House Battles Over Middle-Class Tax Fix
John Edwards arrives at a federal courthouse during the eighth day of jury deliberations in his trial on charges of campaign corruption in Greensboro, N.C., Wednesday, May 30, 2012. Edwards has pleaded not guilty to six counts related to campaign finance violations over nearly $1 million from two wealthy donors used to help hide the Democrat's pregnant mistress as he sought the White House in 2008. (AP Photo/Chuck Burton) / Chuck Burton
If lawmakers can't resolve a messy tax fight on Capitol Hill by the end of the year, it could end up costing millions of middle-income taxpayers as much as $2,000 when April 15th rolls around.
House Democrats have passed a bill that blocks the alternative minimum tax from spreading to middle income people. The tax was originally created back in 1969 to make sure very wealthy people don't duck their obligations to Uncle Sam with crafty deductions and tax breaks. But, because the tax never took inflation into account, every year it is set to affect more and more people.
Congress has been responding with a series of annual fixes, and that's what House Democrats did again today.
The White House and Republicans are less than thrilled by the $80 billion bill because it includes tax increases that will mainly ding investment fund managers. The White House says that would "undermine the competitiveness of U.S. businesses" on the international scene.
The 216-193 vote to "patch" the alternative minimum tax for a year sends the issue to the Senate, where its prospects are at best uncertain. Not one House Republican voted for it.
House Ways and Means Committee Chairman Charles Rangel, D-N.Y., last month outlined a plan to repeal the AMT, at a cost of $831 billion over 10 years, but acknowledged that action on his proposal is a long way off.
Friday's bill would extend AMT relief for one year, at a cost of about $51 billion. It includes another $30 billion in largely popular tax relief measures, including expanding the child tax credit, providing a property tax deduction to some 30 million families and extending a tax exemption for the combat pay of military personnel.
It extends several dozen targeted tax breaks due to expire at the end of the year, including a deduction for college tuition, a deduction for teachers' out-of-pocket expenses and deductions for residents of states that do not have income taxes. Others benefit winemakers, employers of Katrina victims, contributors to charities and state lawmakers.
The controversies come over some $80 billion in new tax revenues required under House Democratic rules that tax cuts or spending increases be offset so that the federal deficit does not grow.
The bill, said House Speaker Nancy Pelosi, will enable Congress "to plant a flag for fiscal responsibility."
The bill would bring in $25 billion over 10 years by taxing so-called "carried interest" as ordinary income. Critics say that it is unfair that private equity managers pay the 15 percent capital gains rate on profits from fees or services instead of the ordinary income tax rate of 35 percent for high earners.
Democrats argued that 23 million people in danger of getting hit by the AMT would be protected by tax changes affecting some 50,000 people earning carried interest.
But changing this tax rule, as well as others affecting corporate transactions, "would undermine the competitiveness of U.S. businesses in the global economy and could have adverse effects on the U.S. economy," the White House said in a statement warning of a presidential veto if the House bill clears Congress.
Some pro-business Democrats joined Republicans in expressing concern that the carried interest provision could hurt venture capital and real estate investors as well as hedge fund managers making hundreds of millions of dollars.
Senate Finance Committee Chairman Max Baucus, D-Mont., plans to put together what he says will be a fiscally responsible Senate version of the AMT after the House vote, but has not committed to any specific tax raisers. Under Senate filibuster rules, Republicans have the votes to kill any bill with tax increases.
"Congress can and must stop this middle class tax hike before Thanksgiving - without raising taxes," Senate Republican leader Mitch McConnell of Kentucky said Friday.
But Pelosi said that "we have an understanding with the Senate that this legislation, in order to go forward, must be paid for."
"Raising revenues takes political courage," said House Majority Leader Steny Hoyer, D-Md. "There is no courage whatsoever in plunging our country into debt, spending and not paying."
The Internal Revenue Service has warned that delays in passing an AMT fix bill, because of House-Senate differences or a presidential veto, could have immediate repercussions for next year's tax-filing season. The IRS says it is now preparing forms for next year and ambiguity about the fate of the AMT could delay processing of returns for as many as 50 million taxpayers and delay issuing of about $75 billion in refunds.
The White House also said language in the bill to terminate an IRS program farming out delinquency cases to private debt collectors would subject it to a veto.
