Tax proposals: What’s on the chopping block

President Obama has claimed the government can generate enough new revenue by taxing “millionaires and billionaires,” hedge funds and corporate jet owners. But these are not the only tax proposals on the table. Hundreds of other deductions, credits and exclusions for both individuals and corporations are also at risk to be cut.

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Capital gains

A bipartisan deficit-reduction plan being discussed in the Senate may end the preferential tax treatment of capital gains and dividends. While the proposal from the Gang of Six does not mention capital gains or dividends, policy experts say that the message seems clear from the numbers. In order to make up the revenue needed and offset lowering tax rates for high earners, investment taxation is the obvious target. Alex Brill, a research fellow at the American Enterprise Institute and a former chief economist at the House Ways and Means Committee under Republican Chairman Bill Thomas, told Bloomberg News: “As I read between the lines of the plan, the cap gains and dividend rates are likely to rise.”

Richard Drew / AP

Health insurance:

Under Coburn's plan, a tax-free limit of $7,500 per year for individual premiums and $15,000 for family premiums would be imposed. There is currently no limit.

Thomas Kienzle / AP

Oil tax breaks

A proposal by Senate Democrats to end three large oil tax deductions would end a deductions for domestic manufacturing, taxes paid to foreign governments, a deduction for intangible drilling and development costs.

Steven Lane / AP

Ethanol subsidy

While a measure to cancel billions of dollars in annual tax credits for ethanol blenders failed to advance in the Senate, some Republicans broke ranks with two decades of GOP orthodoxy against higher taxes to support the bill.

Charlie Neibergall / AP

Corporate jets

Democrats have proposed to eliminate a tax preference that allows companies to use a friendlier depreciation schedule for corporate jets than commercial aircraft.

Lynne Sladky / AP

Mortgage interest deduction

According to a plan unveiled July 18 by Sen. Tom Coburn, (R-Okla.), the popular mortgage interest deduction would be limited to first homes worth $500,000 or less. Deductions for second homes and home-equity loans would no longer be allowed.

Jim R. Bounds / Bloomberg

Hedge fund managers

President Obama has pointed to tax increases for hedge fund managers in public appeals for compromise by the Republicans, saying, “It's pretty simple -- I don't think hedge fund managers should pay taxes at a lower rate than their secretaries. I don't think it's fair to ask nothing of someone like me when the average family has seen their income decline over the past decade."

/ AP

High-income earners

Democrats are seeking to phase out certain tax deductions and credits for those making more than $500,000 a year.

/ AP Photo

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