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Democrats Want U.S. Tax Breaks Slashed

James Politi | Financial Times
Nov 10, 2013

As U.S. budget talks heat up on Capitol Hill, congressional Democrats have floated a list of tax breaks they want to see slashed, posing a fresh threat to wealthy Americans and multinationals but sparing the oil and gas producers that have so often been in their sights.

The list was circulated last week by Democratic staff close to a bipartisan committee charged with reaching a budget deal by December 13 to keep the government running. It is expected to dominate discussions and could well increase tensions with Republicans at the committee’s next public hearing on Wednesday.
 
At least in Congress, the list revives Democratic ambitions to tax private equity, real estate and hedge fund profits, dubbed “carried interest”, at the ordinary income rate of 39.6 percent instead of the capital gains rate of 20 percent.

It also targets other tax provisions benefiting the wealthiest Americans, such as interest deductions on loans for yachts and vacation homes, and tax schemes used in retirement and estate planning. Deductions for corporate jet owners and executive stock options are also mentioned, as are tax provisions used by U.S. multinationals to avoid taxes on foreign earnings.
However, the list does not call for tax breaks to be scrapped for oil and gas producers, even though this has been at the top of Democratic budget rhetoric and policy agenda for several years.

The omission could reflect a desire to protect Mary Landrieu, a senator up for re-election next year in Louisiana, a conservative state with a heavy reliance on energy production. It may also point to an increasing willingness among Democrats to embrace America’s domestic energy boom as a source of economic strength.

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