Ways & Means Chair maps out tax-cut priorities, revenue options

House Ways and Means Chairman Sander Levin, D-Mich., indicated April 19 that his committee would take action on further job stimulus measures, an estate tax fix for 2010, and legislation to address the pending expiration of the 2001 and 2003 tax cuts. Speaking to an audience at the National Press Club in Washington, Levin also predicted an exhaustive search for revenue-raising options to pay for tax relief items on the legislative agenda.

Levin said that legislation to encourage further job growth and economic recovery is Congress's "number one issue." He cited a Ways and Means committee hearing on green jobs, held on April 14, saying that he is interested in drafting legislation to boost employment opportunities in those areas.

Calling the current uncertainty surrounding the estate tax "unacceptable and unfair," Levin also raised the possibility of combining an estate tax fix and a measure to extend certain Bush-era tax cuts into one package. He predicted a tough fight in the Senate, however, where such a measure may not garner the 60 votes necessary to pass.

Levin reiterated that Congress must extend the Bush tax cuts of 2001 and 2003 for the middle class but allow the cuts for high-income earners to expire. He said the recently enacted statutory pay-as-you-go law, which requires that any spending increases or tax cuts be offset by corresponding spending reductions or revenue increases, "sets that course" and is a "vital step" for fiscal responsibility.


Hunt for revenue offsets

With comprehensive health care reform legislation now enacted into law, several previously available revenue offsets used to pay for the overhaul – such as codification of the economic substance doctrine – have been taken off the table. Levin identified several other provisions being examined as potential offsets to the various tax bills on tap this year. Specifically, the chairman said that taxing income from carried interests as ordinary income and provisions to curb treaty shopping are being considered, though both have met with resistance in the Senate.

The House approved a carried interest provision late last year as an offset for its tax extenders package. Last month, the chamber approved small-business tax relief legislation offset in part by a provision that would prevent foreign multinationals from "treaty shopping" to avoid tax on income earned in the United States by having a U.S. subsidiary make a deductible payment to a country with which the United States has a tax treaty with reduced withholding rates before repatriating the earnings in the parent's country.