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April 18, 2015

Posts in "Taxes"

January 17, 2015

Obama Would End Death Tax Break for Wealthy to Fund Middle Class Tax Breaks, Programs

Obama has a new plan to raise taxes on capital gains for the wealthy as well as on the biggest banks. (Tom Williams/CQ Roll Call File Photo)

Obama has a new plan to eliminate a death tax break that benefits wealthy heirs to fund middle class tax breaks and other programs. (Tom Williams/CQ Roll Call File Photo)

President Barack Obama’s sweeping new tax proposal, detailed by senior administration officials Saturday, takes aim at the less-well-known death tax break.

The new wrinkle is part of a broader economic plan to be outlined by Obama in his State of the Union address Tuesday. He will propose eliminating a big tax break for wealthy heirs to fund new and expanded middle class tax cuts and other proposals such as his free community college initiative. The biggest banks would also face higher taxes.

The proposal is aimed squarely at income inequality but is likely to have a rough road among Republicans fresh off a triumphant midterm election.

“A key part of what he will be presenting on Tuesday night … is how do we make the system more fair by closing loopholes but then take the revenues from that and use that as ways to invest in the middle class,” a senior administration official said Saturday.

The tax provisions to be presented to Congress by Obama in his State of the Union address Tuesday would raise roughly $320 billion over the next decade.

Of course, Republicans are sure to criticize using tax increases of any sort to pay for new spending. But it remains to be seen whether some of the proposals could be part of negotiations over a larger tax overhaul Republicans insist must be revenue neutral.

About $210 billion in higher taxes would come from capital gains tax changes and $110 billion from a new 7 basis point fee on borrowing by financial institutions with greater than $50 billion worth of assets.

The money would be used to pay for, among other things, the proposal Obama unveiled in Tennessee to provide two years of community college free of charge to qualified students. That plan would cost the government about $60 billion over a decade.

Under the administration’s plan, the top capital gains tax rate would go back up to 28 percent, which is where it was when Ronald Reagan was in the White House, senior administration officials were quick to point out.

Perhaps the more intriguing change, though, is the proposed end of allowing the cost basis for assets to be “stepped-up” when they’re inherited, meaning potential capital gains tax dollars are never collected. Many mega-billionaires, such as Warren Buffett, for example, haven’t paid taxes on the bulk of their wealth because it is tied up in never-realized capital gains that will disappear — from a tax perspective — when they die.

“By letting very wealthy investors make their capital gains disappear at death, stepped-up basis creates strong ‘lock-in’ incentives to hold assets for generations, even when resources could be reinvested more productively elsewhere,” the White House said. “The proposal would sharply reduce these incentives, making it a pro-growth way to raise revenue.”

A senior administration official said the proposals come with exemptions designed to keep it from hitting the middle class with a new higher tax burden, including allowing a $500,000 exemption per couple for the transfer of a personal residence.

The administration says 99 percent of the revenue raised by raising the capital gains tax rate and ending the capital gains tax exclusion at death — what it dubs the “trust fund loophole” — would come from the top 1 percent wealthiest taxpayers. And 80 percent would come from the richest 0.1 percent. The administration says hundreds of billions of dollars in capital gains are sheltered from taxes each year via death.

Obama will also be asking Congress for new or expanded tax credits, including an increase in the Earned Income Tax Credits for people without children and a new $500 credit for families with two income-earners, which the administration estimates would be a benefit to 24 million couples.

And it would triple the child care tax credit to up to $3,000 per child under 5, which the White House said would benefit about 5.1 million families and 6.7 million children.

There’s also going to be a proposal to provide for automatic enrollment in individual retirement accounts and to require employers let many longer-tenured part-time workers buy into company-sponsored retirement plans. In a fact sheet, the White House said it would propose offsetting the retirement changes and accompanying tax credits for employers by curbing tax-preferred retirement plans that accumulate a sum that works out to roughly $3.4 million.

“Tax-preferred retirement plans are intended to help working families save for retirement. But loopholes in the tax system have let some wealthy individuals convert tax-preferred retirement accounts into tax shelters, including 300 extraordinarily wealthy individuals who have accumulated more than $25 million each in IRAs,” the White House said.

