On September 12 the Administration presented the American Jobs Act to Congress, a mixture of temporary spending and tax relief designed to stimulate job growth. The package features several major tax relief provisions unrelated to estate taxes, including expansion of payroll tax relief for individuals and businesses, extension of expensing incentives and a tax credit for the hiring of veterans.
The President has asserted that the Joint Committee should identify $450 billion more in deficit reduction beyond the already required $1.2 trillion to offset the cost of the jobs plan. Under his proposal, if Congress failed to meet the deficit reduction target several specific tax increases would take effect:
• Limiting the value of allowable deductions and exclusions to 28 percent for individuals with income over $200,000 (couples over $250,000) (this is the source of the vast majority of revenue)
• Taxing carried interest in investment partnerships as ordinary income
• Altering corporate jet depreciation
• Repealing oil and gas tax provisions
• Changing rules for dual capacity taxpayers
House Speaker John Boehner (R-OH) is expected to ask the Congressional Budget Office to score the proposal. Republican leaders have largely expressed openness to consideration of elements of the President’s package; however, they are expected to strongly resist the package’s inclusion of offsetting tax increases, especially if such additional revenues enable increased spending rather than tax relief elsewhere.