Tag Archives: Tax Credits

News

White House threatens veto of bipartisan small businesses tax cut bill

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It’s actually for research and experimentation, and small businesses.

Investors Business Daily reports on the story.

Excerpt:

The White House move this week to torpedo a deal between House Republicans and Senate Democrats to extend dozens of expiring tax breaks suggests that the executive action legalizing 5 million unauthorized immigrants may have been no fluke: Compromise appears to be near the bottom of President Obama’s agenda for his last two years in office.

Despite — or perhaps because of — the Republican wave election that capsized Democrats’ Senate majority, Obama is tugging his party further left, which could make it harder for the GOP to govern effectively. A shift away from the center might seem counterintuitive, but it’s consistent with the Democrats’ post-mortem election analysis that put the blame on the party’s failure to focus enough on its economic agenda.

The White House’s veto threat, which apparently surprised dealmakers, was “really pretty stunning” considering that soon-to-be-demoted Majority Leader Harry Reid was its quarterback, said Chris Krueger, political analyst at Guggenheim Partners’ Washington Research Group.

In blowing apart the deal, estimated to cost $440 billion over 10 years, the White House lined up behind liberal Massachusetts Sen. Elizabeth Warren, who attacked it as “a massive handout to big corporations” that asks “working families to pick up the tab.”

The Obama administration used the same justification in explaining its threat to veto the bill if it reached the president’s desk: “It would provide permanent tax breaks to help well-connected corporations while neglecting working families.”

The centerpiece of the deal is a $160 billion provision to make permanent and expand a research and experimentation tax credit, an idea that the administration has supported. The next two biggest pieces, both about $73 billion over 10 years, would make permanent the American Opportunity tuition tax credit and an allowance for small businesses to write off capital investments permanently.

Individuals would be able permanently to deduct sales taxes instead of income taxes, important for residents of states like Florida and Texas, at a cost of $34 billion. Controversial wind production taxes would be extended but phased out over two years, costing $20 billion.

Other smaller pieces include extending a financial-crisis related provision to shield the value of written-down mortgage principal from taxation; making permanent an expanded deduction for users of mass transit; and making permanent tax-free charitable contributions from tax-protected retirement accounts.

That last point about being able to give away your retirement plan tax-free is huge for me, because that’s what I planned to do with my 401K when I retire, since it doesn’t look like I am going to ever get married. If that tax break on charitable deductions from retirement accounts is ever revoked, it would be bad news for the apologists and Christian scholars I donate to. But it’s in keeping with the leftist idea that individuals like me are only good for earning money, but it takes a big secular government to know how to spend it. They have other plans for my money, like free abortions, IVF and sex changes. Yay, big government!

Commentary

Did Obama keep his promise to not raise taxes on the middle class?

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The non-partisan libertarian Cato Institute explains that Obama broke his promise not to raise taxes on the middle class.

Excerpt:

How many times have you heard the president and the congressional Democrats say Americans who make less than $200,000 a year have not had, and will not have, any of their taxes increased? Unfortunately, it is not true, and it is likely to become a whole lot worse.

The 111th Congress has already enacted $352 billion in net tax increases and may, in the upcoming lame-duck session, enact the largest tax increases in history, which will hit every man, woman and child — as well as every business in America. The good folks at Americans for Tax Reform (ATR) have put together the data on what the current Democrat-controlled Congress has done already. I have summarized their analysis in the accompanying table.

Here is table:

Net Change in Taxes
111th Congress
(in billions of dollars)
Legislation
(bill number)		 Gross Tax Cuts Enacted Gross Tax Increases Enacted
H.R. 2 S-Chip 0 65.5
H.R. 1 “Stimulus” 217.6 0
H.R. 3590/4872 “Obamacare” 144.0 652.2
H.R. 5297 “Small Business” 12.0 8.0
Totals 373.0 725.7

He continues:

The tax increase of $725.7 billion dwarfs the tax cuts of $373 billion, leaving a net tax increase of $352 billion. But it gets worse. Just $107.6 billion of the tax cuts are permanent — the rest are temporary — but all of the $725.7 billion increases are permanent.