The bill is H.R. 3996.
© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. House Democrats have passed a bill that blocks the alternative minimum tax from spreading to middle income people. The tax was originally created back in 1969 to make sure very wealthy people don't duck their obligations to Uncle Sam with crafty deductions and tax breaks. But, because the tax never took inflation into account, every year it is set to affect more and more people.
Congress has been responding with a series of annual fixes, and that's what House Democrats did again today.
The White House and Republicans are less than thrilled by the $80 billion bill because it includes tax increases that will mainly ding investment fund managers. The White House says that would "undermine the competitiveness of U.S. businesses" on the international scene.
The 216-193 vote to "patch" the alternative minimum tax for a year sends the issue to the Senate, where its prospects are at best uncertain. Not one House Republican voted for it.
House Ways and Means Committee Chairman Charles Rangel, D-N.Y., last month outlined a plan to repeal the AMT, at a cost of $831 billion over 10 years, but acknowledged that action on his proposal is a long way off.
Friday's bill would extend AMT relief for one year, at a cost of about $51 billion. It includes another $30 billion in largely popular tax relief measures, including expanding the child tax credit, providing a property tax deduction to some 30 million families and extending a tax exemption for the combat pay of military personnel.
It extends several dozen targeted tax breaks due to expire at the end of the year, including a deduction for college tuition, a deduction for teachers' out-of-pocket expenses and deductions for residents of states that do not have income taxes. Others benefit winemakers, employers of Katrina victims, contributors to charities and state lawmakers.
The controversies come over some $80 billion in new tax revenues required under House Democratic rules that tax cuts or spending increases be offset so that the federal deficit does not grow.
The bill, said House Speaker Nancy Pelosi, will enable Congress "to plant a flag for fiscal responsibility."
But anti-tax Republicans said the AMT was a mistake and thus offsets were unneeded. "What absolute lunacy," said Rep. David Dreier, R-Calif., "paying for a tax that was never intended."
The bill would bring in $25 billion over 10 years by taxing so-called "carried interest" as ordinary income. Critics say that it is unfair that private equity managers pay the 15 percent capital gains rate on profits from fees or services instead of the ordinary income tax rate of 35 percent for high earners.
Democrats argued that 23 million people in danger of getting hit by the AMT would be protected by tax changes affecting some 50,000 people earning carried interest.
But changing this tax rule, as well as others affecting corporate transactions, "would undermine the competitiveness of U.S. businesses in the global economy and could have adverse effects on the U.S. economy," the White House said in a statement warning of a presidential veto if the House bill clears Congress.
Some pro-business Democrats joined Republicans in expressing concern that the carried interest provision could hurt venture capital and real estate investors as well as hedge fund managers making hundreds of millions of dollars.
Senate Finance Committee Chairman Max Baucus, D-Mont., plans to put together what he says will be a fiscally responsible Senate version of the AMT after the House vote, but has not committed to any specific tax raisers. Under Senate filibuster rules, Republicans have the votes to kill any bill with tax increases.
"Congress can and must stop this middle class tax hike before Thanksgiving - without raising taxes," Senate Republican leader Mitch McConnell of Kentucky said Friday.
But Pelosi said that "we have an understanding with the Senate that this legislation, in order to go forward, must be paid for."
"Raising revenues takes political courage," said House Majority Leader Steny Hoyer, D-Md. "There is no courage whatsoever in plunging our country into debt, spending and not paying."
The Internal Revenue Service has warned that delays in passing an AMT fix bill, because of House-Senate differences or a presidential veto, could have immediate repercussions for next year's tax-filing season. The IRS says it is now preparing forms for next year and ambiguity about the fate of the AMT could delay processing of returns for as many as 50 million taxpayers and delay issuing of about $75 billion in refunds.
The White House also said language in the bill to terminate an IRS program farming out delinquency cases to private debt collectors would subject it to a veto.
The bill is H.R. 3996.
