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Entries in Taxes (142)

Tuesday
Sep132011

'Tax the Rich' Aspect of Jobs Bill Punted to Super Committee

Kevin Lamarque-Pool/Getty Images(WASHINGTON) -- President Obama wants to pay for his $447 billion American Jobs Act with a mix of so-called revenue enhancers, mostly by taxing the wealthy.

The president said Monday he hopes the special Congressional super committee already charged with making $1.5 trillion in cuts to reduce the deficit by Nov. 23 will "overachieve" and consider his proposals to pay for the plan, which is intended to stimulate job creation.  Republican reception was cool, with the party's top leaders saying tax increases are unacceptable and job-killing.

Steven Leslie, lead analyst for financial services at the Economist Intelligence Unit, part of the Economist Group, said the measures announced Monday had already been debated before August's deficit reduction plan.

"These are almost exactly like the ones Obama proposed a month ago: shift the tax burden to the wealthy people and close some of these loopholes on corporate airplanes," Leslie said.

The plan includes new limits on deductions for income over $250,000 which the White House says could raise $400 billion over 10 years, oil and gas tax measures which would raise $40 billion, and limiting tax deductions for corporate jets which could raise $3 billion.

Office of Management and Budget Chair Jack Lew on Monday also described changes to the taxation of carried interest, raising $18 billion from the income of hedge fund and private equity managers. 

Billionaire Warren Buffett previously criticized the current policy which he said allows his secretary to pay more in taxes than he does.

The committee, which met for the first time on Sept. 8, holds its first hearing Tuesday.  At the hearing, Congressional Budget office director Doug Elmendorf will testify on "The History and Drivers of Our Nation's Debt and Its Threats."

Cato Institute economist Dan Mitchell said the measures were "repackaged" from previous White House proposals, like Dr. Seuss' Green Eggs and Ham.  He said he doubts the measures will effectively stimulate the economy.

"As they say in the children's book, 'I do not like them in a house.  I do not like them with a mouse.  I do not like them here or there.  I do not like them anywhere,'" Mitchell said.

Mitchell said the most newsworthy announcement on Monday was that the president was targeting itemized deductions, as opposed to increasing the marginal tax rate.  He said most economists across an ideological spectrum agree doing the latter would create the most damage per dollar raised because it affects the incentive to earn additional income.

Copyright 2011 ABC News Radio

Friday
Sep092011

Obama's Jobs Plan Cheered by Economists

Alex Wong/Getty Images(WASHINGTON) -- President Obama's $447 billion American Jobs Act is getting mostly solid marks from business experts and economists, who worry that a divided Congress may be unable to pass anything meaningful in time.

The president's plan would eliminate payroll taxes for companies that add workers or increase wages of current workers, but that benefit is capped to the first $50 million in payroll increases.  The plan has a $4,000 tax credit for employers who hire long-term unemployed workers, plus a "returning heroes" hiring tax credit of $5,600 to $9,600 for each unemployed vet hired.

The proposals include reforming the unemployment insurance program, a $50 billion extension in unemployment insurance to prevent five million people looking for work from losing benefits and state assistance for wage insurance.

Small businesses would get a 50 percent cut in the first $5 million in payroll taxes.  The White House said 98 percent of businesses have payroll below that threshold.

Political analysts say Republicans may be in favor of the tax cuts in the president's proposals, but will oppose the parts of the $447 billion plan that call for new government spending.  The spending measures include a $50 billion investment in infrastructure, a bipartisan National Infrastructure Bank and aid to state governments.

Cecilia Rouse, economics professor at Princeton and former member of President Obama's Council of Economic Advisers, said the president is proposing a "sensible" package of strategies while the private sector continues to struggle.  Rouse said she was "particularly pleased" to see an extension in unemployment insurance for an additional year.

"They are a critical form of assistance for so many families as well as one of the fastest and most effective ways of helping to increase economic activity during a downturn," she said.

Rouse said the proposed employment tax cuts, for both employers and individuals, are warranted, and investments in infrastructure "just make sense" given the numbers of unemployed construction workers and the low rates at which the federal government can borrow.  Further state aid will help the economy a great deal given that public sector employment has been unusually hard hit in this downturn.

