Thursday, January 28, 2010


For those of you who missed the State of the Union Address Kelly Phillips Erb posts the text of the speech at TAX GIRL (click here).

So what did BO have to say in terms of taxes last night?

"I've proposed a fee on the biggest banks. Now, I know Wall Street isn't keen on this idea. But if these firms can afford to hand out big bonuses again, they can afford a modest fee to pay back the taxpayers who rescued them in their time of need."

Any fee will most likely be just passed along to bank customers. How about making bonuses in excess of a certain reasonable amount, or not paid out of current earnings and profits, non-deductible?

I'm also proposing a new small business tax credit -- one that will go to over one million small businesses who hire new workers or raise wages. While we're at it, let's also eliminate all capital gains taxes on small business investment, and provide a tax incentive for all large businesses and all small businesses to invest in new plants and equipment."

I have no objection to a “jobs credit”.

As for the comment “eliminate all capital gains taxes on small business investment” – this certainly raises a lot of questions. Do I understand BO correctly? Does he want to make the capital gains tax rate “0” regardless of level of income? Will this apply only to capital gains from “small business investment”? How will “small business investment” be defined? I thought BO wanted to increase the capital gains tax rate.
I certainly support lower rates for capital gains for all. As for eliminating the ta on certain capital gains - I actually have never given this idea any thought before.

To make college more affordable, this bill will finally end the unwarranted taxpayer subsidies that go to banks for student loans. Instead, let's take that money and give families a $10,000 tax credit for four years of college and increase Pell Grants. And let's tell another one million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years -- and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college."

Doesn’t the American Opportunity Credit already give taxpayers a $10,000 credit for four years of college (within AGI income limitations, of course)? The maximum credit it $2,500 and it is available for four years of college. I suppose he is talking about making it permanent.

I am against any debt forgiveness for student loan borrowings. Don’t charge any interest on the debt for the first 10 years if you want – but don’t forgive the debt altogether. Although I would consider some kind of debt forgiveness or other special treatment for those who enter “public service” and stay there for a required number of years.

To help working families, we will extend our middle-class tax cuts. But at a time of record deficits, we will not continue tax cuts for oil companies, investment fund managers, and those making over $250,000 a year. We just can’t afford it.”

So it appears that BO will support extending, or making permanent, the “Bush tax cuts” for those with income (AGI?) of less than $250,001, but will not do so for those with income (AGI?) of over $250,000. I am not against extending the “Bush tax cuts” for those under $250,001, or over $250,000 for that fact. Of course I would certainly prefer a total overhaul of the tax system to simplify the mucking fess – but I expect this is not to be - at least until the economy has been stabilized.


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