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Obama Plans to Increase Top Two Tax Brackets
By Children’s Home Society of Florida Foundation
On a national media program on July 25, 2010, Treasury Secretary Timothy Geithner emphasized that the Obama administration plans to increase the tax rates for the top two brackets. When asked whether the 2001/2003 tax reductions should be extended for all brackets, Secretary Geithner stated, “I don’t believe they should and I don’t believe they will.”
New Top Rates
In the view of Secretary Geithner, the increase of the top two rates to 36% and 39.6% affects only “2% to 3% of Americans, the highest-earning Americans in the country.” He suggested that the increased rates on top earners will not have a “negative effect on growth.”
[picapp align=”none” wrap=”false” link=”term=income+tax&iid=76590″ src=”http://view.picapp.com/pictures.photo/image/76590/drawer-full-receipts/drawer-full-receipts.jpg?size=500&imageId=76590″ width=”337″ height=”506″ /]
Steny Speaks
House Majority Leader Steny Hoyer (D-MD) agreed with Secretary Geithner. He advocated extending the tax cuts for middle-income taxpayers and remarked that their taxes are “lower than they were in any single year” when compared to prior administrations. However, in his view, the increase in the top two brackets is necessary to keep America from going “deeper into debt.”
So Does Orrin
Sen. Orrin Hatch (R-UT) is a member of the Senate Finance Committee. He spoke on the floor of the Senate and expressed frustration over the decision by Majority Leader Harry Reid (D-NV) to refuse to allow a vote on the Hatch proposal to extend all of the tax cuts. Sen. Hatch offered a motion to commit the pending small business bill back to the Finance Committee in order to amend it and extend all of the tax cuts.
Sen. Hatch indicated that this “largest tax increase in history” will dramatically impact small businesses. These businesses, with between 20 to 500 workers, are owned by individuals who face substantial tax increases.
In the view of Sen. Hatch, the top bracket tax increases will reduce the ability of small business to perform its normal function during an economic recovery of generating 70% of new jobs. Sen. Hatch noted that new jobs typically have three components.
Assessment
First, there must be entrepreneurs who are willing to take risks. Second, there must be adequate access to capital. He indicated that the banks and large companies currently hold record amounts of cash reserves, so there certainly is cash available. Third, there must be “reasonable economic certainly” so that the businesses are willing to expand. With the prospect of higher taxes and greater regulations, Sen. Hatch indicates that there is a high level of uncertainly that is directly reducing job growth in America.
Conclusion
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Filed under: Taxation | Tagged: Finance Committee, income tax, income tax rates, IRS, Orrin Hatch, Steny Hoyer, tax rates, Timothy Geithner |
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September Effort to Extend Tax Cuts
House Majority Leader Steny Hoyer (D-MD) stated on August 3rd that he hopes the House will act to extend the 2001/2003 tax cuts before adjourning on October 8, 2010. House Democrats generally agree with the White House proposal that tax cuts should be extended for individuals making less than $200,000 ($250,000 for married couples).
In response to suggestions that the tax cuts should also be extended for the taxpayers in the top two brackets, Leader Hoyer opposed the concept. He stated, “Almost every economist indicates that those tax cuts will not serve to grow the economy or encourage investment or consumer spending.”
Speaking at a Washington conference this week, Treasury Secretary Timothy Geithner also emphasized the importance of extending the middle-class tax cuts and raising taxes for the top two brackets. He stated, “There is no credible argument to be made that the purpose of government is to borrow from future generations of Americans to finance an extension of tax cuts for the top 2%.”
Two prominent Democratic senators have suggested that the tax cuts should be extended for upper-income earners. Sen. Evan Bayh (D-IN) and Budget Committee Chair Kent Conrad (D-ND) have both supported an extension of all the tax cuts for the next year.
When asked whether the tax system should be modified this year, Sen. Conrad noted, “It is a losing strategy to try to rejigger the current tax code.” He prefers to wait for a November proposal from the National Commission on Fiscal Responsibility and Reform. If 14 of the 18 members of the fiscal commission agree on a proposed strategy, House and Senate leaders have promised to submit that strategy for a vote. Sen. Conrad suggests not making changes until comprehensive new tax and spending policies are determined.
Source: By Children’s Home Society of Florida Foundation
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Hoyer and Boehner Continue Tax Debate
The White House and House Democratic Leaders continue to advocate a Democratic proposal on the extension of the 2001/2003 tax cuts in 2011. Under their proposal, the tax reductions will be extended for single persons with incomes of $200,000 and married couples with incomes under $250,000.
However, the top two income tax brackets will be increased to 36% and 39.6%. In addition, capital gains will increase from 15% to 20% and various phaseouts for upper-income taxpayers will be restored. The effect of restoring phaseouts is to increase the actual tax rates by another 1% or 2% for higher-income taxpayers.
Majority Leader Steny Hoyer (D-MD) published a release on August 12th to reemphasize his position. He indicated that the Democratic Leaders are behind the efforts to stop the “tax increase on the middle-class” while the opposition proposals would give higher income taxpayers reductions without any tax offsets.
In the tax release, Rep. Hoyer indicates that the increased taxes on the top two brackets are expected to raise $38 billion in 2011 and nearly $700 billion over the next decade. He estimates that 96% of the added tax would be paid by taxpayers with incomes over $500,000 per year.
Minority Leader John Boehner (R-OH) published a release to state his opposition to “hitting small businesses with a job-killing tax increase” in 2011. Rep. Boehner points to the current high unemployment and indicates that his Ohio constituents are asking him, “Where are the jobs?” With the high level of unemployment, Rep. Boehner suggests that raising taxes on small business owners is the wrong strategy.
