MLK Holiday ReadsPosted: January 19, 2015
It’s our holiday to celebrate the contributions of Reverend Doctor Martin Luther King! No holiday celebration is complete without drawings by grade school children!!
President Obama will give his SOTU address tomorrow and will call for raising taxes on the wealthy to provide tax cuts for the middle class. This is an interesting strategy and I’m sure the Republicans are planning on screaming “class war” for the next few days.
President Obama will use his State of the Union address to call on Congress to raise taxes and fees on the wealthiest taxpayers and the largest financial firms to finance an array of tax cuts for the middle class, pressing to reshape the tax code to help working families, administration officials said on Saturday.
The proposal faces long odds in the Republican-controlled Congress, led by lawmakers who have long opposed raising taxes and who argue that doing so would hamper economic growth at a time the country cannot afford it. And it was quickly dismissed by leading Republicans as a nonstarter.
But the decision to present the plan during Tuesday’s speech marks the start of a debate over taxes and the economy that will shape both Mr. Obama’s legacy and the 2016 presidential campaign.
It is also the latest indication that the president, untethered from political constraints after Democratic losses in the midterm elections, is moving aggressively to set the terms of that discussion, even as he pushes audacious moves in other areas, like immigration and relations with Cuba.
The president’s plan would raise $320 billion over the next decade, while adding new provisions cutting taxes by $175 billion over the same period. The revenue generated would also cover an initiative Mr. Obama announced this month, offering some students two years of tuition-free community college, which the White House has said would cost $60 billion over 10 years.
The centerpiece of the plan, described by administration officials on the condition of anonymity ahead of the president’s speech, would eliminate what Mr. Obama’s advisers call the “trust-fund loophole,” a provision governing inherited assets that shields hundreds of billions of dollars from taxation each year. The plan would also increase the top capital-gains tax rate, to 28 percent from 23.8 percent, for couples with incomes above $500,000 annually.
Those changes and a new fee on banks with assets over $50 billion would be used to finance a set of tax breaks for middle-income earners, including a $500 credit for families in which both spouses work; increased child care and education credits; and incentives to save for retirement.
The initiative signals a turnabout for Mr. Obama, who has spoken repeatedly about the potential for a deal with Republicans on business tax reform but little about individual taxation, an area fraught with disagreements.
“Slapping American small businesses, savers and investors with more tax hikes only negates the benefits of the tax policies that have been successful in helping to expand the economy, promote savings and create jobs,” said Senator Orrin G. Hatch, Republican of Utah and chairman of the Finance Committee. “The president needs to stop listening to his liberal allies who want to raise taxes at all costs and start working with Congress to fix our broken tax code.”
Republicans have already referred to it as “trolling” given that they run both houses of the US Congress and will pass neither one. This does, however, have very bad optics for them. It puts them squarely in league with the uberwealthy.
“It’s not surprising to see the president call for tax hikes, but now he’s asking Congress to reverse bipartisan tax relief that he signed into law,” said Don Stewart, deputy chief of staff to Senate Majority Leader Mitch McConnell (R-Ky.).
Stewart said that “Republicans believe we should simplify America’s outdated tax code; that tax filing should be easier for you, not just those with fancy accountants; and that tax reform should create jobs for families, not the [Internal Revenue Service].”
Meanwhile, a spokeswoman for Rep. Paul Ryan (R-Wis.), who chairs the House Ways and Means Committee, also criticized the proposal.
“This is not a serious proposal,” said Ryan spokesman Brendan Buck in a public statement. “We lift families up and grow the economy with a simpler, flatter tax code, not big tax increases to pay for more Washington spending.”
Plan details include hitting big banks and inheritance taxes. These suggestions really go at the types of tax cuts that incent gambling and increase financial wealth rather than industrial and business wealth that create jobs and economic growth.
During his State of the Union address on Tuesday, President Barack Obama will lay out a plan to extend tax credits to the middle class by hiking taxes on wealthier Americans and big banks, according to senior administration officials.
Under the plan, the capital gains tax for couples with income over $500,000 per year would be raised from its current level of 23.8 percent up to 28. The plan would also strip a tax break, known as a “step-up,” that allows heirs to avoid capital gains taxes on large inheritances.
In addition, the plan would institute a new tax on the biggest financial institutions, basing the fee on liabilities in order to discourage risky borrowing. The administration says the fee would hit the roughly 100 banks that have assets of $50 billion or more.
