As blogged previously, Obama’s proposed stimulus package is meeting resistance – on both sides of the aisle.
Key members of the Senate Finance Committee have criticized plans for a $3,000 tax credit for new hires, citing that it wasn’t the most effective means of promoting employment. Sen. John Kerry (D-MA) said, “I’d rather spend the money on the infrastructure, on direct investment, on energy conversion and other kinds of things much more directly and much more rapidly and much more certainly create a real job.”
Also on the hit list? Proposed tax credits for working Americans, which had been pitched as a reduction in federal withholding. The credit would work out to $19.23 per week for married couples and a mere $9.62 per week for individuals. Some Senators (and readers on my blog) have suggested that would not do much for the economy, considering the cost.
Some members of the House are also calling for changes to the much dreaded AMT (alternative minimum tax), a continual thorn in Congress’ side. Of course, if history is any indication, if they start whining about the AMT now, they might – might – reach an accord by December…
Surprisingly, there has been little reaction to Obama’s plan (or lack of a plan) to not touch the federal estate tax. I’m guessing that proponents of eliminating the tax realize that it might not be politically advantageous to raise the idea of cutting the federal estate tax (with exemptions sitting at $7 million per family in 2009) during the current economic climate. But I’d expect to see the idea raised sometime during the year – the flukey one year “repeal” of the federal estate tax is set for 2010, with sunset provisions ready to drop the exemption to $2 million per family in 2011 with no action from Congress.
Of course, all of this is still just conversation until the ink is dry. What are your thoughts on what will stay and what will go? Got any better ideas?
I agree that money could be better spent than on tax credits for new hires, or for “working Americans”. Investment in infrastructure creates jobs in the immediate scenario, and pays dividends of efficiency and lower costs for a long time after that.
The inane $3,000 limit on capital losses should be raised at least tenfold, if not more; it certainly would help a lot of “middle-class Americans” who have seen their inventment portfolios tank lately, and could be applied to losses sustained in housing as well.
I, personally, never bought the claptrap about the “death tax”; the way the Bush tax cuts set it up was to be totally a high-dollar sop to the rich and, especially, the very rich. It’s reasonable, I think, to have exemptions in the $5-7 million dollar range; that would keep a lot of family businesses intact. But, as far as I’m concerned, huge estates should pay huge taxes. After all, they already get a very significant tax break: estates are not subject to capital gains taxes, and repealing the “death tax” leaves estates, no matter how large, virtually untouched by the tax man. Personally, I’d rather the dead pay taxes than the living — which includes me! And if some effete dorks don’t inherit quite so many millions, I can’t seem to work up a lot of sympathy (so there, Paris Hilton!!).
And the AMT — whay can’t we just fix it once and for all? It was meant to overcome tax dodges that benefit the wealthy, so let’s put it back that way. Yes, it will mean losses in revenues of some $billions over the years, but that’s a drop in the bucket compared to the $trillions in defecits we already have planned anyway. And it certainly would qualify as “middle-class” tax relief. Okay, maybe “upper middle class” tax relief, but those taxpayers are included in the tax relief targets of the overall “plan”.
Any talk about the budget must include a discussion of the current underfunding of the Tax Whistleblower Reward Program. Congress passed a law in December 2006 that standardizes the IRS practice of giving rewards for tips and information that leads to the collection of the underpayment of tax. Problems is….the program has been TOO successful. The IRS Whistleblower Office cannot process the rewards fast enough. The Office is grossly understaffed to handle the number of tips being provided. In some cases, informant information is laying dormant for 3 months or more as analysts scramble to catch up. The Tax Whistleblower Reward Program is revolutionizing the LMSB tax practice. Former employees are turning in their tax cheating employers faster than the IRS can process the claims. This is our chance to stop the cliche corporate tax evasion that we’ve heard so much about these last few years, but the IRS seemed powerless to stop. So, lobby your Congressmen to increase funding. For more information about the Tax Whistleblower Reward Program, http://www.RewardTax.com is the authoritative website on the internet that describes the program.