The S-Chip bill was funded by an additional $65.5 billion in tobacco tax increases. These increases are paid primarily by lower-income people. Obamacare is funded with a variety of individual and employer mandates, excise tax increases and fees, including a tax on “tanning salons,” adding up to $652 billion in tax increases, before deducting $107 billion in “exchange credits” and $37 billion in small-business tax credits. The vast majority of these tax increases fall on middle- and lower-income people. As with all of the revenue estimates prepared by Congress’ Joint Tax Committee, most of the behavioral effects of these tax changes are ignored — e.g., how many tanning-salon customers will now opt for the sun rather than pay the tax?

The president and most congressional Democrats have been claiming they will make sure no one making less than $200,000 per year will face a tax increase when all of the “Bush tax cuts” expire on midnight Dec. 31. Given they have not been truthful about the tax increases they already have enacted, why should anyone believe these new claims?

Democrats don’t cut taxes, they raise them. Democrats don’t reduce spending, they increase it. Democrats don’t enable businesses to create more jobs, they attack businesses and we get fewer jobs. Those are the facts.

News

Moderate George Will loves Paul Ryan’s plan for economic recovery

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Rep. Paul Ryan

Editorial from the Press Telegram. (H/T ECM)

Excerpt:

Ryan would eliminate taxes on interest, capital gains, dividends and death.The corporate income tax, the world’s second highest, would be replaced by an 8.5 percent business consumption tax. Because this would be about half the average tax burden that other nations place on corporations, U.S. companies would instantly become more competitive – and more able and eager to hire.

Medicare and Social Security would be preserved for those currently receiving benefits, or becoming eligible in the next 10 years (those 55 and older today). Both programs would be made permanently solvent.

Universal access to affordable health care would be guaranteed by refundable tax credits ($2,300 for individuals, $5,700 for families) for purchasing portable coverage in any state. As persons under 55 became Medicare eligible, they would receive payments averaging $11,000 a year, indexed to inflation and pegged to income, with low-income people receiving more support.

Ryan’s plan would fund medical savings accounts from which low-income people would pay minor out-of-pocket medical expenses. All Americans, regardless of income, would be allowed to establish MSAs – tax-preferred accounts for paying such expenses.

Ryan’s plan would allow workers under 55 the choice of investing more than one-third of their current Social Security taxes in personal retirement accounts similar to the Thrift Savings Plan long available to, and immensely popular with, federal employees. This investment would be inheritable property, guaranteeing that individuals will never lose the ability to dispose every dollar they put into these accounts.

Ryan would raise the retirement age. If, when Congress created Social Security in 1935, it had indexed the retirement age (then 65) to life expectancy, today the age would be in the mid-70s. The system was never intended to do what it is doing – subsidizing retirements that extend from one-third to one-half of retirees’ adult lives.

My last post on George Will is here: Moderate George Will lauds the virtues of Michele Bachmann. He’s actually quite moderate, not at all a conservative, so this is very interesting.

ECM also send me this article from the American Spectator.

Excerpt:

Ever since his back and forth with President Obama during last week’s question time at the Republican retreat, Rep. Paul Ryan’s “Roadmap for America’s Future” has been gaining attention as a plan that the Congressional Budget Office has projected would actually solve our nation’s long-term entitlement crisis.

[…]“The lower budget deficits under your proposal would result in much less federal debt than under the alternative fiscal scenario and thereby a much more favorable macroeconomic outlook,” CBO writes in page 14 of its analysis of the Ryan plan.

CBO projects “real gross national product per person would be about 70 percent higher in 2058 under the proposal.” But after 2058, the CBO’s model completely breaks down when trying to project current trends, “because deficits become so large and unsustainable that the model cannot calculate their effects.” By contrast, the model shows the Ryan plan continuing to achieve economic growth in the decades that follow. This is demonstrated by the CBO chart below.

So the CBO is backing up Ryan’s calculations.