How will we pay for it? Don’tMessWithTaxes’ Kay Bell explains it here:
About $50 billion of that cost will be offset by other taxes or program cuts. Here's a quick look at some of the most likely ways to pay.
- Carried interest will cost recipients more: negotiators are nearing an agreement to phase in higher taxes on carried interest, a type of compensation paid to managing partners of some partnerships, at the highest individual income tax rate. That's currently 35 percent, scheduled to increase to 39.6 percent in 2011. Now such remuneration is treated as capital gains, meaning it's taxed at 15 percent.
- Ending foreign tax credit abuses: Tax writers are said to be looking at ways to stop "creative use of the foreign tax credit."
budget that seeks to prevent the separation of foreign taxes from associated income.
According to a Treasury Department explanation, the proposal would allow a credit for
foreign taxes "when and to the extent the associated foreign income is subject to U.S. tax in the hands of the taxpayer claiming the credit."
The change would take effect in 2011 and Joint Committee on Taxation numbers crunchers
estimate it would raise an estimated $9.5 billion over 10 years.
- Other ways to pay for the massive bill might include allowing companies to delay pension funding requirements, imposing payroll taxes on service sector S corporations and barring treaty shopping by multinational companies.
A bank tax, however, is looking less likely as part of the extenders bill.
The only sure thing is that we can expect more -- and more esoteric -- payment provisions to be revealed as full consideration of the bill nears.