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Subscribe to RSSFrom msnbc.com's Tom Curry: The tax cut-spending accord that President Obama announced Monday has been put into the form of legislation unveiled Thursday night by Senate Majority Leader Harry Reid. A summary of the bill is on Senate Finance Committee web site.
The bill would continue through the end of 2011 a variety of tax credits, deductions, and incentives that help taxpayers and industries across the nation.
Depending on your particular interest, there may be a provision in the bill that you'll like:
- Do you want to help rebuild parts of New Orleans devastated by Hurricane Katrina? Back in 2005, Congress authorized tax-exempt bonds to help rebuild areas hit by Katrina, but that tax break was to expire at the end of this year. The bill would allow the tax-exempt bonds to be issued through the end of next year. It also extends a tax credit for rehabilitating historic structures in "the Gulf Opportunity Zone" which includes parts of Alabama, Mississippi and Louisiana.
- Do you believe in mass transit as a way of reducing congestion and pollution? The bill continues a tax break for employer-provided transit and vanpool benefits. The nonpartisan staff of the Joint Committee on Taxation estimates that this break is worth about $500 million a year to workers.
- Do you want to wash your laundry in an energy-efficient way? The bill maintains a tax break for U.S.-based manufacture of energy-efficient clothes washers and other appliances. The credit for the production of energy-efficient appliances is worth about $100 million a year to corporations.
- Do you want to help a school teacher? Elementary and secondary school teachers who pay out of their own pocket for books and supplies for their classrooms can deduct $250 worth of those expenses. This tax break is worth about $200 million a year to teachers.
- Do you want to buy a house in our nation's capitol? The bill continues through next year a $5,000 tax credit for first-time home buyers in the District of Columbia.
There are several other such provisions in the bill, benefiting interests from Midwest farmers (ethanol tax credits) to people investing in American Samoa.
Just last week the members of Obama's fiscal commission recommended eliminating such tax expenditures, or as co-chairman Alan Simpson calls them "tax earmarks."
"We don't use the phrase 'tax expenditures' any more – that's a fake," Simpson said. "Tax earmarks are spending by another name… and they just chip away revenue."
By eliminating tax preferences, "We can broaden the base, simplify the (tax) code, reduce (tax) rates, and pay the deficit down between $80 billion and $180 billion a year, every year," said commission co-chairman Erskine Bowles.
Commission member Sen. Kent Conrad, D- N.D., who is chairman of the Senate Budget Committee, said the tax expenditures "really have run out of control."
Another member Sen. Dick Durbin, D- Ill., said, "I've been in Congress and around Congress for 29 years. We've never had this conversation. We have never put everything on the table and said, 'Now, what's important?' We just incrementally, year after year, make modifications in a tax code that most people never read or understand and think that it really doesn't have any impact."
Both Durbin and Conrad voted for the Bowles-Simpson deficit-cutting proposals.
In all, tax expenditures add up to $1.1 trillion a year in benefits to taxpayers – or putting it another way, $1.1 trillion in revenues the federal government would otherwise get. To put that number in perspective, the federal budget deficit in fiscal year 2010 was $1.3 trillion.
Of course, the big tax "earmarks" are not the ones for energy-efficient clothes washers and rehabilitating historic buildings.
The two biggest are the long-standing tax breaks that benefit millions of Americans workers and homeowners: the deduction for interest paid on home mortgages, about $120 billion in 2011, and the tax-free status of employer-provided health insurance, worth $115 billion in 2011.
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How about you guys just pass the bill! Then let's move to a Flat Tax of 11 to 15% NO DEDUCTIONS OF ANY KIND. You make this much you pay this much NO DEDUCTIONS! Corporations included when companies like EXXON do not pay taxes it crime on the American people!
Let's say you're earning $24K/year and living in Queens. After the 15% flat tax, you're taking home $1,700/month. Rent's $700 for a basement studio, utilities $150, subway pass $90, and employer provided health insurance $200. That leaves $560 a month for food, medical, clothing...everything, or about $18/day. What do you do if you get sick? A $10 doctor copay and $5 Rx means you're not eating today. Flat tax doesn't work for everyone.
There's never been a tax code that a big corporation couldn't twist to its own purpose and even a flat tax will end up with loopholes. I think it could be simplified but I don't believe a flat tax is right either.
Ursula, Most proponents of flat tax advocate that the first $35,000 of income would be tax exempt, the 15% rate would only apply to the income over $35,000.
This sounds fair and uncomplicated. As long as the 15% rate would only apply to the income over $35,000, I am all for it. Why aren't we doing this already? The toxic tax conversation would dissipate and we could then move on to the next toxic topic!
At best, all this plan offers is a way to weather the storm, not the solutions required to turn the tide on it.
