Mr. Bush said last month that he was developing plans to address the weak stock market and help investors through measures that might include cutting taxes on dividends, increasing the deductibility of capital losses and allowing workers to contribute more money to their 401(k) retirement plans.
His first two ideas had to do with restoring investor confidence and increasing the deductibility of passive investment losses those losses in the post-2000 crashavingng been instrumental in reducing investor confidence in the first place.
In the House of Representatives he has been a tabula rasa for almost two years; his main achievement has been to propose an increase in the deductibility of charitable contributions.
Among the changes he is seeking are increases in the deductibility of business meals, entertainment and spousal travel; a reduction in corporate tax rates; and financial help in installing new security systems.
Mr. DeLay has been backing a proposal that would include a small increase in the deductibility of capital losses and allow retiring workers to delay cashing in their 401 k)'s if the market is depressed when they leave the work force.
He said the deductibility of pension contributions might be increased, the number of years in which benefit increases were accounted for might be shortened, and companies might be barred from reducing one year's pension contributions by carrying over credits from previous years' contributions.
The bill also removes limits on the deductibility of student loan interest, and increases the contribution limit for tax-advantaged education savings accounts to $2,000 a year from $500.
In line with intuition, they find that higher corporate tax rates increase the value of deductibility provisions.
The intention behind this regulation is that an upper bound on the tax deductibility of non-performance based compensation should increase pay-for-performance.
One potential source of increasing tax revenue is the proposed removal of tax deductibility of medical scheme contributions, the value of which was estimated to be almost US$22 billion in 2007 [ 40].