But she would have liked for Obama to have proposed more innovation for services that help the unemployed find jobs.

Copyright 2011 ABC News Radio

Wednesday
Aug312011

25 CEOs Earned More than Their Companies Paid in Tax

Medioimages/Photodisc(WASHINGTON) -- Twenty-five of the biggest, best-known corporations in the U.S. paid more money to their CEOs last year than they paid to Uncle Sam in taxes, according to a report released Wednesday. The list includes Boeing, eBay, General Electric, International Paper, and Verizon. The same report, issued by the Institute of Policy Studies, a liberal think-tank, said the 25 companies enjoyed average global profits of $1.9 billion.

Chuck Collins, one of the study’s co-authors, told the Washington Post, “These individual CEOs are being rewarded for presiding over companies that dodge taxes.” Eighteen of the 25 firms operate subsidiaries in countries characterized as tax havens by the U.S. Government Accountability Office or by other tax-monitoring groups.

Some of the 25 took issue with the Institute’s approach, which focused only on what firms paid as a tax expense within calendar year 2010. A spokesman for Verizon, for example, told the Post that Verizon, “fully complies with all tax laws and pays its fair share of taxes.” Verizon said it had deferred paying the bulk of its 2010 taxes to future years.

The same report found that the gap between pay for the average U.S. worker and pay for CEOs rose to a ratio of 325-to-1 last year, up from 263-to-1 in 2009.

Copyright 2011 ABC News Radio

Wednesday
Aug172011

Donald Trump Would 'Put Country First' and Pay More Taxes

ABC/Donna Svennevik(NEW YORK) -- Donald Trump backed up fellow billionaire Warren Buffett’s op-ed in The New York Times and said he’d be willing to pay more in taxes, but he doesn’t think Wall Street would go along with it.

“I would be willing to," Trump told ABC's chief political correspondent George Stephanopoulos on Tuesday, "but a lot of people wouldn't be.  A lot of people would leave the country. I'm talking about big people, job-producing people. Would I be willing? Yeah, I'd be willing.  I’d put country first.  Lot of people don't necessarily put country first."

Trump said these “unpatriotic” businessmen would take their money elsewhere, leaving the U.S. with nothing.

“I deal with Wall Street all the time.  I know all of them…You're going to have a mass exodus.  You already have an exodus out of this country.  But you're going to have a mass exodus of business out of this country when you start taxing too high,” he said.

Except when it comes to oil, and specifically the Organization of the Petroleum Exporting Countries, or OPEC.  Trump says we should close the loopholes on oil companies, a position that sets him apart from many in the Tea Party.

“If you go back to certain companies, Exxon Mobil, the oil companies, for us to be subsidizing oil companies is absolutely insane.  And frankly, the oil companies really facilitate OPEC.  The worst abuser we have is OPEC,” he said.

“Every time the economy gets good, oil goes up…So what they do is they systematically destroy any momentum you get.  Because oil should be selling at $25 to $30 a barrel right now,” Trump said.

The real estate mogul said he'd also like to tax Chinese products in order to get the country to stop manipulating their currency.

“You put a 25 percent tax on Chinese products, products coming into this country, two things are going to happen.  Number one, this country's going to take in a bundle of money,” he said.  “And number two, a lot of people won't have their products made in China.  They'll start being made in Alabama, in Iowa, in New York, in Texas and lots of other places.”

Trump added that if this move started a trade war it would be okay because we shouldn’t be trading when there is such an imbalance -- it’s not fair trade.

“The fact is, China is not our friend.  I was asked, ‘Are they our enemy?’ I said, ‘Yeah.  Actually, they're our enemy.  China is our enemy.’  What they're doing to us is unbelievable,” he said.

Copyright 2011 ABC News Radio

Monday
Aug152011

Warren Buffett to Congress: Stop 'Coddling' Billionaires

ABC News(NEW YORK) -- When it comes to taxes, Warren Buffett, one of the country's richest men, says that he and other high-earning Americans need not be “coddled” by Congress, and that “most wouldn’t mind being told to pay more.”

In an op-ed published in The New York Times, the Berkshire Hathaway chairman and CEO says, “My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.”

