Law Offices of David L. Silverman, J.D., LL.M.

Senate Approves Tax Extenders Bill

March 12, 2010 · Leave a Comment

Friday, March 12, 2010 US Senate Finance Committee Chairman Max Baucus (D – Mont.) has applauded the Senate’s passage of legislation to extend tax cuts, unemployment insurance benefits and eligibility for unemployment benefits and health care for unemployed workers through the end of 2010. The American Workers, State and Business Relief Act, introduced by Baucus last week and passed by the Senate on March 10, extends unemployment insurance benefits and eligibility for the 65% COBRA health care tax credit through December 31, 2010. The COBRA tax credit helps workers who have lost their jobs continue to afford health insurance through the Consolidated Omnibus Budget Reconciliation Act. The legislation also retroactively extends tax cuts for middle‐class families and businesses that expired at the end of 2009, including, for businesses:

* The Indian Employment Credit and the New Markets Tax Credit;

* A tax credit aimed at encouraging small firms to hire military reservists;

* The five-year cost recovery period for expenditure on certain farm machinery;

* The temporary 15-year straight-line cost recovery period for certain leasehold, restaurant and retail improvements;

* Accelerated depreciation for business property on an Indian reservation;

* Temporary expensing rules for certain film and television productions;

* Modification of tax treatment of certain payments to controlling exempt organizations;

* Improved treatment of certain dividends for Regulated Investment Companies (RICs);

* Extension of the treatment of RICs as ‘Qualified Investment Entities; and extension of the exception under Subpart F for active financing income;

* Improved CFC ‘look through’ rules. And for individuals:

* Extension of the teacher expense deduction;

* Extension to the additional standard deduction for real property taxes;

* Extension of the deduction of state and local income taxes; and

* Extension of tax-free distributions from individuals retirement plans for charitable purposes. The bill also extends several expiring energy tax provisions and disaster relief provisions.

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To Cut Debt, Obama Shifts on No Tax Vow

March 12, 2010 · Leave a Comment

To Cut Debt, Obama Shifts on No Tax Vow

By JACKIE CALMES

President Obama, still seeking to get Congressional Republicans to join in a bipartisan commission to reduce the federal debt, suggested he would be willing to break his campaign promise against raising taxes on households with less than $250,000 annual income.

“The whole point of it is to make sure that all ideas are on the table,” the president said in the interview on Tuesday with Bloomberg BusinessWeek that the publication released online today. That included not only tax increases, he added, but also spending on the popular government health programs, Medicare and Medicaid, whose fast-growing costs are driving the projections of unsustainable annual deficits in coming years.

“What I can’t do is to set the thing up where a whole bunch of things are off the table,” Mr. Obama said. “Some would say we can’t look at entitlements. There are going to be some that say we can’t look at taxes, and pretty soon, you just can’t solve the problem.”

Budget experts from conservative to liberal have long agreed that future deficits can only be brought under control by a combination of tax increases and spending cuts, especially in the benefit programs. Many of them criticized Mr. Obama during the campaign for promising in effect to exempt 95 percent of Americans from any tax increase; the wealthiest 5 percent, the critics said, cannot shoulder the likely load without harming investment and economic growth.

Last summer, with the recession’s costs having forced deficits above $1 trillion annually on average, Mr. Obama’s spokesman, Robert Gibbs, said the president stood by his campaign promise after the top economic advisers — Lawrence H. Summers and Timothy F. Geithner, the Treasury secretary — suggested the administration was reconsidering in light of the worsened fiscal forecasts.

Now the president has made clear he is willing to reconsider, if Republicans will come to the table to negotiate ways to reduce deficits. But the Republican Party opposes all tax increases, and so the Congressional Republican leaders, Senator Mitch McConnell of Kentucky and Representative John A. Boehner of Ohio, have resisted committing to a bipartisan commission. But neither did they rule it out at a White House meeting on Tuesday, participants say.

At that meeting, Mr. Obama gave the Republicans a paper describing the executive order he is planning for creating a commission. The group would have 18 members, 10 Democrats and eight Republicans. The president would name two of the Republicans along with four Democrats; none would be administration officials. For the remaining 12 members, the leaders of both parties in the House and Senate each would choose three lawmakers.

The commission would be charged with reporting by December — after the midterm elections — on how to balance the budget by fiscal year 2015, not counting federal interest payments on the national debt; those are projected to be nearly 3 percent of the gross domestic product that year, a level that most economists say is about the maximum desirable deficit for any year. Also, Mr. Obama wants a commission to also propose longer term changes in revenues and the entitlement programs to rein in a debt projected to be nearly 80 percent of the economy’s total output by 2020.

While the president cannot force Congress to vote on any package the commission comes up with, the Democratic leaders, Representative Nancy Pelosi of California and Senator Harry Reid of Nevada, have committed in writing to have vote.

Categories: News