He continues, “We will not fix the deficit until we cut spending and have real economic growth — and we won’t have real economic growth if we keep raising taxes on small business.”
Editor’s Note: Your editor and this organization take no specific position on this tax debate. This information is offered as an educational service because there is great interest in the efforts of the federal government to increase employment.
Source: Children’s Home Society of Florida Foundation
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Returning Congress Takes Up Taxes
Following the August recess, Congress will return to Washington in September. A priority on the legislative schedule will be consideration of a tax bill. In a conference call last week, House Ways and Means Committee Chair Sander Levin (D-MI) discussed the fall schedule with reporters. He indicated that the House hopes the Senate will act first on a tax bill.
Chairman Levin affirmed the Democratic support for extending tax cuts for single persons with incomes of $200,000 ($250,000 for couples) in the forthcoming tax bill. House members have requested that the Joint Committee on Taxation analyze the effects on small businesses of allowing the top two brackets to return to 36% and 39.6%.
On August 25, 2010, Vice President Joe Biden expressed White House support for the same plan. He noted that extending the tax cuts for middle-income taxpayers and allowing the top two rates to increase would produce $700 billion in tax revenue over 10 years. Vice President Biden stated, “There’s nothing populist about this. It’s simple economics.”
In the view of Biden, it is important to raise the top level of taxes because only 3% of small-business owners would pay the tax. In addition, the funds need to be used to help “small businesses and middle-class people.”
Senate Majority Leader Harry Reid (D-NV) has scheduled a series of votes for September 14 on a new tax bill. The bill will cover various tax provisions that impact small businesses. A tax bill to extend the middle-class tax rates may be considered later in the month by the Senate.
House Minority Leader John Boehner (R-OH) continued to advocate an extension of all tax rates for 2011. He stated, “We will not solve our fiscal challenges until we cut spending and have real economic growth — and we won’t have real economic growth if we keep raising taxes on small businesses.”
Rep. Boehner is also concerned about the new Form 1099 Information Reporting Requirements and the tax extenders. He suggests that Congress also should look carefully at the tax extenders to determine whether some of those provisions should not be enacted for 2010.
Children’s Home Society of Florida Foundation
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Not so Fast!
Rep. Boehner Proposes Two Year Spending and Tax Freeze
House Republican Leader John Boehner (R-OH) published a press release on September 8, 2010 that proposed a spending and tax freeze for two years.
His first proposal is to pass a bill that cuts non-security related government spending for the next year back to the expenditure level of 2008. Under this part of the proposal, most federal expenditures would be reduced to 2008 levels. There would be exceptions for seniors, veterans and defense spending.
The second portion of his proposal is a two-year freeze on all current tax rates. Leader Boehner would hold existing income tax, dividend tax and capital gain rates at the 2010 level for years 2011 and 2012.
Rep. Boehner noted, “If were able to do this together, I think we’ll show the American people that we understand what’s going on in the country and we’ll be able to get our economy moving again and get jobs growing in America.”
Editor’s Note: We take no position on this debate. This information is shared because it is of great interest to our ME-P readers.
Children’s Home Society of Florida Foundation
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Sen. Nelson Proposes Tax Extension
In a September 9, 2010 press release, Sen. Ben Nelson (D-NE) proposed continuing the 2001/2003 tax cuts for all taxpayers. He noted, “I support extending all of the expiring tax cuts until Nebraska’s and the nation’s economy is in better shape, and perhaps longer, because raising taxes in a weak economy could impair recovery.”
Sen. Nelson had previously expressed concern about the White House proposal to allow the top two brackets and the capital gains rates to increase. He suggests that the uncertain economy merits an extension of all of the different tax brackets. Sen. Nelson continued, “That said, I’d like to see these tax cuts paid for as much as possible. We need to focus on reducing government spending and finding offsets, where we can, because that’s the fiscally responsible thing to do.”
President Obama felt differently about the topic in a speech in Cleveland, Ohio. He affirmed the White House position that the tax reductions should be continued only for individuals with incomes below $200,000 ($250,000 for couples).
However, in a September 9th interview on Good Morning America with George Stephanopoulos, President Obama refused to promise a veto of a bill if passed by Congress that would extend all tax cuts. Nevertheless, he continued to support raising taxes on the higher-income taxpayers.
President Obama stated, “What every economist that I’ve talked to has said that if you’re going to spend, say $95 billion, even just for two years for these tax cuts, probably the least efficient way of actually giving the economy a boost is to provide that $95 billion to millionaires and billionaires.”
Editor’s Note: We take no position on this debate. This information is shared because it is of great interest to our ME-P readers.
Source: Children’s Home Society of Florida Foundation
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New Tax Breaks for Physician Business Owners
President Obama signed into law the Small Business Jobs Act, which expands loan opportunities for small businesses and provides some substantial new tax breaks for many medical practices.
http://www.physiciansmoneydigest.com/your-practice/New-Tax-Breaks-for-Physician-Business-Owners
Bernie
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IL Podiatrist Indicted on Tax Fraud Charges
Federal prosecutors say a Chicago podiatrist with offices in Northbrook and Orland Park is facing tax fraud charges. A nine-count indictment unsealed last week alleges that 62-year-old Randy Pachnik failed to pay more than $500,000 in federal income taxes on approximately $1.8 million in gross income from his medical practice over four years, as well as from an inheritance.
Randall Samborn, a spokesman for the U.S. Attorney’s office, says Pachnik appeared in U.S. District Court on Monday and pleaded not guilty to four counts of tax evasion, four counts of failing to file a federal income tax return and one count of obstructing and impeding the IRS from collecting taxes.
Source: Chicago Tribune [10/18/10]
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