Two years ago, geography teacher and congressional challenger Tim Walz said the Bush tax cuts tilted too heavily to wealthy Americans, proposed returning tax rates to pre-Bush levels for people making more than $330,000 and wanted to use the resulting revenue for deficit reduction and middle-class tax cuts.

Now Congressman Walz, DFL-Mankato, has proposed legislation that would take a step in that direction for the next two years.

The bill would target corporate tax loopholes, tax advantages for hedge-fund managers and other tax regulations that benefit wealthier taxpayers. The resulting revenue would be split between deficit reduction and tax cuts aimed at the middle class.

“We’re starting to gather co-sponsors as we speak,” Walz said last week.

His plan is to pass the bill yet this year so that it would apply to income taxes paid next spring, potentially boosting the economy as taxpayers spend their higher tax refunds. The bill would result in tax savings averaging $750 for an estimated 61 million Americans, according to Walz.

“It’s the simplest, it’s the fairest and I think it would act as a stimulus for those who think we need a second one,” he said.

The bill would be particularly beneficial to the majority of taxpayers who don’t itemize and to those who itemize but find that their itemized deductions aren’t substantially higher than the standard deduction.

Specifically, the bill would double the standard deduction — from $5,450 to $10,900 for singles, from $8,000 to $16,000 for a head of household, and from $10,900 to $21,800 for married people filing jointly.

Essentially, the bill reduces the taxable income of people by the difference between those figures. It also allows people who don’t itemize to deduct property taxes and make the refundable $1,000-per-child tax credit available to low-income taxpayers.

The bill would also put $60 billion into deficit reduction.

Walz’s Republican opponents haven’t put forth detailed tax plans as part of their campaigns, but Dr. Brian Davis, R-Rochester, and state Sen. Dick Day, R-Owatonna, both oppose tax increases of any kind — including increases aimed at wealthier Americans.

Day said he sees several items in Walz’s plan that he could probably support. Davis said he has no quarrel with the elimination of tax subsidies for oil companies.

But both Republicans, who will face off in the Sept. 9 primary election to see who takes on Walz on Nov. 4, want to see the Bush tax cuts — set to expire in 2010 — made permanent. Day said it’s important that business owners not see their taxes rise at a time when they’re struggling with the sluggish economy.

“Going around the 1st District, I tell you businesses are really nervous and I’m worried they’re going to start laying people off,” Day said.

The Republicans also agree that further large tax cuts such as the ones passed early in President Bush’s first term need to wait until federal deficits are reined in.