The stimulus bit is unrealistic! People are going to hold onto their returns, NOT spend it. In a period of such uncertainty you gotta have a little 'what if' fund in the bank. Holding onto our tax refunds, will NOT stimulate the economy, this coupled with the looming deficit and spending cuts are going to put us in a triple bind...
Is it not clear that we are is crisis? The claim that this is a stimulus package is a 'hope for the best' argument and frivolous.
The bill would have been better if it did not include as much stimulus, none at all and was for a slightly longer horizon. There is a real need to improve the uncertaintly that is keeping potential investment and capital improvement money on the sidelines.
In my opinion a better "compromise" would have been to make the extension for two years at all rates, then an additional two years for those making less than $1m. It is reasonable to expect the small businesses and higher wage earners making more than $1m to return to Clinton era rates. I would like to understand why the POTUS thinks $250k for couples or $200k for individuals is such a perfect magic number. It is far from rich. I know, I know .. there are many on this vine that think anybody making coin like that should pay much larger rates and the tax code should redistribute to those less fortunate.
I agree that $1 million is probably a more realistic number for the highest rate. It doesn't take much to have a $250,000 small business.
What some biased Republican supporters choose to ignore is the gross irresponsibility of the Republicans in stubbornly and arrogantly refusing to consider the average American as they concentrate on placating and patronizing Special Interests and the select few who strongly support them. It would seem reasonable to expect them to understand what was totally and clearly demonstrated by Bush-Cheney, being that it costs this country greatly to focus on giving the few everything and to just take the majority for granted, as they expect to control and manipulate public opinion with subterfuge and psuedo-'conservative' propaganda. The trouble is that they have become cocky with their success and just continue to belligerently focus entirely on their political ambitions, no matter what the cost to the people. If the people don't recognize, understand and reject their gross self-serving irresponsibility, we are very apt to continually be subjected to more of the same that cost so much and caused the problems. You would think that after 10 years the obvious would be comprehended but that has yet to prove true. We may wish Obama was stronger and put the fault there but that could just be avoiding putting the blame were it belongs, on the people, on the voters. The buck may stop with Obama but really what choice was there with the emboldened Republicans given him by the voters. We may have to look at ourselves to see who created the problems. When the people start to realize that the appeal of the "more for me for nothing" offering is just subterfuge intended to manipulate the majority and only reality for the few, then maybe we will see real progress. Argue the details as you like but when with the smoke blown away the big picture is just more of the same.
RGiles, Very well put, I agree whole heartedly!
But additionally, The very same elected officials that are speaking loudly for tax breaks for the wealthy are themselves some of the most wealthy americans, so in actuality the only people they are really looking out for are themselves. These people could give a rats ass about us commoners, the economy or even america. They only care about how they can line their own pockets.
At this if they let taxes raise or not - I'm too tired to care. All of this fighting - mostly for election year sound bytes in 2012 have gotten on my nerves. I pray for us all - and really - a part of me wishes they would just let all of the tax cuts expire.
You guys should stop complaining because, one the health care we have now isnt as good as it was supposed to be. also the law has just been signed so give it some time. so if u want to say u have the right to choose tell that to ur congress men or state official. If you do not have insurance and need one You can find full medical coverage at the lowest price check http://ow.ly/3akSX .If you have health insurance and do not care about cost just be happy about it and trust me you are not going to loose anything!
Dick Cheney, Karl Rove and others are raising 25 - 30 million and more at a time, to sell the likes of Sarah Palin, the Republican Party and their propaganda, in other words, to control public opinion, to manipulate people’s thinking. Now do you really think those contributors are giving all of that money and not demanding anything in return? The reality is they are expecting more of the same that so greatly benefits them (Bush-Cheney style), they are expecting to continue with that program and they all are well organized to do just that as they confidently continue to take the people for granted, as if just ‘pawns’ to be used.
Being completely naive and gullible definitely is not good but being conned into being a ‘whipping boy’ and being happy about it is just totally incomprehensible, in fact it is crazy. Taking a beating for the ‘masters’ is just not something I see as acceptable, not something I consider worthwhile or appropriate but rather something I see as really needing to be avoided. Yet, I do realize everyone has to make their own decisions and determine what their value is, so if it works for you,.. hey, go for it, support them. The trouble is that the total majority suffers, as we have seen, when too many accept the subterfuge and are susceptible to the con.
Check out good ol' Al Gore or Kerry's money before pointing at everyone else, take 2 solar panels and a plate of tofu and call Obama in the morning.
