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Pepperdine University School of Law

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Friday, October 26, 2007

The Tax Reduction and Reform Act of 2007

House Ways and Means Committee Chairman Charles Rangel (D-NY) yesterday introduced the Tax Reduction and Reform Act of 2007 (H.R. 3970), which would, among other things:

  • Repeal the AMT
  • Reduce the corporate tax rate from 35% percent to 30.5%
  • Impose a new 4% surtax on AGI over $150,000 (single) and $200,000 (married), and 4.6% on AGI over $500,000
  • Increase the standard deduction by $425 (single) and $850 (married)
  • Expand the earned income tax credit to 15.3% of earned income and increase the phase-out amount to $10,900
  • Increase the child tax credit by decreasing the floor against which the credit is calculated to $8,500
  • Tax carried interest paid to financial managers as regular income rather than as capital gains
  • Impose new taxes on deferred compensation plans of offshore hedge fund managers
  • Extend numerous expiring tax provisions for one year
  • Repeal last-in, first-out (LIFO) method of accounting
  • Repeal the § 199 domestic production deduction
  • Codify the economic substance doctrine
  • Require option holders in an S corporation to recognize income when an option is recognized or sold in an amount equal to the amount of income that was shifted to an ESOP
  • Require that financial service providers give customers information on basis of sold securities
  • Require certain Subchapter S corporations and partnerships that provide services to pay payroll taxes
  • Require U.S. corporations that defer income through controlled foreign corporations to defer deductions associated with this income
  • Repeal the worldwide allocation of interest
  • Repeal the lower of cost or market method of valuing inventories
  • Modify the dividend received deduction
  • Terminate special rules for domestic international sales corporations (DISCs)

Documents:

Press and blogosphere coverage:

http://taxprof.typepad.com/taxprof_blog/2007/10/tax-reduction-a.html

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