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I agree with Dr. Paul on the Social Security issue. Our nation''s promise to its seniors, once considered a sacred trust, has become little more than a tool for politicians to scare retirees while robbing them of their promised benefits to pay for militarization. Today, the Social Security system is both broke and broken. Those in the system are seeing their benefits dwindle due to higher taxes, increasing inflation, and irresponsible military spending. The proposed solutions, ranging from lower benefits to higher taxes to increasing the age of eligibility, are NOT solutions; they are betrayals. Imposing any tax on Social Security benefits is unfair and illogical. In Congress, Dr. Paul introduced the Senior Citizens Tax Elimination Act (H.R. 191), which repeals ALL taxes on Social Security benefits, to eliminate political theft of our seniors'' income and raise their standard of living. Solvency is the key to keeping our promise to our seniors, and he introduced the Social Security Preservation Act (H.R. 219) to ensure that money paid into the system is ONLY used for Social Security. Also, it is fundamentally unfair to give benefits to anyone who has not paid into the system. The Social Security for Americans Only Act (H.R. 190), which Ron Paul supported, ends the drain on Social Security caused by illegal aliens seeking the fruits of your labor. We must also address the widespread desire of younger workers to save for retirement on their own.
If he is elected President, Ron Paul will work to abolish the Federal Reserve System as well as the IRS, returning our country to the Gold Standard. He believes, as I do, that our current Income Tax System is unconstitutional, because it is a direct tax that is not equally apportioned as The Constitution requires. Whenever taxes are raised by the federal government, it should be done as The Constitution does require--in an indirect way, which is equally apportioned. This system would benefit all of us, creating more individual wealth, and allowing us to make more decisions for ourselves about our lives. As President, Ron Paul will also work to abolish the Federal Reserve, a group of private banks, run by unelected officials, which loans our government unbacked money which they are allowed to essentially print out of thin air, making each dollar in your pocket worth less all the time, and increasing our national debt to these banks. Worse still. Most of our debt is owned by China (25%) and Saudi Arabia who finance our runaway military spending overseas. This is a threat to our nation. We need to bring our troops home from overseas, and use the trillions we would save thereby to reduce our debt, and to re-invigorate our currency. We can use this money to ensure that Social Security and other essential programs will still be solvent in the future. Vote for Ron Paul. He''s published three books on the topic of sound economics. ronpaullibrary.org
Federal Reserve Chairman Ben Bernanke appeared before the Congressional Joint Economic Committee Member, Congressman Ron Paul on November 8th, and had to face some tough criticism from Paul concerning the fact that the Fed has been increasing the money supply while at the same time refusing to raise the Prime Interest Rate in order to curb deflation. Paul accused the Federal Reserve of "robbery," telling Bernanke, "There''s a dollar crisis out there and people''s money is being stolen," Paul said. "People who have saved, they''re being robbed. I mean, if you have a devaluation of the dollar at 10 percent, people have been robbed of 10 percent." Federal Reserve Chairman Ben Bernanke attempted to dispel that notion by explaining, "If somebody has their wealth in dollars and they''re going to buy consumer goods in dollars, then the only effect it has on their buying power is that it makes imported goods more expensive." Paul disagreed, reminding Bernanke, "Yeah, but not if you''re elderly and you have your wealth in CDs. Their cost of living is going-up no matter what your CPI says," adding finally, "Their cost of living is going up, and they''re hurting. And that''s why the people of this country are very upset."
Congressman, Paul never votes for any Bill which he feels is not authorized by The Constitution, regardless of what it might be named. He feels most Laws should be made at the local or State level: the way our Founders intended. We are a Republic, and we have plenty of State lawmakers who are more than willing to make Laws which best serve their constituents. "Ron Paul is one of the easiest people in Congress to work with, because he bases his positions on the merits of issues," says Barney Frank, who has worked with Paul on efforts to ease the regulation of gambling and medical marijuana. "He is independent, but not ornery." Paul has made a habit of objecting to things that no one else objects to. In 2001, he was one of only three House Republicans to vote against the USA Patriot Act. He was the sole House member of either party to vote against the Financial Antiterrorism Act. In 1999, he was the only naysayer in a vote in favor of casting a medal to honor Rosa Parks. Nothing against Rosa Parks. Paul also voted against similar medals for Reagan and Pope John Paul II. He did, however, offer $100 of his own money to help pay for Reagan''s medal, and invited others in Congress to match his offer, but not one Member took him-up on it. Instead, Congress spent YOUR money. He not only routinely opposes resolutions that are unconstitutional, he votes against Bills which presume to advise foreign governments how to run their affairs.
