Its a rare occurrence when Democrats and Republicans agree on an issue. But on the issue of a particular Obama health care tax requirement, both sides agree that it could hurt businesses.

As reported by CBS News, Republicans in the Senate want to repeal a part of President Obama’s health care reforms they say place undue burden on businesses — and so do, apparently, Democrats.

Senate Democrats, led by Florida Sen. Bill Nelson, introduced on Thursday a measure to roll back a provision of the health care reforms that requires businesses to fill out more tax forms, the Hill reports.

Republicans had already introduced a plan to repeal the provision, and the measure was gaining support — including the support of one Democrat, moderate Sen. Blanche Lincoln of Arkansas.

The provision in question requires businesses to fill out a 1099 form with the IRS once the goods it purchases from another business in the span of a year exceed $600. It does not create a new tax, but simply requiring businesses to fill out the paperwork would generate approximately $17 billion over 10 years, the nonpartisan Congressional Budge Office estimates.

Senate Minority Leader Mitch McConnell said this week the provision would create “an enormous amount of paperwork and complexity” for businesses, the Hill reports. Republicans are pointing to the new requirement as an example of how the president’s policies hurt business.

Given that repealing the provision would leave the government $17 billion short, the Republican proposal would cut billions of dollars in preventive health care services, according to the Hill.

By contrast, the Democratic proposal would scale back the filing requirement — only requiring businesses with more than 25 employees to fill out a 1099 after purchasing $5,000 worth of goods. To make up for the lost revenue, the Democratic measure would reportedly eliminate a tax break for large oil companies.

The Senate is slated to take a procedural vote on the Republican bill on Sept. 14, according to the Hill, and subsequently take up the Democratic alternative as an amendment.

Both Democrats and Republicans in the House also want to repeal the provision, but they failed to pass a bill to do so last week, because of differences of opinion over how to make up for the $17 billion lost.

Meanwhile, some states continue to challenge more significant portions of the health care reforms, such as the individual mandate — the requirement that all Americans acquire health care. A district judge this week denied the White House’s request to dismiss a lawsuit against the requirement. The Virginia General Assembly passed legislation this year exempting state residents from the federal coverage mandate, and the Virginia Attorney General filed suit against the federal law. Several other state attorneys general have filed a separate lawsuit challenging the federal law.

Former Vermont Gov. Howard Dean, a longtime liberal advocate for health care reform, predicted on MSNBC today that the individual mandate would be taken off the law books by 2014, when most of the reforms will be in place.

“Academically you want a mandate. The American people aren’t going to put up with a mandate,” Dean said. “I made this prediction before and I’m going to make it again: by the time this thing goes into effect in 2014, I think the mandate will be gone either through the courts or because it’s unpopular. You don’t need it.”

Even in the rare instance when both parties agree on a measure, they fail in passing it into law.

For once, can the House and Senate put politics aside and do the right thing?

source: cbs.com

President Obama and his administration are seeking almost a $1 trillion tax increase over the next decade on US taxpayers earning more than $200,000. He also wants to take an additional $400 billion from businesses even as it retools a proposed crackdown on international tax-avoidance techniques; according to a Feb 2, 2010 Business Week article.

Believe it or not, the Obama income tax proposal would actually reinstate income tax rates enacted by former President Bush 10 years ago. The income tax rates for single Americans making over $200,000 or joint filers earning more than $250,000 would increase to 36% and 39.6% respectfully. The plan also calls for eliminating preferences for oil and gas companies, life-insurance products, executives of investment partnerships and U.S.-based companies that operate overseas.

“This set of tax reforms strikes a balance between targeted tax cuts to spur investments in job growth and innovation here at home, middle-class tax relief to make our tax system more fair, measures to crack down on abuses that send jobs overseas, and long-term fiscal discipline,” Treasury Secretary Timothy F. Geithner said in a statement.

Obama’s proposed $143.4 billion in new tax cuts for individuals who earn under $200,000. While the budget sets out $93.5 billion in gross tax reductions for businesses, overall they would face a net tax increase.

“The proposed budget’s $300 billion in tax relief over the next 10 years for individuals, families, and businesses is mostly targeted and limited, often to people who don’t have to pay any taxes,” said Senator Charles Grassley of Iowa, the ranking Republican on the tax-writing Senate Finance Committee. “The tax increases in the budget dwarf the tax relief.”

President Obama asked Congress to extend all of Bush’s tax cuts that apply to Americans earning under $250,000. He also proposes almost doubling a tax credit that helps Americans pay for child care and increasing federal subsidies for Individual Retirement Accounts.

The budget assumes the federal estate tax, which expired Jan. 1 and was replaced with a capital-gains tax, will be reinstated retroactively with a 45 percent rate applied when married couples’ estates exceed $7 million. If Congress doesn’t act, the estate tax in 2011 will be reinstated to a 55 percent rate applied to estates valued at more than $1 million.

Obama’s budget also assumes Congress will continue to index the alternative minimum tax for inflation. The minimum tax can impose higher rates on families earning between $75,000 and $500,000 when their deductions are too high relative to their income. It was originally intended to affect only millionaires and is now ensnaring people with lower incomes because it was never indexed for inflation.

The Obama tax budget proposal will most certainly face opposition from Congress.  This proposal will also be opposed by the influential and wealthy US taxpayers.  Is Obama’s tax proposal political hari-kari?

source: businessweek.com

Get ready for some more bad economic news today. The Obama administration is expected to increase its estimate of the federal deficit over the next ten years by $2 Trillion, a move that will stir political debate and create more economic uncertainty.

The White House’s Office of Management and Budget is expected to forecast $9 trillion in deficits over the next decade, up from a $7 trillion estimate earlier this year.  The increase is largely due to lower-than-expected tax revenues as a result of the recession.

This tax revenue decrease, combined with federal spending on the bank bailout ($700 billion) and the Obama stimulus package ($787 billion) are the main reasons for the enormous deficit.

But government spending is expected to continue with more than $100 billion on unemployment compensation this year.  And if Obama’s proposal to provide health care coverage for more than 47 million uninsured Americans is approved, expect another $1
Trillion over the next 10 years.
sources: google.com, Associated Press, Wall Street Journal