Helicopter Association International (HAI) continues to closely monitor tax legislation expected to come out of the House Ways and Means Committee.  The word in Washington is that the monster tax bill would include language to simplify the tax code, eliminate the alternative minimum tax (AMT), and reduce taxes on middle-income families.  To accomplish this task, tax writers must find nearly $1 trillion over 10 years.

Democrats have offered some clues about what might end up in the bill.  A recent hearing highlighted private equity managers, and the House tax package could include a measure, H.R. 2834, that would tax more of their pay as ordinary income, not capital gains.  There is no official revenue estimate for the legislation.

Democrats could codify the “economic substance” doctrine, a judicial precedent disallowing tax shelters that do not result in economic benefits to companies (H.R. 2136).

The Chairman of Ways and Means, Congressman Charles Rangel (D-New York) has signaled that he may offer proposals to close the estimated $345 billion annual “tax gap” between taxes owed and paid.  That could include a proposal to prevent underreporting of capital gains. 

However, Chairman Rangel may encounter trouble in the Senate.  Senate Finance Committee Chairman Max Baucus (D-Montana) expects Congress to pass another AMT patch this year, preventing it from expanding to more than 22 million taxpayers from the current four million.