By a vote of 241-181, the House on Wednesday sent the Senate a bill (HR 4213) to extend through 2010 a $31 billion package of temporary tax credits and other fiscal incentives that benefit a multitude of U.S. businesses, farms, units of government, schools, charities, individuals, nonprofit organizations, religious institutions and other recipients.

The bill uses two measures to pay for itself. One would tax the earnings of hedge-fund managers and certain investment partners as ordinary income rather than capital gains. The other would increase Treasury receipts by cracking down on wealthy Americans who use secret overseas bank accounts to evade taxes.

• A sales tax deduction that mainly benefits people who live in the nine states without a state income tax. The states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington and Wyoming. Cost: $1.8 billion.
• An additional standard deduction for state and local property taxes for taxpayers who don’t itemize their deductions. Cost: $1.5 billion
• A deduction of up to $4,000 for college tuition and related expenses. Cost: $1.5 billion.
• A deduction of up to $250 for teachers who spend their own money for books and other classroom supplies. Cost: $228 million.
• A credit that helps businesses finance research and development. Cost: $7 billion.
• Accelerated depreciation for improvements made to leased restaurant and retail property. Cost: $5.4 billion.
• Additional depreciation allowance for businesses that suffer damage from a federally-declared disaster. Cost: $1.4 billion.

Do you know how your state member of Congress voted on this issue of tax break extensions in 2010? Do you know the true tax facts about these bills?

You should!

Source: corsicanadailysun.com, seattletimes.nwsource.com

President Obama has proposed creating a tax incentive for small businesses that hire new employees even as Congress tries to figure out how such a deal would work.

There is no question that creating a tax incentive for small businesses that hire workers or increase payroll would help the economy.

Lawmakers on Capitol Hill have been working for months on ways to develop small business tax incentives and give small businesses tax help in a way that it won’t be abused.

Obama and Congress have both been vague on how the tax break would work and how it would be administered.

“I believe it’s worthwhile to create a tax incentive to encourage small businesses to add and keep employees and I’m going to work with Congress to pass one,” Obama said.

With the 2009 year ending, Congress is running out of time to pass a jobs package this year, and the process will be even more complicated if the administration doesn’t come up with details. Moreover, the Senate is preoccupied with the health care debate, making any action less likely.

The Obama administration is expected to propose extensions and enhancements tax credits and tax breaks that were part of the federal economic stimulus package passed in early 2008.

Obama also proposed eliminating capital gains taxes on small business stock, if it is purchased in 2010 and held for at least five years, expanding a tax break enacted in the stimulus package.

While Obama and the Democrats focus on health care reform, Republicans believe the focus should be on getting Americans back to work. Unemployment rates currently stand at 10 percent.

Tax experts ponder how a small business tax break for hiring working would work. Do you give a tax break just for hiring more employees, or do companies have to simply increase payroll? How long do the companies keep the workers? How do you enforce the requirements?

“You’re trying to subsidize people for doing things they wouldn’t otherwise do, but we don’t know what they would otherwise do,” said Eugene Steuerle, a Treasury Department official in the Reagan administration who is now co-director of the Tax Policy Center, a Washington think tank.

John H. Bishop, an economist and a professor at Cornell University, has a proposal for extend tax credits to companies that increase payroll subject to Social Security taxes. Since only the first $108,600 of a worker’s pay is subject to Social Security taxes, executives couldn’t get the credit by giving themselves big bonuses, he said.

Bishop’s small business tax credit proposal would help the economy if companies either raise the pay of existing workers or hire new workers. Bishop’s proposal, modeled after a similar tax credit enacted in the 1970s, has been circulating on Capitol Hill for several months.

“It does exactly what we want,” Bishop said. “It focuses on hiring Americans to work now.”

source: The Associated Press 2009

Can you afford a new car this year? If you can, you will get a tax break on the sale tax and interest payments on the vehicle.

Yesterday, February 3, 2009, the Senate approved the measure by a 71-26 margin. President Obama signaled opposition to congressional attempts to insert “buy American” provisions into the legislation, saying in one of a series of television interviews that “we can’t send a protectionist message.”

New car buyers will be able to claim an income tax deduction for sales taxes paid on new autos and interest payments on car loans. Estimates are car buyers would save $1,500 on the purchase of a $25,000 vehicle.

The measure is an attempt to get car buyers back into the showroom. The jury is out on whether it will be enough to lure Americans back.

Charles Rangel, the chariman of the House Ways and Means Committee, helped  preserve a lucrative off-shore tax loophole for an oil drilling executive. This issue has prompted the House ethics committe to expand the inquiry on the matter.

Rangel is a powerful New York Democrat who insists the charges are false. But is it just coincidence that the businessman linked to the scandal pledged $1 million for a planned Charles B. Rangel Center for Public Service at the City College of New York?

Beyond suspicions about the offshore tax loophole worth tens of millions, the panel must look into Mr. Rangel’s use of congressional letterhead to solicit support for his eponymous center. Then there’s his use of rent-stabilized apartments in Harlem at cut rates and his failure to pay taxes and disclose $75,000 in income from a Dominican villa on which he enjoyed an interest-free mortgage.

The ramifications are great. It could lead to Rangel giving up his chairmanship while the investigation proceeds.  House speaker Nancy Pelosi is in a tough position - she needs to act on the matter on this Democratic party member.  She needs to urge Rangel to step down.  If he doesn’t, she needs to remove him.

Ethics violations by a public servant in such a high position cannot be tolerated.  His power in making decisions regarding huge fiscal and tax issues means there can be no doubts about the leadership’s priorities.