama’s proposed American Jobs Act and allowing for net deficit reduction of $3 trillion over ten years which he hoped the Joint Select Committee on Deficit Reduction would incorporate into their proposal for how to reduce the deficit. President Obama’s American Jobs Act proposal, a 199 page proposal, included tax changes noted in this column. The report also includes President Obama’s five principles of tax reform (see below).

Feb. 2012 - White House and Treasury Department, The President's Framework for Business Tax Reform, Feb 2012. This report includes some specific proposals as well as some more general ones, such as to eliminate oil and gas preferences.

PERAB - The President’s Economic Recovery Advisory Board, The Report on Tax Reform Options: Simplification, Compliance, and Corporate Taxation, Aug. 2010. The items analyzed in this report are not necessarily items that President Obama has indicated he advocates. The Board notes in the report that it is not part of the President's Administration (page v).  Per the preface to the report, the report presents “options for changes in the current tax system to achieve three broad goals: simplifying the tax system, improving taxpayer compliance with existing tax laws, and reforming the corporate tax system.”

Deficit Commission - National Commission on Fiscal Responsibility and Reform, The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform, Dec. 2010. This report was not endorsed the requisite supermajority of Commission members, but did have bi-partisan support within the Commission. The Commission was created by President Obama and he has not disavowed the report.