- Eliminate the home mortgage interest deduction on yachts treated as second homes. Why not eliminate the home mortgage interest deduction (via a phase-out) for all second homes? There is no reason for the tax law to offer a subsidy for financing a second home.
- Reduce the depreciable life for race horses to be the same as what farmers would get. There is a lot more that can be done in the depreciation area to update depreciable lives to better reflect reality (these would not all be measured as revenue raisers though because some lives are too long).
- Let the "Bush tax cuts" (now also the 111th Congress tax cuts) starting in 2012 (rather than 2013) for those with over $1 million of income. He also proposes new brackets that are 3% higher for millionaires and billionaires. I think this will be a tough sell to accelerate this one year, but I agree there needs to be more brackets in the high end because in our economy, a couple with $250,000 of income certainly doesn't feel as wealthy or live similarly to people making over $1 million. But, why $1 million, why not have a bracket at $500,000 and above and then $1 million and above. IRS data for 2009 indicates that the average AGI for the top 400 individuals was $202 million. That seems to leave room for a few more brackets above $250,000
- Cap the tax value of itemized deductions at 28%. President Obama has also proposed this. It violates the simplicity and transparency principles because there are already reductions in itemized deductions and having multiple rules rather than just one cut back adds some complexity. Also, the effect is really a higher marginal tax rate. Why not just raise the tax rate? Also, this adds some equity, but converting some deductions, such as for charitable contributions, to a credit worth the same to all tax brackets, would be more equitable. Also cutting back on deductions that primarily benefit higher income individuals, such as the $1 million cap on mortgage acquisition debt would be useful.
- Enact H.R. 62 to support US jobs by treating certain foreign corporations managed in the US as US corporations. I think that instead of making piecemeal changes to how the US tax law applies to international operations, it would be good to look at the whole topic along with business tax reform including integrating the corporate tax.
- Replace the corporate AMT with a 10% tax on profits over $25 million. I don't understand exactly how this is intended to work. We already have a graduated corporate tax structure with the highest rate of 35% kicking in when taxable income exceeds $10 million. Is this just adding another corporate bracket? If intended to get to a bracket of 45% (and I am not sure this is what is intended), that is too high even though in the 1980s, the rate was 48%.
- Discuss a temporary 3 cent soda tax. This is described as a way that the middle class helps pay down the deficit. From the description, it appears it would only be on sugary sodas. But why on just that? Why not the other sugary drinks we consume - juice, flavored water, milkshakes, etc.? I'm not sure the administrative and compliance costs justify this tax.
There are a few more items in the list of proposals - here (and pdf I generated). I don't think it is the answer to reducing the deficit, but it is another example that there are ways to generate a trillion dollars over ten years. The ideas should get into the debate along with those of President Obama's deficit commission and others.
What do you think of Senator Rockefeller's proposal?