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:

• Text of Bill
• Ways & Means Committee Summary of Bill
• Ways & Means Committee Press Release
• Ways & Means Committee Republicans Press Release
• Joint Committee on Taxation Preliminary Revenue Estimate

Press and blogosphere coverage:

• Associated Press:  House Democrats Propose Tax Overhaul
• ataxingmatter:  More on the Rangel Tax Reform Bill Carried Interest Revenue Raiser, by Linda Beale
• Bloomberg News:
  • Kill AMT, Even If It Means Raising Some Taxes (op-ed), by John M. Berry
  • Rangel Seeks $48 Billion Hedge Fund, Buyout Firm Tax, by Ryan J. Donmoyer & Alison Fitzgerald
  • Republicans Welcome Rangel's Tax Bill as Election-Year "Gift," by Alison Fitzgerald
• Business Week:  The "Mother of All Tax Bills"; Democrat Charles Rangel Proposes Elimination of the AMT and an overhaul of Corporate Taxes, Pitting Businesses Against One Another, by Eamon Javers
• Heritage Foundation:  The Rangel Tax Bill: Roses Among the Thorns, by JD Foster
• L.A. Times:  Democrat Vows Equity in Tax Plan; The Overhaul Would Make Top Earners Pay More and Give Millions a Break; Republicans See "Mother of All Tax Hikes," by Jonathan Peterson & Noam N. Levey
• New York Times:  You Say "Tax Reform," I Say "Tax Hike," by David M. Herszenhorn
• Reuters:  Senior Democrat Proposes Major Tax Overhaul
• TaxVox:  "The Mother of All Tax Reforms," by Howard Gleckman
• TheStreet.com: "Mother of All Tax Reforms" or Hikes?, by John Fout
• Wall Street Journal:
  • Tax Blueprint Mixes Pain, Gains; Rangel Proposal Is Seen as Shaping Long-Term Debate, by Sarah Lueck & Jesse Drucker
  • Trillion-Dollar Baby; Charlie Rangel's Very Revealing Tax Increase (editorial)
• Washington Post:  Democrat Proposes Overhaul Of Taxes Rangel Would Annul AMT, Shift Burden, by Jeffrey H. Birnbaum