The president’s plan would use revenues from those tax code changes to finance credits aimed at the middle class, officials said. That includes extending the earned income tax credits to families without children, which would benefit an estimated 13 million low-income workers, while also tripling the maximum tax credits for child care in low- and middle-income homes.
“This proposal is probably the most impactful way we can address the manifest unfairness in our tax system,” an administration official said.
The tax hikes on capital gains would run into heavy opposition from Republicans in the GOP-controlled Congress. Other elements of the president’s plan, however, have enjoyed some degree of bipartisan support. House Ways and Means Committee Chairman Dave Camp (R-Mich.) has proposed a similar tax on big banks, and many Republicans favor the idea of broadening the earned income tax credit.
According to officials, the capital gains tax reforms would impact “almost exclusively” the top 1 percent of earners, carving out the majority of middle-income families from the hikes.
Here’s an essential outline for the items up for revision in the President’s plan. Is it his Piketty moment? This one is my personal favorite but they’re all good.
Raise the top capital gains tax rate from 23.8 to 28 percent. This is straightforward enough. Money you get from investments is taxed less than money you get from, you know, actually working, and while that might be good for the economy, it’s not good for a basic sense of fairness. Not when the top 400 households are getting 16 percent of all capital gains, and the top 0.1 percent are getting half of them. That’s why, as theCongressional Budget Office (CBO) dryly puts it, “preferential tax rates on dividends and capital gains provide almost no benefit to households in the bottom four quintiles, but provide notable benefits to households in the top quintile”.
So Obama wants to push the top capital gains tax rate, which only applies to couples making more than $500,000, up from its current level of 23.8 percent to 28 percent, where it was when Ronald Reagan left office. In all, the White House calculates that increasing the capital gains tax and getting rid of step-up basis would raise 99 percent of its money from the top 1 percent, with 80 percent of that coming from the top 0.1 percent.
This is one of the items that has really drawn money out of doing business and into stock market gambling. Why work when you can day trade your life into a lower tax bracket as a wealthy person?
Here’s a few political things sure to give you some fits and giggles. Lady Lindsey is said to be considering a run at the Presidency.
Sen. Lindsey Graham acknowledged on Sunday he’s seriously exploring a bid for the Republican presidential nomination.
Asked on NBC’s “Meet the Press” if he had started polling voters about his chances in 2016, Graham said he is not polling, “but we set up a testing-the-waters committee under the IRS code that will allow me to look beyond South Carolina as to whether or not a guy like Lindsey Graham has a viable path.”
“I don’t know where this will go, but I’m definitely going to look at it,” said Graham, the senior senator from South Carolina.
A new CBS poll shows 29 percent of Republicans would like to see Christie run for the Republican nomination for president. But 44 percent say no. CBS points out “Only former Alaska Gov. Sarah Palin’s numbers are more underwater: 30 percent of Republicans say they’d like to see her run, but 59 percent disagree.”
Fifty-nine percent of Republicans would like to see Mitt Romney jump into the 2016 race, while 26 percent believe he should stay out.
“Fifty percent of Republicans would like to see former Florida Gov. Jeb Bush on the campaign trail as well, while 27 percent disagree,” pollsters said. “If both Romney and Bush run, analysts expect them to wage a competitive battle for the allegiance of the Republican establishment.”
Numbers for some of the others often mentioned:
– Former Arkansas Gov. Mike Huckabee: 40 percent of Republicans urge him to get in, and 29 percent say stay out.
– “Twenty-seven percent of Republicans would like Kentucky Sen. Rand Paul to mount a bid, but 34 percent disagree. Twenty-six percent would like Florida Sen. Marco Rubio to run, while 19 percent would not. Twenty-one percent want Texas Sen. Ted Cruz to run, while 25 percent want him to not run.”
– Gov. Rick Perry of Texas: 21 percent yes, 29 percent no.
– Gov. Bobby Jindal of Louisiana: 14 percent yes, 20 percent no.
– Gov. Scott Walker of Wisconsin: 22 percent yes, 12 percent no.
Maybe winning isn’t everything after all. “Republicans, by a 61 to 35 percent margin, believe it’s more important to have a nominee who agrees with them on the issues than a nominee who can win the general election,” according to the poll.
Well, that’s it for today! We’ll see you with a live blog for the SOTU tomorrow!! Have a great holiday!
What’s on your reading and blogging list today?