“Last year my federal tax bill -- the income tax I paid, as well as payroll taxes paid by me and on my behalf -- was $6,938,744,” Buffet writes. “That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income -- and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”

Buffett calls on the Super Committee to raise tax rates on the roughly 240,000 American households which netted more than $1 million in income in 2009.

“I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains,” Buffett says in The New York Times. “And for those who make $10 million or more -- there were 8,274 in 2009 -- I would suggest an additional increase in rate.”

“I know well many of the mega-rich and, by and large, they are very decent people,” Buffett writes. “They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.”

Copyright 2011 ABC News Radio

Saturday
Aug062011

Almost 1,500 Millionaires Do Not Pay Income Tax

Comstock/Thinkstock(WASHINGTON) -- At a time when America is borrowing about 40 cents of every dollar it spends because tax revenues cannot keep up with government spending, hundreds of America's wealthiest households are paying no income tax at all.

According to a recently released IRS report, almost 1,500 of America's 230,000 millionaires avoided paying any federal income tax in 2009.

So how did they do it? Were they scamming the system? Evading the IRS? Stashing their cash in elusive off-shore, untraceable bank accounts?

Actually, they were probably donating to charity, investing in local and state government bonds and making most of their money overseas.

Mark Robyn, an economist at the Tax Foundation, said foreign income tax credit avoids the problem of double taxation.

"That generally seems like a pretty acceptable feature of a tax code -- to avoid unfairly taxing people twice for the same income," Robyn said.

But the foreign tax credit could be just one of many reasons that almost 1,500 millionaires are not paying U.S. income tax, Robyn said.

"A lot of factors go into it," he said. "High-income people have lots of income sources that the average person like you or me doesn't really experience."

Millionaires are more likely to qualify for tax deductions, for example, by earning non-taxable income from interest on state and local bonds or donating to charity.

"There are a whole bunch of provisions in the tax code that lower people's taxes," Williams said. "And those disproportionately go to people with higher incomes."

But these millionaires are not the only Americans skipping out on federal income tax. A full 46 percent of the population pays zero income tax. The vast majority of these income-tax-free households have low incomes and qualify for child tax credits.

Income tax is a small slice of the complex tax pie, however. Even those that don't pay it are still on the hook for payroll tax, which funds Medicare and Social Security, excise taxes on gasoline, cigarettes and alcohol, and sales tax.

While most lawmakers have said they support reforming this complicated tax puzzle, exactly how to change the tax code is highly disputed.

GOP presidential candidate Michele Bachmann, a former IRS tax attorney, said she would revamp the tax code if elected by lowering overall tax rates and getting "rid of all the deductions" so that more people paid into the system.

Copyright 2011 ABC News Radio

Tuesday
Jul122011

Will Baseball Fan Have to Pay Up for Returning Jeter's 3,000th Hit Ball?

Jeffrey Hamilton/Photodisc/Thinkstock(NEW YORK) -- When Christian Lopez returned the home run ball that represented Derek Jeter's 3,000th hit last Saturday, the New York Yankees showered Lopez with tickets and autographed memorabilia as a sign of the team's appreciation.

But come Tax Day 2012, the 23-year-old baseball fan may see those gifts as a burden if he gets stuck with a bill from the Internal Revenue Service.

Tax experts told The New York Times that Lopez would have to declare as income everything the Yankees gave him for the historic ball.  This includes free tickets for the remainder of the 2011 regular season, as well as for any postseason games; and three bats, three baseballs and two jerseys all autographed by Jeter.

The tickets alone are estimated to be worth between $44,800 and $73,600, according to the Yankees' website.

If the gifts were valued at just $50,000, Lopez would be forced to pay about $14,000 in taxes, a tax expert told the newspaper.

The IRS declined to speculate whether Uncle Sam would come after the baseball fan.

Copyright 2011 ABC News Radio

Thursday
Jun092011

Sen. Ron Johnson: No New Tax Cuts Until Deficit in Order

RonJohnsonSenate.gov(WASHINGTON) -- A payroll tax cut has emerged this week as a possible way for Washington to seek to spur hiring, as concerns about the sluggish economy are impacting deficit reduction talks between the White House and congressional leaders.

But even some staunch supporters of lower taxes say this is a dangerous idea, since it would take even more revenue away from the federal government at a time of spiraling deficits and debt.

