Senate Finance leaders' "blank slate" proposal for tax reform would eliminate exclusion for municipal bond interest
Originally published June 28, 2013
Senate Finance Committee leaders unveiled a "blank slate" tax reform proposal that has no deductions, credits, or exclusions, including the exclusion for municipal bond interest. However, the municipal bond exclusion—or any other tax expenditure—could be given a reprieve, provided a senator or senators can make a case for retaining a particular provision.
In a June 27 "Dear Colleague" letter, committee Chairman Max Baucus, D-Mont., and the committee's ranking minority member, Orrin Hatch, R-Utah, said they "both believe that some existing tax expenditures should be preserved in some form." But they "plan to operate from an assumption that all special provisions are out unless there is clear evidence that they: (1) help grow the economy, (2) make the tax code fairer, or (3) effectively promote other important policy objectives."
Baucus and Hatch asked senators "to formally submit legislative language or detailed proposals for what tax expenditures meet these tests and should be included in a reformed tax code, as well as other provisions that should be added, repealed or reformed as part of tax reform." They set a deadline of July 26 for such proposals.
Declaring that "America’s tax code is broken," Baucus and Hatch said they are determined to complete tax reform this Congress. Baucus has announced he will not seek re-election to the Senate in 2014.
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