A number of the proposals Obama’s expected to outline Tuesday are said to be modeled on efforts with Republican supporters. The administration has cited, among others, House Republican Conference Chairwoman Cathy McMorris Rodgers of Washington and Ways and Means Chairman Paul D. Ryan of Wisconsin — and yes, even the Heritage Foundation.

While much should be clear by the end of the State of the Union, granular details of the president’s plans are likely to appear where they always do: when the Office of Management and Budget releases the budget request for the next fiscal year on Feb. 2.

As for the State of the Union, it’s clear the new proposals and the willingness to talk about new revenues are tied to what Obama sees as progress on the economy.

“He is very optimistic about America’s future, he’s very optimistic about potential for how well our economy has done and potential for the economy to grow, and that will be reflected in the speech, and then he will have the specifics that he thinks  — the choices that we need to make to make sure that extends to the middle class,” the official said.

Obama and others in his administration have been unusually eager to talk about the domestic policy proposals that he will highlight during Tuesday evening’s State of the Union address, as part of an effort that was made public shortly before the president left Hawaii.

A senior administration official called the advance rollout that’s featured some presidential barnstorming “probably a clearer way for the president to present his vision” but cautioned against the idea that the potential for fewer surprises might mean a significantly shorter presentation to assembled members of the House and Senate.

“It’ll be a healthy speech still in terms of breadth and length,” the official said.

And Obama still plans the more traditional post-State of the Union travel, too. Press Secretary Josh Earnest said late Friday that the president would be traveling to Boise State University and the University of Kansas in the days after the Tuesday evening speech at the Capitol.

Steven T. Dennis contributed to this report.

 

Related: 

Obama, GOP Clash Ahead of Speech

Joke, Flatter, Dig In: Handling Post-Shellacking SOTUs

The Updated Staffer Guide for SOTU

A Guide to SOTU Watch Parties

D.C. Mayor to Attend SOTU

The 114th: CQ Roll Call’s Guide to the New Congress

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December 3, 2014

‘Looser’ Obama Riffs on Taxes, Trade, Regulations, Immigration, GOP

From left: Deutsche Bank Chief executive Jacques Brand, President and CEO of Convergys Andrea Ayers, President and CEO of Dell Michael Dell (3L), listen to U.S. President Barack Obama at the quarterly meeting of the Business Roundtable. (Getty Images News)

From left: Deutsche Bank Chief executive Jacques Brand, President and CEO of Convergys Andrea Ayers, President and CEO of Dell Michael Dell, listen to President Barack Obama at the quarterly meeting of the Business Roundtable. (Getty Images News)

President Barack Obama is starting to open up, six years into the job.

“You get a little looser in your last two years in office,” he told CEOs at a meeting with the Business Roundtable.

Indeed, the remark itself would never have been made public under the old White House policy of kicking out the press for the all-important Q&As the president regularly has with business leaders and donors. Full story

November 25, 2014

Obama Would Veto Corporate Tax Cut Bill (Updated)

Obama would veto a $450 billion tax cut bill tax extenders

Obama would veto a $450 billion tax cut bill. (Bill Clark/CQ Roll Call File Photo)

Updated 5:37 p.m. | President Barack Obama would veto an emerging $450 billion tax cut deal coming together in the Senate because it doesn’t do enough for the middle class, according to the White House.

“The President would veto the proposed deal because it would provide permanent tax breaks to help well-connected corporations while neglecting working families,” said Jen Friedman, deputy White House press secretary.

The emerging package of tax cuts negotiated by top Democrats and Republicans would extend an array of mostly business tax breaks — some permanently — while some of the president’s priorities would be left on the cutting room floor.

The package includes the research and development break and is expected to revive a slew of other provisions that benefit corporate interests, including NASCAR, film producers and the owners of racehorses.

The so-called “tax extenders” package has been in the works for months, after most of the provisions expired in January. Democrats negotiated to add some of their preferred tax cuts, including a tax subsidy for mass transit and the deductibility of sales taxes, but other provisions, like an enhanced Earned Income Tax Credit, would expire. Full story

November 24, 2014

Obama Wants Middle Class Aid Before Corporate Tax Breaks (Updated)

Democrats repeatedly harped about programs to help the middle class in the run-up to the midterm elections. (Tom Williams/CQ Roll Call File Photo)

Democrats repeatedly harped about programs to help the middle class in the run-up to the midterm elections. (Tom Williams/CQ Roll Call File Photo)

Updated 5:10 p.m. | Corporate tax lobbyists hoping for a holiday treat from Congress may get a lump of coal from President Barack Obama.

