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Thread: Democrats' tax bill moves toward vote in US Senate

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    Democrats' tax bill moves toward vote in US Senate

    Quote Originally Posted by Reuters

    June 14 (Reuters) - A Democratic plan to extend benefits for the jobless that would also more than double the tax rate for investment fund managers will likely get its first test on Wednesday in the U.S. Senate.

    Majority Leader Harry Reid on Monday moved toward an initial vote on a $126 billion bill to extend unemployment insurance that ran out last month for hundreds of thousands of out-of-work Americans and renew a set of popular business tax breaks.

    Under Senate rules, the vote on whether to limit debate on the legislation will likely occur Wednesday. Sixty votes are needed out of the 100-member Senate.
    ...

    Over the next 10 years, the Senate proposal would increase direct spending by $126 billion and add $22 billion in funding to prevent a 21 percent payment cut to doctors in the Medicare program, the Congressional Budget Office estimated.

    The total package adds about $80 billion to the deficit over that period, according to CBO.
    ...

    The Senate version would tax 65 percent of fund managers' income at the higher rate. A tougher House version would tax 75 percent at ordinary income rates.

    Currently, they only pay a 15 percent capital gains tax rate on this income, while ordinary income is taxed at a maximum of 35 percent. The top tax rate is set to rise to 39.6 percent in 2011, the year this legislation would take effect.

    Republicans have offered a stripped-down alternative that would extend unemployment insurance for 30 days, but excludes the controversial tax-raising provisions. It also excludes a provision extending tax-exempt Build America Bonds, created in the stimulus plan last year.
    Note: Bolded area's are my emphasis.

    First, this is the famed "doc fix" President Obama has been asking for. This will:
    1. Increase the deficit spending
    2. Raise the highest tax rate from 35% to 39.6%
    3. Will affect a majority of fund managers (ie. Wall Street) and increase capital gains taxes (ie. Populist "tax the rich")
    4. Prevents a 21% payment cut to doctors payments to Medicare (Medicare which is approaching insolvency)
    5. Will extend healthcare insurance to out of work Americans (think COBRA) by using the higher taxes to fund said insurance

    Questions:

    - Is extending benefits the answer or is creating "jobs" what's being lost in this bill?
    - Is this plan of "taxing the rich" going to further jobless rates or make the unemployed even more dependent on government?
    - What is the exit strategy for the Federal budget, the unsustainable deficit and how does this bill help stop the U.S. from fiscally driving off the cliff?

    Are we losing sight of the trees through the forest?
    Last edited by Ockham; 06-15-10 at 09:58 AM.
    “I think if Thomas Jefferson were looking down, the author of the Bill of Rights, on what’s being proposed here, he’d agree with it. He would agree that the First Amendment cannot be absolute.” - Chuck Schumer (D). Yet, Madison and Mason wrote the Bill of Rights, according to Sheila Jackson Lee, 400 years ago. Yup, it's a fact.


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    Re: Democrats' tax bill moves toward vote in US Senate

    Quote Originally Posted by Ockham View Post

    Questions:

    - Is extending benefits the answer or is creating "jobs" what's being lost in this bill?
    Extending benefits is not the answer no doubt the only reason the business tax breaks are in the bill is to get Republicans and Blue Dogs on board.

    - Is this plan of "taxing the rich" going to further jobless rates or make the unemployed even more dependent on government?
    Both, people who get crushed by high taxes are going to find ways to avoid them one way or another and when the unemployed who see the benefits being extended again will lose the drive to find work since this has become a trend that the Federal Government will just extend the benefits once they run out.

    - What is the exit strategy for the Federal budget, the unsustainable deficit and how does this bill help stop the U.S. from fiscally driving off the cliff?
    Their is no exit strategy, they'll just ignore it like they do everything else.

    Are we losing sight of the trees through the forest?
    We as a people no but our politicians wont even acknowledge that they're in the forest.
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    Re: Democrats' tax bill moves toward vote in US Senate

    Overall, this legislation would override a very modest cost-saving mechanism that exists within Medicare. In doing so, it would establish yet another precedent against prospects for fiscal discipline, both as it relates to the recently-enacted health care law (and its limited cost-saving provisions) and, much more importantly, the far larger fiscal challenges facing the U.S.

    In terms of the fund managers' situation, I favor consistency in tax treatment. If the legislation treats capital gains on fund holdings as ordinary income, that would be deeply disturbing. If, however, the legislation would treat wages and salaries paid to fund managers as ordinary income, that would merely make the tax treatment of their wages and salaries consistent with that of others' wages and salaries. There is no compelling reason that, for example, wages and salaries earned by, let's say auto workers should constitute ordinary income while those earned by IT programmers should be treated in a preferential fashion. Salaries and wages are compensation for services rendered. Tax treatment for such compensation should be consistent across industries and professions.

    In short, capital appreciation on fund assets should be treated as capital gains income. If fund managers invested their own capital into the funds, the returns on that invested capital should also be treated as capital gains. If, however, fund managers are merely receiving wages and salaries for their services, those wages and salaries should be taxed in a fashion consistent with wages and salaries for all other professions.

