All Articles Tagged "tax policy"
The Art of Deduction
(Slate) — Americans will pay less in total taxes, as a proportion of the nation’s economy, this year than in any year since 1950. This is due in part to a growing list of personal and business deductions. How long have deductions been around? Since we’ve had an income tax. The first federal income tax form—for income earned in 1913, the year of the 16th Amendment’sratification—listed six general deductions. (It was called the “Form 1040″ back then, too.) Broadly speaking, they allowed federal taxpayers to write off business expenses; business and personal interest; state and local taxes; catastrophic losses (those “arising from fires, storms, or shipwreck”) not covered by insurance; bad debts; and depreciation of business assets. Each category of deductions survives in some fashion in the current tax code, though we’ve been tweaking the specifics. Business interest is still deductible, for instance, but the Tax Reform Act of 1986 junked the deductions for nearly all personal interest, such as credit card debt and car loans. One exception is interest on home mortgages, spared from the 1986 cuts: Today, the mortgage-interest write-off is among the most valuable deductions, accounting for an estimated $573 billion in foregone tax revenues between 2009 and 2013. Deductions for depreciation—write-offs based on property or assets losing value with wear-and-tear or general obsolescence—today are nearly identical in principle to those in 1913, though the method of calculating the deductions has become much more complicated.
Obama Reaches Out to Black Leaders, Says Tax-Cut Deal Good for African Americans
(Washington Post) — As President Obama prepared to sign his $858 billion tax dealFriday, White House aides moved quickly to soothe the anger among liberal constituency groups that bitterly opposed the measure. An e-mail distributed to black leaders declared the package a “major victory for African-Americans,” arguing that a series of middle-class tax cuts will give “targeted” aid to minorities. The White House also invited one of its key African American surrogates, the Rev. Al Sharpton, to Friday afternoon’s bill signing and scheduled a private meeting with top labor union leaders who had railed against extending the George W. Bush-era tax cuts for the wealthy.
White House Touts Tax Deal’s Black Benefits
(Afro) — Having won the endorsement of the man dubbed America’s “First Black President,” Bill Clinton, the Obama administration on Dec. 10 peddled the tax deal made with Republicans as a boon for the African- American community. “We feel we really were winners in this deal because we got a lot of priorities through that not only helps economic recovery but helps families that really need that assistance in this pivotal time,” White House spokeswoman Jen Psaki said during a conference call with the Black press. Cecilia Rouse, a member of President’s Council of Economic Advisers, reaffirmed that the president had not been happy about acceding to Republican demands for an increased estate tax cut and a two-year extension of President Bush’s high-income tax credit, which together costs $114 billion in revenue.
Georgia Tax Reforms Taking Shape
(AJC) — Broadening Georgia’s sales tax to include services in return for lower income tax rates will be the framework of tax reforms a task force will recommend to the General Assembly. An 11-member panel of business leaders and academic economists has been meeting since last summer to look for ways to make the state’s tax code fairer and more business friendly without reducing revenues. On Tuesday, its chairman gave a broad outline of the recommendations the task force will make prior to the Jan. 10 start of the 2011 legislative session.
How President’s Deal Could Affect Taxpayers
(Wall Street Journal) — President Barack Obama called the bipartisan tax agreement announced on Monday a “framework.” As yet there is no legislative language or even a comprehensive outline of the proposals, and its passage by Congress isn’t assured. But its broad parameters do address a range of tax issues that have been in question for months or years. Here’s how the various provisions could affect taxpayers. Individual tax rates: The agreement would extend the Bush-era tax rates for two years for all taxpayers. Current rates would remain in place, with a top rate of 35%. Capital gains: Current rates would be extended, and the top rate on long-term capital gains would remain at its historic low of 15% for two years. The rate applies to gains on assets held longer than a year.
Small-Business Groups Parse Tax Deal
(Wall Street Journal) — President Obama’s newly proposed tax package is being praised, though with cautious optimism, by several of the nation’s most prominent small-business advocacy groups. The Republican-backed deal with its temporary extension of Bush-era income tax cuts would have a direct impact on a large segment of entrepreneurs, whose small-business income falls into top tax brackets. Other measures, such as a reduction in payroll taxes for workers, could indirectly benefit small companies by potentially spurring consumer spending.
President Accepts Tax Cuts
(Businessweek) — President Barack Obama said he would agree to sustain Bush-era tax cuts for high-income taxpayers in exchange for extending federal unemployment insurance and cutting the payroll tax by $120 billion for one year. Obama said he would accept lower rates on high earners’ income, dividends, capital gains and multi million-dollar estates for the next two years to break a stalemate over extending the Bush administration’s tax cuts for middle-class taxpayers before Congress adjourns. The current tax rates, enacted in 2001 and 2003, are set to increase Dec. 31.
Nonprofits Fear Losing Tax Benefit
(New York Times) — With the federal government struggling to regain control over the nation’s deficit, a debate is emerging over the charitable deduction and other tax policies that support nonprofit groups. What began as a proposal by the Obama administration in 2009 to reduce the deduction has become a wide-ranging discussion of what was once considered a sacred cow. Three blue-ribbon panels have proposed tinkering with the charity deduction, as has Robert B. Reich, the former labor secretary.
Democratic Activists Criticize Possible Compromise on Tax Cuts
(Washington Post) — Democratic activists Thursday sharply criticized White Houseofficials after a published report indicated that President Obama is likely to back a temporary extension of tax cuts for households with income over $250,000 a year. Obama responded Friday that while he was open to compromise, his top priority remains making middle-class tax cuts permanent. In an interview with the Huffington Post, top Obama adviser David Axelrod said: “We have to deal with the world as we find it,” in noting that the White House might compromise with the GOP on the issue. He said that White House officials have long opposed a permanent extension of the tax cuts on upper-income Americans. However, Obama aides also have repeatedly said that they have not ruled out backing a temporary extension of those cuts as part of a compromise with Republicans.
