Tax Reduction and Reform Act of 2007

Bill: 110-hr-3970
Sponsor: Rep. Rangel, Charles B. [D-NY-15]
Introduced: 2007-10-25 in the House
Policy area: Taxation
Subjects: Accounting
Agriculture and Food
American Samoa
Armed Forces and National Security
Arts, Culture, Religion
Bonds
Books
Charitable contributions
College costs
Commerce
Computers
Corporation taxes
Crime and Law Enforcement
Depreciation and amortization
District of Columbia
Dividends
Earned income tax credit
Education
Educational technology
Elementary and secondary education
Environmental Protection
Families
Finance and Financial Sector
Government Operations and Politics
Hazardous wastes
Higher education
Home ownership
Housing and Community Development
Housing finance
Income tax
Indian lands
Individual retirement accounts
Insurance premiums
Interest
Investment advisers
Investment tax credit
Labor and Employment
Leases
Liability for environmental damages
Local taxation
Maintenance and repair
Military pay
Military personnel
Minimum tax
Minorities
Minority employment
Mortgage guaranty insurance
Mutual funds
Native Americans
Nature conservation
Partnerships
Public Lands and Natural Resources
Railroad engineering
Research and development tax credit
Restaurants
Sales tax
School buildings
Science, Technology, Communications
Small business
Social Welfare
Sports and Recreation
Sports facilities
State taxation
Student loan funds
Tax credits
Tax deductions
Tax evasion
Tax exclusion
Tax exemption
Tax incentives
Tax penalties
Tax rates
Tax-deferred compensation plans
Taxation of foreign income
Teachers
Teaching materials
Terrorism
Textbooks
Undercover operations
Veterans' benefits

Summary:
action_date: 2007-10-25
text: 
Tax Reduction and Reform Act of 2007 - Amends Internal Revenue Code provisions relating to individual income tax rates, the alternative minimum tax, partnerships and corporations and extends certain expiring tax credits, deductions, and other tax incentives.

Increases and modifies: (1) the standard tax deduction for individual taxpayers; and (2) the earned income and child tax credits. 

Extends the increased alternative minimum tax exemptions for individual taxpayers through 2007. Repeals such tax after 2007. Imposes limitations on the itemized deductions and exemptions of taxpayers with adjusted gross incomes in excess of $250,000.

Treats partnership income earned for providing investment management services (i.e., carried interest) as ordinary income.

Extends through 2008 various expiring tax provisions primarily affecting individual taxpayers, including: (1) the tax deductions for state and local sales taxes, for qualified tuition and related expenses, for qualified conservation contributions, for certain expenses of elementary and secondary school teachers, and for mortgage insurance premiums; (2) tax-free distributions from individual retirement accounts for charitable purposes; (3) the taxpayer election to include combat pay as earned income for purposes of the earned income tax credit; (4) special rules for qualified mortgage bonds to finance home purchases by veterans; and (5) tax-free distributions from retirement plans for individuals called to active military service. 

Extends through 2008 various expiring tax provisions primarily affecting businesses, including: (1) the tax credits for increasing research expenses, for hiring workers on Indian reservations, for investment in new markets, and for railroad track maintenance; (2) accelerated depreciation for qualified leasehold and restaurant improvements, for motorsports entertainment complexes, and for business property on Indian reservations; (3) expensing allowances for environmental remediation costs; (4) tax deductions for contributions of food and book inventories and for computer equipment for educational purposes; and (5) tax incentives for investment in the District of Columbia and American Samoa.

Extends through 2008 authorities for: (1) issuing qualified zone academy bonds; (2) making disclosures of tax information to facilitate student loan repayments, for combating terrorist activities, and for veterans programs purposes; and (3) Internal Revenue Service (IRS) undercover operations.

Reduces the top marginal income tax rate for corporations from 35 to 30.5% and the tax deduction for dividends received by corporations. Repeals various provisions relating to corporate taxation, including the tax deduction for income attributable to domestic production activities, the LIFO and the lower of cost or market accounting methods, interest allocation rules for U.S. corporations with foreign assets, and special rules relating to domestic international sales corporations. 

Makes permanent the increased expensing allowance ($125,000) for small business assets. Increases the amortization period for goodwill and other intangibles from 15 to 20 years. 

Sets forth rules for the application of the economic substance doctrine to tax transactions. Imposes enhanced penalties for underpayments of tax due to transactions lacking in economic substance.


Legislative actions:
action_date: 2007-10-25
text: Referred to the House Committee on Ways and Means.
action_date: 2007-10-25
text: Introduced in House
action_date: 2007-10-25
text: Introduced in House