Sen. Wyden has long pushed for cutting tax expenditures. Dems write tax reform wish list

Memo to corporate jet owners and companies taking tax breaks for CEO stock benefits — you’re in the Senate Democrats’ line of sight.

In a document obtained by POLITICO on Thursday, Senate Democrats outline a dozen of the most “egregious” loopholes used by corporations and the wealthy that could be eliminated as part of the budget conference tasked with coming to a deal by Dec. 13.


Tax expenditures topping the list include the deduction corporations take when they move operations overseas and the carried interest loophole, which allows private equity and some other investment advisers to pay the lower capital gains tax rate on some of their income.

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“Below is a list of just a few of the many egregious loopholes that Republicans should either bring to the negotiating table or explain to the American people why they can’t find a single loophole to close to get a bipartisan deal,” the document said.

A senior Democratic aide said the list was not exhaustive and was a set of ideas to get Republicans discussing tax expenditures, after several said closing loopholes was not on the table. The aide said the list was not meant to be a list of targets.

Senate Budget Committee Chairwoman Patty Murray (Wash.) leads the panel for Democrats and House Budget Committee Chairman Paul Ryan (Wis.) is the lead Republican negotiator.

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The budget conference is scheduled to meet next Wednesday for its second meeting, with low expectations that they will come to a bipartisan deal.

The 12 expenditures on the list are hardly new priorities for Democrats, but at least several, like “marking to market” derivatives contracts, have been embraced by Republicans, including House Ways and Means Chairman Dave Camp (Mich.). Camp is unlikely to support this change outside the context of comprehensive reform that slashes tax rates.

Senate Democrats first floated cutting tax expenditures — dubbed loopholes by critics — during the first meeting of the budget conference committee created to end the 16-day government shutdown.

For example, Sens. Bill Nelson (Fla.) and Ron Wyden (Ore.) said senators could tax corporations’ overseas earnings to find revenue to offset the across-the-board sequestration budget cuts.

“When there are a trillion dollars worth of tax expenditures, a number of which both sides said are foolish and wasteful, it is possible to trim wasteful tax expenditures as part of our conference to generate the revenue,” Wyden told reporters on Thursday. He was speaking generally of the budget conference and not referencing the document.

Revenue raised from curbing tax expenditures would be used to prevent automatic spending cuts under the sequester.

“The bipartisan budget conference presents Democrats and Republicans with an opportunity to, at the very least, work together to replace the harmful cuts from sequestration and agree on, at the minimum, a budget for the short term,” the document said.

Also on the list is the deduction taxpayers can take on loans for vacation homes and yachts and the so-called “check-the-box” loophole that multinational corporations use to reduce U.S. tax liabilities by from foreign subsidiaries.

The document also takes aim at the tax provision allowing corporations to finance overseas operations through debt and deduct that interest before reporting their foreign taxable income to the IRS.

At least one Senate Republican has also offered a tax break to target during the conference. Sen. John McCain (Ariz.) said he wants to eliminate a corporate tax deduction for stock options to offset sequester, also on the Democrats’ list.

Rachael Bade contributed to this report.