Discussion:Tax Reduction and Reform Act of 2007 Goodbye AMT?

Rangel introduces Tax Reduction and Reform Act of 2007

This morning, House Ways and Means Chair Charlie Rangel (D-NY) introduced the "Tax Reduction and Reform Act of 2007." The bill would:

-- Repeal the AMT for post-2007 tax years, paid for with a tax increase on upper- income taxpayers;

-- Boost AMT exemption amounts for 2007 to the same level they were at for 2006, allow nonrefundable personal credits to offset regular tax and AMT for 2007, plus provide a one-year reprieve for a number of provisions expiring at the end of 2007, paid for with a variety of changes including taxation of carried interest of investment fund managers as ordinary income (to the extent not a reasonable return on investment capital), taxing deferred compensation plans of offshore hedge funds, and basis reporting on securities; and

-- Reduce the top corporate tax rate from 35% to 30.5%, paid for by reducing or eliminating a variety of business tax breaks (e.g., eliminating the Sec. 199 domestic production activities deduction and repealing the LIFO accounting method).

The bill's three titles are said to be self-contained in terms of offsets (it doesn't use revenues raised from the corporate side to pay for the individual reforms and vice-versa).

Rangel is said to be planning to consider the 2007 AMT relief provisions and the extenders as a separate bill, to be introduced as early as next week.

Here is a link to the bill itself. http://waysandmeans.house.gov/media/pdf/110/Summary%20for%20Distribution.pdf

Some of the changes I'd like to see are:

How about an adjustment to the ss income of the elderly? That hasn't been changed since it was put into place. 

Also student loans should not has an income cap. Our doctors and lawyers etc need big incomes in order to pay the loans which can exceed 100,000. Their incomes are too high to deduct the loan interest.

Somewhere here there is room for an Onion headline: "Solons propose elimination of Departments of State, Treasury, Labor and Agriculture to bridge missing AMT gap."

Then again, as I noted, if this corp were in PA under current law, its book earnings are capitalized by dividing thru by .095 [or over 8.4M] then divided in half, 4.2M, and then an exemption of 125K is given, meaning the company is taxed at .00489 on 4M, or 20K of tax....this is not bird feed either. There is still a small saving since PA would tax the wages at 3.07%, and the CST is a corporate deduction. Note that this same tax applies to LLCs also.

Other states might not have such levies, and to be fair, PA eliminates the tax on most small corporations thru that 125K exemption, but it goes to show skinning cats is an equal opportunity employer.