Thursday, January 22, 2009

AS THE CONGRESS TURNS

I reported on the Democrat’s “stimulus” package, but missed the Republican version - the Economic Recovery and Middle-Class Tax Relief Act (HR 470) – which was introduced on January 13.

According to a post by Congressman Scott Garrett at THE RIDGEWOOD BLOG tax provisions contained in the Republican proposal include:

1. 5% across the board reduction to individual income tax rates
2. Repeal the Alternative Minimum Tax for individuals
3. No increase in capital gains and dividends tax rates for individuals
4. Increase the child tax credit from $1,000 to $5,000, but it is not refundable
5. Permanently repeal the 70.5 distribution requirement on IRAs
6. Increase the tax deduction for student loans from $2,500 to $3,750 and increase income limits up to $75,000 for individuals and $150,000 for families with no phase out
7. Increase the tax deduction for qualified higher education expenses from $4,000 to $6,000 and increase income limits up to $75,000 for individuals and $150,000 for families with no phase out
8. Temporarily make all withdrawals from IRAs not subject to taxation or penalties for 2009
9. Reduce the corporate income tax rate to 25%
10. Reduce the alternative capital gains rate for corporations to 15%
11. Index capital gains for inflation
12. Repeal limitations on expensing allowance (Sec. 179) of depreciable business assets
13. Make the R&D tax credit permanent
14. Extend the two-year “carryback” period for net operating losses to seven years
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My two cents -
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* A big two thumbs up to #s 2 and 3.
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* I have no problem with 1, 6, 7, 8, 10, and 13.
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* I think $5,000 is too much in #4, but I am glad to see that any increase would not be refundable.
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* I don’t think the repeal should be permanent, although I would support increasing the age re: #5.
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* I would rather see the creation of a “dividends paid deduction” re: #9.
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* I am not quite sure how #11 would work. I would strongly favor the $3,000 maximum net capital loss deduction be increased and perhaps indexed for inflation.
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* I would rather see a total overhaul of the depreciation deduction re: #12.
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* Maybe 5 years re: #14.
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What thrills me most about this proposal is – NO REFUNDABLE CREDITS!
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So what do you think?

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