The main thing Ron Paul''s campaign has done thus far is to serve as a clearinghouse for voters like me who feel unrepresented by the Fascisct (globalist Republicans) and their Socialist comrades in crime (globalist Democrats). They''re actually one and the same. It''s all a phony, poorly staged left-right paradigm. Most people, though, are too distracted, dumbed-down, or outright brainwashed by mainstream media, which endlessly regurgitates scientifically-crafted streams of information aimed at keeping their eyes closed to the realities of the world around them, that they fail to recognize this. Those currently in power, and those being groomed to take [major] political power, are preselected by the "global elite," and whomever is eventually elected, will ultimately, serve their will, and not ours. People on the right and those on the left have many differences. Maybe irreconcilable ones. But they have a lot of common beliefs too, and their numbers and anger are of a considerable magnitude. No matter what happens in 2008, I personally believe Ron Paul will influence the national conversation about what the role of the federal government is, how much power the government should have over our lives and how much liberty we should give up for security. These are issues that, frankly, no one else is talking about as seriously and sincerely as Ron Paul. What''s for sure is that his growing army of supporters like me will be a force to be reckoned with in 2008.
-- No more meddling in other country''s political affairs
-- No more aggressive military actions overseas
-- No more torture prisons
-- No more pseudo-wars like the "War on Drugs"
-- No more IRS and unconstitutional income taxes
-- No more Federal Reserve (the group of private banks which owns our government)
-- No more U.N. (one world government) participation
-- No more NAFTA, CAFTA, WTO or GATT
-- No more North American Union
-- No more federal gun control laws
-- No more illegal aliens pouring-in over our country''s borders
-- No more illegal aliens allowed to roam freely in our streets
-- No more federal Laws which are not authorized by The Constitution
-- No more federal erosion of State sovereignty
-- No more unlimited federal government
They don''t call him "Dr. No" for no reason. The Doctor is in! Join us in this 21st Century political revolution at ronpaul2008.com
"Liberty, when it takes root, is a plant of rapid growth."
- George Washington
"Those who expect to reap the blessing of freedom must...undergo the fatigue of supporting it."
- Thomas Paine
"Ron Paul doesn''t represent your Father''s school of political thought. He represents your Founding Fathers."
- Me
Ron Paul voted against the Do-Not-Call Registry
Ron Paul voted against extending Unemployment Compensation Act
Ron Paul voted against the Supplemental Appropriations Act for Further Recovery From and Response to Terrorist Attacks
Ron Paul voted against stricter penalties for sexual predators
Ron Paul voted aginst the Keeping Children and Families Safe Act
Ron Paul voted against the Child Custody Protection Act
Ron Paul voted against the Internet Freedom and Broadband Deployment Act
Ron Paul refused to recognize A Resolution Honoring the Contributions of Catholic Schools
Ron Paul regularly votes against funding the military (year after year)
Ron Paul voted against the Public Health Security and Bioterrorism Response Act
Ron Paul voted against Expressing Solidarity With Israel in the Fight Against Terrorism
Ron Paul voted against the Best Pharmaceuticals for Children Act
Ron Paul was the only vote against the Federal Long-Term Care Insurance Amendments Act
Ron Paul was the only vote against the Financial Anti-Terrorism Act
Ron Paul voted against deterring and punishing terrorist acts in the United States and around the world
Ron Paul voted against Urging the Secretary of Energy to Fill the Strategic Petroleum Reserve
Ron Paul was the only vote against the Military Construction Appropriations
Ron Paul was the only vote against the resolution To Promote Freedom and Democracy in Viet Nam
The Ant and the Grasshopper
In a field one summer''s day a Grasshopper was hopping about, chirping and singing to its heart''s content. An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest.
"Why not come and chat with me," said the Grasshopper, "instead of toiling and moiling in that way?"
"I am helping to lay up food for the winter," said the Ant, "and recommend you to do the same."
"Why bother about winter?" said the Grasshopper; we have got plenty of food at present." But the Ant went on its way and continued its toil. When the winter came the Grasshopper had no food and found itself dying of hunger, while it saw the ants distributing every day corn and grain from the stores they had collected in the summer. Then the Grasshopper knew:
It is best to prepare for the days of necessity.
http://www.pagebypagebooks.com/Aesop/Aesops_Fables/The_Ant_and_the_Grasshopper_p1.html