On ABC’s Top Line Thursday, Sen. Ron Johnson, R-Wis. -- who spent more than three decades in manufacturing before being elected to Congress last year with Tea Party support -- said it would be a mistake to lower the payroll tax paid by businesses.

“I would love to be talking tax decreases -- I mean I really would -- but right now we've got to focus on providing the structural reform for entitlement programs and just [spending] caps, to discipline Washington once and for all,” Johnson told ABC News.

Asked whether a payroll tax cut would make the deficit worse, Johnston said,: “Unfortunately, I think it would.”

“Let's face it: part of the problem is the entitlement programs that are simply unsustainable. So we've got to provide structural reform,” Johnson continued. “As unfortunate as it is that we can't be talking about tax decreases to spur the economy, the fact of the matter is they use Keynesian economics. They indebted us to another $2.4 trillion these past three years. Total employment's down since when that program started. It hasn't worked. It just hasn't worked. We've dug ourselves such a deep hole.”

Copyright 2011 ABC News Radio

Tuesday
May242011

Small Business, Trade Groups Push for Repeal of Health Insurance Fee

PhotoAlto/Frederic Cirou(WASHINGTON) -- A coalition of small business groups and trade associations have launched a campaign calling for the repeal of a provision in the health care law that they say will sharply escalate costs for small companies.

The group is opposing an annual fee that health insurance providers have to pay under the Affordable Care Act, starting in 2014. The fee, which is based on the provider’s net premiums, is one of the chief ways the federal government will generate revenue from the new law.

The Congressional Budget Office estimates it would rake in $8 billion in 2014 and $14.3 billion in 2018 and revenues would rise subsequently every year. But the coalition argues that the fee will be passed on to small businesses, in turn increasing their costs.

“This tax will be almost entirely passed on to consumers in the fully insured marketplace, where nearly all small businesses and the self-employed purchase their coverage,” states a fact sheet by the group. “This new tax on small business will raise insurance costs for already struggling small businesses and is contrary to the goals of health care reform.”

The coalition, which includes lobbying heavyweights like the U.S. Chamber of Commerce, the National Small Business Association and the American Farm Bureau Federation, is already garnering some attention on Capitol Hill.

On Monday, Sen. Jon Kyl, R-Ariz., introduced a Small Business Health Relief Act that would eliminate this fee on insurance companies. In the House, the group has found support in Rep. Charles Boustany, R-La., who introduced similar legislation in his chamber.

A spokesperson for the group said outreach to members of Congress is an important part of the campaign, but the coalition will also engage its members on a grassroots level. It also plans to use targeted advertising to get its message across, though the group would not provide specifics.

Copyright 2011 ABC News Radio

Tuesday
May242011

Billions in Stimulus Funds Paid to Tax Delinquent Contractors

ABC News(WASHINGTON) -- Critics of the $800 billion in taxpayer money that made up the Obama administration's so-called stimulus package have more ammunition, as it has been revealed the federal government awarded $24 billion in Recovery Act funds to contractors and vendors who owe hundreds of millions in unpaid taxes. This, according to a new Government Accountability Office (GAO) report.

The nonpartisan watchdog agency reported Tuesday that at least 3,700 recipients owed more than $750 million combined in unpaid federal taxes as of Sept. 30, 2009.  They represent 5 percent of all recipients of the so-called stimulus funds.

"For many years now, we've known that a small percentage of federal contractors and grantees who get paid with taxpayer dollars shirk their responsibility to pay their taxes," said Democratic Sen. Carl Levin of Michigan. "Now the executive branch should get on with it and actually debar the worst of the tax cheats from the contractor workforce."

Levin, who chairs the Senate Permanent Investigations Committee, was to hold a hearing on the report Tuesday.

The GAO said their report likely underestimates the total amount of unpaid taxes owed by stimulus recipients.  Federal law does not require government agencies to check the tax compliance of prospective grantees.

When pushing for the Recovery Act, President Obama promised the taxpayers' money would be watched carefully, even deputizing Vice President Joe Biden with overseeing the stimulus operation, because, as Obama put it, "nobody messes with Joe."

Copyright 2011 ABC News Radio

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