3 1987

87 Y 4.T 19/4: R32, ` 4. T 19/4: R 32/6/987

CIS RECORD ONLY:

[JOINT COMMITTEE PRINT]

DESCRIPTION OF POSSIBLE OPTIONS

TO INCREASE REVENUES

PREPARED FOR THE

COMMITTEE ON WAYS AND MEANS

For sale by the Superintendent of Documents, U.S. Government Printing Office

DOCU

JCS-17-87

CONTENTS

Introduction..

I. Revenue Areas Addressed By the President's 1988

Budget Proposals

A. EMPLOYMENT TAX PROVISIONS

1. Extend Medicare payroll tax to all State and

local government employees

2. Expand employer share of FICA tax to include all

cash tips

3. Extend FICA tax to inactive duty earnings of

military reservists and certain other earnings.....

4. Treatment of group-term life insurance as wages

under FICA.....

5. Railroad retirement tax proposals.

a. Increase in railroad retirement payroll tax.....

b. Partial rail sector financing of vested dual

benefits

c. Extend FUTA tax to railroad employment.

B. EXCISE TAX PROVISIONS

1. Proposals relating to black lung benefits..

a. Increase in coal excise tax.....

22 22

10

10

12

12

b. Inclusion of black lung cash benefits in gross

income.....

13

2. Repeal of current gasohol, bus, and State and

local government highway excise tax exemp-

tions....

3. Airport and Airway Trust Fund excise taxes.

4. Imposition of air and ship travel tax

5. Repeal of crude oil windfall profit tax.

C. PBGC PREMIUMS...

D. CERTAIN NEW USER FEES......

1. Internal Revenue Service

2. Bureau of Alcohol, Tobacco and Firearms

3. Customs Service.......

4. Coast Guard............

1

1

II. Other Possible Revenue Options

A. EXCISE TAXES

1. Alcoholic beverage excise taxes...

2. Tobacco products excise taxes.........

3. Telephone excise tax.....

4. Luxury excise taxes

5. Firearms excise taxes..

6. Pollution excise taxes.

a. Excise tax on sulfur and nitrogen emissions

b. Tax on ozone depleting chemicals..

7. Energy consumption taxes

a. Broad-based energy tax

b. Broad-based petroleum tax.

c. Oil import tax......

8. Motor fuels excise taxes.

a. Increase in excise tax rates.....

b. Collection of gasoline and diesel fuel excise

taxes...

c. Income tax credit and excise tax exemption

for certain alcohol fuels.

9. Gas guzzler excise tax

10. Increase Trust Fund excise taxes by an amount

to offset implicit general fund contributions......

11. Federal Unemployment Tax Act (FUTA) provi-

sions....

a. Index FUTA wage base.

b. Extension of portion of FUTA due to expire

after 1987........

B. GENERAL CONSUMPTION TAXES

1. Value added tax (VAT)

2. Business alternative minimum tax (BAMT)

C. SECURITIES TRANSFER EXCISE TAX.

D. INCOME TAX PROVISIONS

1. Individual and corporate tax rates and surtaxes....

2. Reduction in individual and corporate tax prefer-

ences......

3. Individual income tax provisions.

a. Credit for child and dependent care expenses.

b. Interest expense deduction on home equity

loans

93

c. Other itemized deductions

(1) Disallowance of deduction for nonbusi-

ness personal property taxes

(2) Imposition of floor under aggregate

itemized deductions for higher-income

taxpayers....

...........

(3) Limitation on tax-liability reduction for

top-bracket individuals.....

4. Business meal and entertainment expenses

5. Employee benefits; Pensions; ESOPs..

a. Employee benefits.....

(1) Limit the exclusion of employer-provid-

ed health coverage..

Page

100

101

102

102

102

(2) Repeal the exclusion of employer-provid-

ed group-term life insurance....

105

(3) Repeal the $5,000 exclusion for employ-

er-provided death benefits.....

107

(4) Repeal the exclusion of employer-provid-

ed dependent care assistance.

109

(5) Repeal the exclusions for employee ben-

efits with respect to high-income em-

ployees.....

111

(6) Limit the exclusion for cafeteria plan

benefits....

113

(7) Exclusion from income for meals and

lodging..

116

b. Pensions

118

(1) Treat loans from qualified plans as dis-

tributions

118

(2) Redefine full funding limitation for pen-

sion plans.........

a. Accrual accounting requirement for large

nonfarm businesses.........

g. Current accrual of market discount on bonds.

h. Installment sales.....

142

144

i. Amortization of intangibles..

146

j. Disallow interest deductions allocable to tax-

exempt installment sales of property to

State or local governments

149

k. Below-market loans to certain continuing

care facilities

152

7. Farming provisions

154

a. Accrual accounting requirement for large

farming businesses

154

b. Treat farm losses like real estate losses

under the passive loss rules.........

156

c. Increase cost recovery period for single pur-

pose agricultural structures

158