I itemize deductions because the tax law permits and of course because it lowers my income taxes. However, I am for the elimination of all deductions and dependent exemptions. I am also for eliminating all tax credits. Most are just ways to redistribute my tax payments to others for whatever reason some politician thought would get them elected or was "convinced" to do so by some lobbist. Everyone would have to pay a rate of 10% on income from salary and incentives to cover social security and medicare. This would be on every dollar of earned income, not just up to $100,000 per annum or so. And yes, I make more than that a year, so my contribution for those two items would go up. For income taxes, no one would pay on the first $35,000 of gross income. The income tax rate would be 5% on income over $35,000 up to $100,000 per annum, 7.5% for gross income between $100,000 and $250,000; 10% on gross income between $250,000 and $1,000,000; 15% on gross income between $1,000,000 and $5,000,000 and 20% of all income over $5,000,000. Since dividends are taxed at the corporate level, these would not be double taxed, therefore excluded from the definition of gross income. Income from investments, capital gains of any type, etc. would be included in gross income and taxed at the appropriate rates for the person's income level. Everyone would file an individual income tax return. There would be no joint tax returns, etc.
Hey forrestoak,
How much in subsidies did Exxon receive from Uncle Sam? How much of the $658 billion defense budget (not counting the wars) went to protecting Exxon's interests? Its time these corporations stop living off of the tax payers and pay their own way.
it's a spendin gproblem, not a tax problem. Flat tax would also be a back door to VAT so not happy with that either. Cut spending and wasteful programs and watch us get this thing back on the right foot.
Thats a baldfaced lie brutaltruth, because we were set on paying off the entire federal debt, prior to GWB screwing with the tax rates. Its clearly a revenue problem, since taxes and revenue are directly related.
Im assuming your an R based on your assumption that its a spending problem. Well I honestly WISH you R's would cut off old people from their SS and throw them in the street, or pull the plug on grandma because she has no medicare, or slash defense spending by %60 and shut down 2/3's of our overseas bases. No one would ever vote your party into power again.
America is well on it’s way into a deep abyss with the action being perpetuated by a purposeful and self-serving scam. Should the people continue to lack the fortitude and the unselfish discipline to be rational and objective enough to recognize the aggressive and arrogant con going on, then the pit is only going to be dug deeper. In every area of American life this deception is having it’s negative affect as government responsibilities are neglected, society’s values, qualities and intellectual levels are continually being eroded, Special Interests and the influential, powerful and very wealthy few are being catered to and the majority, including the total middle-class, are constantly loosing ground as we digress towards becoming a ‘second class’ country with a population of a few ‘haves’ and a vast majority of ‘have-little’ and ‘have-not’.
The Republican Party (Tea Party or whatever), with the very aggressive overt and covert substantial support of the powerful few, have become bold, confident and even cocky in irresponsibly focusing totally on their political ambitions and on being ‘puppets’ for the few who ‘pull their strings’. The evidence is completely obvious in the constant manipulation of public opinion, currently seen in everything from seeking to resurrect GWBush’s justifiably terrible reputation, to unjustifiably grooming and selling the sociopathic Sarah Palin and to rationalizing value in every benefit for the very few, at the significant but disguised cost to the many. Without the people ‘waking up’, seeing and rejecting the deception and noting the Democrats fall short of being able to successfully overcome the disadvantage without the people’s support, then the people are destined to continually just be ‘used and abused’. To avoid being returned to more of the same (Bush-Cheney style) that literally cost this country greatly and benefited only the few, it is now really up to the people to refuse to be further scammed.
As a registered democrat since 1972 and a Union member for over 33 years I would like to see the rich pay their fair share of taxes and the government to set up programs to help people help themselves.
As for business paying taxes, if you believe that businesses really pay taxes you must assuredly believe in the tooth fairy. The reality is businesses hire a lot of accountants and/or tax lawyers to figure out ways of shielding money from being taxed and what money can't be shielded from taxes are passed along to the consumer.
The real issue is how much taxes are fair and how can that level be achieved without wasteing money on accountants and tax lawyers. The best way is as follows:
1. Don't tax businesses. Business can and do move to avoid taxes/
2. Set up a simplified tax system that taxes people fairly.
3. Set up a flat graduated tax.
Flat in the sense that there are very limited deduction and no tax credits.
Graduated in the sense that there are different reasonable tax brackets.
ie: under $20,000 no taxes paid; $20,001 to $50,000 10% tax rate; $50,001 to $100,000 15% tax rate; $100,001 - $1,000,000 20% tax rate $1,000,001 to $5,000,000 25% tax rate and over $5,000,000 30% tax rate.
Keep the charitable deductions, dependent deductions and phase out the mortgage deductions over a 10 year period, all other deductions to be eliminated and the IRS employment would be reduced for a savings.
These brackets can be adjusted. But the idea should be to simplify the tax system and save money. Without all the deductions there would not be a need for so many IRS employees which in itself would be a savings.
We are always complaining about lobbyists, what is the #1 issue lobbyist's are bribing our representatives over, it's taxes.