Last week, Senate Finance Committee Chairman Max Baucus (D-MT) issued a discussion draft of some tax reform proposals. He’s not the first, and certainly won’t be the last with tax reform ideas, some of which will be popular, and a few of which will not.
Among other things, Baucus suggests:
- Replacement of the current depreciation rules with new ones which better approximate economic depreciation, reducing the number of major depreciation rates from more than 40 to five.
- Repeal of the last-in, first-out (LIFO) method of inventory accounting, and the like kind exchange provisions.
- Extension of current maximum expensing amounts and limitations for one year, and then permanently increasing Section 179 expensing to $1 million with a $2 million ceiling.
The proposed reforms are perceived to be simpler and fairer, and have the effect of reducing tax burdens on small business, while raising enough revenue to support substantial corporate tax rate reductions.