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

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.