President Obama signed the fourth job creation measure of the year in to law yesterday, which is expected to be the last before the midterm elections November 2nd. The bill will provide tax cuts to small businesses, and aims to promote job creation.
Obama signed the Small Business Jobs Act during a ceremony in the East Room of the White House. It is the fourth jobs measure to clear Congress this year and is likely the last before the Nov. 2 midterm congressional elections.
A few weeks ago the U.S. Senate passed a Wall Street reform bill with a 59 to 39 majority. The legislation is intended to help prevent future bank failures such as those that led to the financial collapse of 2008. The House of Representatives passed a different bill aiming to take on Wall Street back in December, and the two will need to be reconciled before a final package can be sent to the President’s desk. Although all the provisions in the Senate’s legislation may not make it into the final bill, I wanted to take a look at all of the possible tax implications on American consumers.
Curb Abusive Lending Practices
One of the main purposes of the legislation is to “curb abusive lending practices,” but not to punish big banks. There are a number of tactics they will use to help reduce unscrupulous lending, many of which will be explained in this blog entry.
"Our goal is not to punish the banks,” explained President Obama, “but to protect the larger economy and the American people from the kind of upheavals that we've seen in the past few years.”
Bureau of Consumer Protection
To help protect consumers from abusive lending the federal government would setup a new bureau to help Americans. It would have authority to write and enforce rules for nearly any business that offers loans including mortgage companies, payday loan providers, and even car finance companies. The bureau would also create an abuse hotline, and will work to act quickly when new financial companies begin taking advantage of consumers.
Foreclosure Relief for the Unemployed
Another main component of the bill aimed at helping taxpayers is a $3 billion fund to provide relief to struggling homeowners. Although, the details are not entirely clear, the program would lend up to $50,000 to unemployed homeowners whom could likely resume making payments within two years.
Shareholder Rights Over Bonuses
In an obvious response to the public’s anger about the multimillion-dollar bonuses that were given out to executives of bailed-out banks, the Wall Street reform bill gives shareholders the right to cast nonbinding votes on executive pay packages. Additionally, the federal government would be given the power to set standards on excessive compensation deemed unsafe.
Rights for Government Seizures
The legislation would allow the federal government to seize large financial institutions whose difficulties pose a risk to the American financial system. The government would then have the authority to fire executives and wipe out shareholders.
Financial Stability Oversight Council
Once the bill is passed into law, a new Financial Stability Oversight Council will be created by the Treasury. The council will work with companies considered significant to the American financial industry to ensure they meet strict capital, leverage, and liquidity requirements. These companies will also be forced to create systematic plans should they fail.
Future of the Legislation
The Senate and House of Representatives have until July 4, 2010 to present a final package to President Obama. The legislation could change significantly over the next month, however since both chambers of Congress have passed similar bills we can expect that a significant reform package will be signed into law this summer.
There has been a lot of media attention placed on the effects of Arizona’s new immigration law and the impact on local residents. However, the bill also includes strict new immigration requirements for business owners. As this article from Forbes.com explains, the law is likely to make doing business in Arizona much more difficult.
SB 1070 is the most extreme anti-business law in recent history. For instance, sections 7 and 8 set out punishments for employers who knowingly or intentionally hire undocumented workers. In both cases for a first offense, the employer has to fire all undocumented workers, sign an affidavit attesting to that and promising not to repeat his mistake, and have all his business licenses suspended.
Additionally, and perhaps most gallingly, the business is then put on a three-year probation (five years for those that intentionally hire undocumented workers) and must file quarterly records to prove that it has not since broken the law again. This would amount to businesses being presumed guilty and being forced to prove their innocence. It will hurt entrepreneurship and endanger the economic recovery.
Most egregiously, if a business commits a second such offense and hires an undocumented worker, all of its business licenses are permanently revoked. Because it is illegal to operate a business without a state-sanctioned license in the state of Arizona, that amounts to the government forcibly shutting down someone's business.
Fearing that reform was taking to long to come to fruition, Senator Christopher J. Dodd - chairman of the Senate Banking Committee – announced that he would unveil his own financial overhaul plan on Monday. However, what makes this announcement even more surprising is Dodd’s intention to unveil his plan was without negotiation with other members of the Republican party.
Mr. Dodd suggested that he was acting out of a sense of urgency. The House adopted a regulatory overhaul — a priority of the Obama administration — in December on a largely party-line vote. But bipartisan negotiations in the Senate have repeatedly faltered over several critical points, notably the creation of a consumer financial protection agency to regulate mortgages, credit cards and other products.
In an unusual turn, Senator Richard C. Shelby of Alabama, the ranking Republican on the Banking Committee, has found himself largely shut out of the negotiations, while another Republican, Senator Bob Corker of Tennessee, has been directly negotiating with Mr. Dodd.
At a news conference later Thursday morning, Mr. Corker called Mr. Dodd’s plan to proceed with a bill without further negotiations “very disappointing.”
From BloggingStocks.com:
There is a bill making rounds on Capitol Hill that would provide a tax break for up to $3,500 for pet expenses. Does Fido really deserve a tax deduction? Do we really need to subsidize pet ownership in this country?
The recession has been extra hard on pets as people have abandoned pets at shelters they are no longer able to properly care for them. Pet can be very expensive between food, visits to the vet and increased rent. Those of you who think dog food is expensive should try to feed a horse sometime!
While pet lovers may point to all the positive aspects a man's best friend can bring to a family; if there are tax benefits people may start to get a pet just for the tax benefits. This brings up a lot of interest scenarios. I wonder if the benefit will be per pet or per pound? Would you get the same benefit for a pet mouse as you would for a pet horse? If someone adopts 76 cats do they get to pick up $266,000 in tax breaks? And what happens when you feed the pet mice to the pet snake?
If the bill were to pass it would certainly be good for companies in the Pet Care Industry like PetSmart (NASDAQ: PETM), Petmeds Express (NASDAQ: PETS), and Tractor Supply (NASDAQ: TSCO).
Some Congressman may have written this bill just to please some a pet loving constituent knowing it is unlikely to pass. I thought there were some real issues like a recession, unemployment and $1.4 trillion deficit that lawmakers could keep busy with.
From Reuters.com:
Offshore tax havens used by rich Americans in Switzerland, the Cayman Islands and other nations are targeted for shutdown by a bill to be offered in the U.S. Senate on Monday, said senior Senate aides.
In legislation that expands on a bill co-sponsored last year with then-Senator Barack Obama, Senator Carl Levin will propose a broad crackdown on tax avoidance schemes estimated to deprive the U.S. government of more than $100 billion a year.
The bill comes just two days ahead of a Senate hearing where a senior UBS AG executive is due to testify about an investigation of the Swiss banking giant.
"Offshore tax haven and tax shelter abuses are undermining the integrity of our tax system," said Levin in a statement given to Reuters. "We cannot tolerate $100 billion in offshore tax abuses burning a hole through our budget each year.
"We can fight back against secrecy jurisdictions and shut down offshore tax abuses if we have the political will."
Companion legislation is expected to be introduced in the U.S. House of Representatives, the aides said.
Both bills will face committee review and some political opposition. Bankers at UBS and other financial institutions have long been among the largest contributors to U.S. politicians' campaigns.
Since last year, three provisions have been added to the Senate bill. One would classify U.S.-controlled foreign corporations as domestic for income tax purposes. Another would close an offshore tax dividend loophole that lets people dodge payment of U.S. taxes on U.S. stock dividends, the aides said.
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