(Reuters) – Billions of dollars in U.S. tax breaks prized by manufacturers, energy companies and other industries could be targeted for elimination when two powerful lawmakers are expected to introduce proposals to overhaul the United States’ tax system.
The plans could be introduced as early as September and face tough odds in a Congress where disputes over nearly every tax and spending issue threaten a crisis.
Democratic Senator Max Baucus, chairman of the Senate Finance Committee and Republican Representative Dave Camp, head of the House Committee on Ways and Means, are crafting separate proposals to scrub the tax code of clutter and lower tax rates.
It is the most ambitious congressional effort in a generation, with Camp likely to move first.
The duo are considering trimming a slew of tax deductions and other breaks to offset the cost of cutting the top corporate and individual rates to as low as 25 percent, say aides and others. The corporate rate now tops out at 35 percent, while the highest individual rate is about 40 percent.
Baucus and Camp found the most common ground in potential corporate tax code revisions while working together on the congressional “supercommittee,” a group of lawmakers who tried but failed to forge a debt deal in 2011.
“There were a lot of areas of agreement when they delved into the code,” said a senior legislative aide involved in the supercommittee effort.
For example, both are open to tightening depreciation rules that govern how quickly companies can write off the cost of certain assets, and limiting a widely used manufacturing tax break known as the domestic activities deduction, said the aide, who worked for the panel.
Camp is the top tax-writer in the Republican-controlled House of Representatives and Baucus leads the tax-writing Finance Committee in the Senate, where Democrats hold power.
The tax code has not been completely cleaned up since 1986 when a politically divided Congress forged a deal with Republican President Ronald Reagan.