To lower the corporate tax rate and perhaps also the individual income tax rate, in a revenue neutral rate means that revenue must be found to pay for the drop in taxes that would occur with a lowered tax rate. Tax preferences - special deductions, exclusions and tax credits would need to be eliminated or cut back. Some of the suggestions though, involve timing items. For example, making depreciable lives longer and methods slower just pushes more of the depreciation deduction to later years. It does not permanently raise revenue. It will show up though as a revenue raiser in a table that only shows the revenue effect for a limited number of years.
Where can permanent tax increases be generated to offset the desired permanent tax decrease generated from permanent lower rates? I have a few suggestions pulled from a few government reports. See "Real revenue sources for tax reform" in the 1/16/14 AICPA Tax Insider.
What do you think?
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