White House Press Secretary Josh Earnest said Monday the president would “strongly oppose” a package of corporate tax cut extenders without doing something for the middle class.

“I can tell you that the reports are not promising,” Earnest said. “The reports suggest that there may be some in Congress who want to provide tax relief to businesses and to corporate insiders but not ensuring that … those benefits are shared by middle-class families.

“So certainly the administration would not be supportive of a package that provided relief to corporations without providing relief to middle-class families.

Full story

May 13, 2014

White House Stops Short of Veto Threat on Tax Extenders Bill (Video)

Obama wants the Senate's tax extenders bill amended so it doesn't add to the deficit, but hasn't threatened to veto it. He also hasn't demanded an unemployment extension

Obama wants the Senate’s tax extenders bill to be amended so that it doesn’t add to the deficit, but hasn’t threatened to veto it. (Tom Williams/CQ Roll Call File Photo)

The White House wants the Senate’s $85 billion tax extenders bill amended so that it does not add to the deficit, but stopped short of issuing a veto threat Tuesday.

“The Administration supports the extension of many of the tax provisions in the Senate bill, such as those that support America’s small businesses, help unemployed veterans find jobs, and promote clean energy production and research and development,” said Bobby Whithorne, a spokesman for the White House. “The President in his budget has put forward a way to pay for these tax provisions so they don’t add to the deficit and hopes that as legislation moves forward, Congress will offset their cost by closing tax loopholes.”

Whithorne’s statement, however, does not include a threat to veto the bill — either over the deficit or the lack of an unemployment extension — another priority for the White House.

Full story

May 9, 2014

Will Obama Threaten to Veto Senate’s Tax-Cut Bill?

tax cut bill veto unemployment extension

Obama is against a tax extenders package that is not paid for and has criticized the House for not passing an unemployment extension. (Tom Williams/CQ Roll Call File Photo)

Defying the White House and a yearslong push for more revenue, Senate Democrats are on the verge of passing an $85 billion grab bag of tax cuts with no plans to pay for them.

The question now is whether President Barack Obama will stick to his guns and threaten to veto the bill — picking an intraparty fight in an election year with control of the Senate at stake.

Ask a liberal Senate Democrat about the deficit-financed “tax extenders” package headed for the floor next week, and you’re likely to hear a refrain that could have been uttered by a Republican — some tax cuts shouldn’t have to be paid for because they pay for themselves. Or extending an expired tax cut shouldn’t count — never mind those pesky pay-as-you-go rules.

But the White House’s budget proposed a corporate tax package that would generate revenue to help pay for its transportation bill, not another tax cut that would inflate the deficit.

“Our position remains unchanged and we continue to believe the extenders should be paid for,” an administration official told CQ Roll Call.

(Update 5/13: The White House declined to issue a veto threat on the bill.)

The administration hasn’t yet threatened a veto of the Senate measure, but the Office of Management and Budget issued a sternly worded veto threat over the House GOP’s tax extender bill resurrecting the research and development tax credit and making it permanent, at a cost of $156 billion over the coming decade. Some 62 House Democrats defied their leaders and the president’s veto threat to help pass the bill Friday with a potentially veto-proof majority.

It’s not the tax break Obama opposes — his budget would revive it too. It’s the not-paying-for-it part. Full story

May 6, 2014

Obama Threatens Tax Cut Veto as Unemployment Extension Languishes

The White House threatened to veto a new $156 billion corporate tax cut proposed by House Republicans, noting the same group has refused to act on an unemployment extension.

The bill would permanently extend the research and development tax credit without paying for it — adding to the deficit. As the White House Office of Management and Budget noted in a Statement of Administration Policy on Tuesday, it doesn’t even comport with the budget resolution the House passed just last month.

President Barack Obama supports extending the credit, but wants to offset the cost by ending other corporate tax breaks instead.

“The deficit increase in H.R. 4438 is more than fifteen times the cost of the proposed extension of emergency unemployment benefits, which Republicans are insisting be offset,” the statement noted. Full story

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