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Summer Hearings On Comprehensive Tax Reform



On June 5, 2014, Senators Wyden and Hatch of the Senate Finance Committee announced three hearings for the summer on comprehensive tax reform. The topics:

June – Education incentives

July – (1) Identity theft and taxpayer privacy protection (2) Modernizing corporate taxation

They also mention:

• Simplification
• Promoting economic prosperity
• Innovative ways to fix the depleted Highway Trust Fund

A few observations:

Education incentives – there are over ten today. There really is no need for any. Any government subsidy can take place through existing systems such as Pell grants. Also, a lower rate would help people save for higher education. The existing provisions are for college, not for vocational training, so are limited. Also, they benefit higher income taxpayers more than lower income taxpayers.

Modernizing the corporate tax – ideally, this should include some effort at integration, but that is unlikely. I’m guessing that they are mostly looking at a lower rate and a changed international taxation scheme. If the result includes longer life for intangibles (such as 20 rather than the current 15), we are not really modernizing. The Camp and Baucus proposals included extending the life to help pay for a lower corporate tax rate.

How to fix the depleted Highway Trust Fund. While they are studying it, why not raise the rate from 18.4 cents per gallon, where it has been since 1997, to at least the inflation adjusted amount (27 cents).

In accordance with Circular 230 Disclosure

Original Post By: Annette Nellen

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Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.

Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.

Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.

Prior to joining SJSU, Annette was with Ernst & Young and the IRS.

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