Reid Seeks More Tax Revenue; May Target Energy Industry

In January, a host of tax increases went into effect, especially on high-income Americans.  Income tax rates went to 39.6 percent in the highest bracket, capital gains and Medicare tax rates increased for high-earners, and increased payroll taxes hit all workers.  Despite these increases in tax rates, Democratic senator and Senate Majority Leader Harry Reid made clear in February that he wanted more tax increases in future budgets.  He specifically pointed to eliminating tax breaks for the oil and gas industry.  While Reid provided few specifics, it is possible that he has in mind other “loopholes” such as the favorable “carried interest” taxation of hedge funds.  Alternatively, he might consider capping itemized deductions, an idea floated by Mitt Romney during the 2012 presidential campaign.