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    Re: Democrats' tax bill moves toward vote in US Senate

    So in other words, this bill suggests that we should apply for a Discover card, to pay for the maxed-out Amex card's monthly interest payments, which pays the maxed-out MasterCard's monthly interest payments, which pays the maxed-out Visa monthly interest payments.

    Our government follows the same financial plan as your typical stripper "paying her way through college."

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    Re: Democrats' tax bill moves toward vote in US Senate

    Given the state of our country fiscally and politically - I do not see this bill being passed. If it does pass (and I'm not surprised very often) I'll be surprised.
    “I think if Thomas Jefferson were looking down, the author of the Bill of Rights, on what’s being proposed here, he’d agree with it. He would agree that the First Amendment cannot be absolute.” - Chuck Schumer (D). Yet, Madison and Mason wrote the Bill of Rights, according to Sheila Jackson Lee, 400 years ago. Yup, it's a fact.


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    Re: Democrats' tax bill moves toward vote in US Senate

    Quote Originally Posted by donsutherland1 View Post
    Overall, this legislation would override a very modest cost-saving mechanism that exists within Medicare. In doing so, it would establish yet another precedent against prospects for fiscal discipline, both as it relates to the recently-enacted health care law (and its limited cost-saving provisions) and, much more importantly, the far larger fiscal challenges facing the U.S.

    In terms of the fund managers' situation, I favor consistency in tax treatment. If the legislation treats capital gains on fund holdings as ordinary income, that would be deeply disturbing. If, however, the legislation would treat wages and salaries paid to fund managers as ordinary income, that would merely make the tax treatment of their wages and salaries consistent with that of others' wages and salaries. There is no compelling reason that, for example, wages and salaries earned by, let's say auto workers should constitute ordinary income while those earned by IT programmers should be treated in a preferential fashion. Salaries and wages are compensation for services rendered. Tax treatment for such compensation should be consistent across industries and professions.

    In short, capital appreciation on fund assets should be treated as capital gains income. If fund managers invested their own capital into the funds, the returns on that invested capital should also be treated as capital gains. If, however, fund managers are merely receiving wages and salaries for their services, those wages and salaries should be taxed in a fashion consistent with wages and salaries for all other professions.
    What?!...you work for the Administration?!!

    All I can say is, "FINALLY!! Another solution to once-and-for-all save our economy. You go, Dems!!!"

    Seriously though, does anyone really believe this economy is so bad off now that a little sensible and moderate supply-side style policy won't help it along far better? Jeesh...this is really getting ridiculous.
    Last edited by Telecaster; 06-15-10 at 04:04 PM.

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    Re: Democrats' tax bill moves toward vote in US Senate

    Quote Originally Posted by Telecaster View Post
    What?!...you work for the Administration?!!

    All I can say is, "FINALLY!! Another solution to once-and-for-all save our economy. You go, Dems!!!"

    Seriously though, does anyone really believe this economy is so bad off now that a little sensible and moderate supply-side style policy won't help it along far better? Jeesh...this is really getting ridiculous.
    FYI, I do not favor the bill. It is not budget neutral. Worse, it would establish a bad precedent that undermines the credibility of even limited mechanisms for containing costs. Such a precedent would not be helpful when it comes time for the more demanding task of fiscal consolidation that should, IMO, begin to be implemented starting in 2011 and then expanded to include mandatory spending reforms, among other provisions.

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    Re: Democrats' tax bill moves toward vote in US Senate

    Quote Originally Posted by donsutherland1 View Post
    FYI, I do not favor the bill. It is not budget neutral. Worse, it would establish a bad precedent that undermines the credibility of even limited mechanisms for containing costs. Such a precedent would not be helpful when it comes time for the more demanding task of fiscal consolidation that should, IMO, begin to be implemented starting in 2011 and then expanded to include mandatory spending reforms, among other provisions.
    Translation: Slippery slope, and I agree.
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    Re: Democrats' tax bill moves toward vote in US Senate

    Funny how the Bush administration establishes tax cuts that have an expiration date, but people claim that it's the Obama administration "raising" taxes.

    And as for capital gains, it's just a way for the wealthy to decrease their tax burden. A wealthy person can invest a much higher percentage of income, and have that income only subject to the 15% tax instead of the usual income tax level. The end result is the top-top-mega earners actually have their total tax liability as % of income go down. Our tax system becomes regressive at the top!
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    Re: Democrats' tax bill moves toward vote in US Senate

    Quote Originally Posted by Deuce View Post
    Funny how the Bush administration establishes tax cuts that have an expiration date, but people claim that it's the Obama administration "raising" taxes.
    Tax cuts were imposed to spur economic growth during the recession. It was expected that by now, the economy would have righted itself and the taxes could go back to the pre-recession levels they were during the 90's. Unfortunately, the housing market crash and the the bank bust ended that. The last thing the sputtering economy needs is for taxes to go up, so naturally that is exactly what Obama is going to allow to happen.


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