Dingell Unveils Plan to Tax AIG Bonuses

From Detnews.com:

Rep. John Dingell on Tuesday joined a growing list of lawmakers proposing legislation to recover the controversial bonuses paid to employees of insurance giant AIG.

Dingell, D-Dearborn, introduced a bill that he said would tax at a 95 percent rate any bonuses paid to any employees of companies receiving federal money from the Wall Street bailout fund.

"It is unconscionable that companies dependent upon the largesse of the federal government for their very existence should in turn pay the very employees partially responsible for our current calamity such irresponsibly exorbitant bonuses," Dingell said in a written statement.

On Monday, Rep. Gary Peters, D-Bloomfield Township, introduced his own bill, which would add a 60 percent surtax to the bonuses. Peters' staff said the surtax, plus federal income taxes and state and local taxes, would account for nearly 100 percent of the bonuses.

There was support from lawmakers of both parties and both houses of Congress on Tuesday for trying to recover the controversial bonuses by legislation. American International Group has received $170 billion in federal aid, designed to keep the company from collapse, which economists fear could drag down much of the global financial system.

Obama Budget Chief Defends Tax Hikes In Plan

Earlier today the Associated Press posted an article on the tax hikes in Obama’s plan, and his budget chiefs’ remarks on them. You can find a snippet of the post below, but the full text can be found here.

White House Budget Director Peter Orszag on Tuesday defended President Barack Obama's $3.6 trillion federal budget and its proposal to raise taxes on more affluent Americans.

"We have lived through an era of irresponsibility," Orszag told the House Budget Committee. "Looking forward, we must change course."

Lawmakers in both parties have questioned Obama's call to reduce high-income earners' tax deductions for the interest on their house payments and for charitable contributions. Also drawing fire is his proposal to start taxing industries on their greenhouse gas pollution — a move sure to raise consumers' electric rates.

Rep. Paul Ryan, R-Wis., called Obama's plan "a truly sweeping transformation of the federal government, the likes of which we have not seen since the New Deal." Ryan also warned that tax increases on small businesses earning more than $250,000 a year would stunt a possible recovery.

But, countered Orszag, "The new administration has inherited an economic crisis unlike any we have seen in our lifetimes."

Obama dispatched both Orszag and Treasury Secretary Timothy Geithner to Capitol Hill to defend the budget, with its proposed tax increases and the whopping $1.7 trillion annual budget deficit it would generate for 2009.

Legality of Proposed California Tax Plan in Question

From SacBee.com:

Any budget agreement between Democrats and Gov. Arnold Schwarzenegger that skirts the state's two-thirds vote requirement for new taxes will almost certainly be challenged in the courts – and there's a significant chance the state would lose, some legal experts said Monday.

It's not a slam-dunk case for either side, though, law professors say, because the Legislature is largely moving into uncharted territory with its plans to break the budget stalemate by effectively replacing a tax that is tough to increase with a fee that is much simpler to boost.

"The question is, 'What is a tax?’” said Jesse Choper, Earl Warren Professor of Public Law at the University of California, Berkeley. "It may be a simple little question, but like most things, it can be more complicated."

Democrats and the governor are trying to hash out a plan that would eliminate about half of the state's burgeoning $40 million deficit. The foundation of the plan is a measure passed by the Legislature last month that would raise some fees, lower some taxes and come up with an extra $10 billion or so in revenue – all without triggering the Proposition 13 requirement that any tax increase be approved by a two-thirds vote in the Legislature.

The governor threatened to veto the plan, then said he might go along with it if it contained several new provisions. Republicans, who didn't have the votes to kill the plan, nonetheless generally hate it and contend it violates the state constitution.

Daniel Simmons, a law professor at UC Davis who specializes in taxation issues, said it would be tough for Democrats to convince a court that a series of moves that results in a huge increase in revenue from citizens doesn't constitute a tax increase.

"It sounds an awful lot like a tax to me," Simmons said, echoing a similar sentiment from Choper. "If they are not raising revenue (with the proposal), something is very funny. It's very hard to make that claim."

Any court case involving the plan would likely focus on the differences between a fee and a tax, Simmons and others said.

McCain & Palin: Obama tax plan will 'spread the wealth'

From CNN.com:

Sen. John McCain's camp on Monday continued its weekend assault on Sen. Barack Obama's tax plan, which it called an attempt to "spread the wealth."

Speaking at a campaign event in St. Charles, Missouri, McCain said Obama "wants to spread the wealth around."

A chorus of boos rang out as the senator from Arizona continued, "He believes in redistributing wealth -- not in policies that grow our economy and create jobs and opportunities for all Americans. Sen. Obama is more interested in controlling who gets your piece of the pie than in growing the pie."

In Colorado Springs, Colorado, Alaska Gov. Sarah Palin also continued her line of attack from the weekend, but softened her tone in that she didn't call Obama's plan outright socialism.

"Our opponent's plan is just more big government, and John and I think that that is the problem, not the solution," she said. "Instead of taking your hard-earned money and spreading your wealth, we want to spread opportunity so people like you and Joe the plumber can create new wealth."

Sen. Joe Biden: a Deeper Look at his Tax Views

With Election Day only a few months away, both Sen. Barack Obama and Sen. John McCain have announced their running mates. Although everyone in the media is talking about Sen. Joe Biden and Gov. Sarah Palin, no one is really talking about their tax or economic views. With a looming recession, and gas prices expected to spike because of Hurricane Gustav, I decided to take a deeper look into Senator Joe Biden’s tax views.

Ending the War

One of Biden’s most progressive tax views is his adamancy about ending the war. Biden feels the sooner we end the war, the sooner we can start saving money again and reducing our national debt. Currently, the war on Iraq is costing around $100 billion a year, and Biden wants use that money to invest in our own country.

Bush Tax Cuts

The Bush tax cuts have been a large subject of debate this election season. Biden opposes the tax cuts and has voted against them recently and voted against similar tax cuts in the past when Bush Sr. was president. Although the argument has been made that the “trickle down” effect will make sure the tax cuts benefit us all, Biden claims that this tactic has not worked. “Imagine what we could do if we had a president who had the nerve and the wisdom to understand that rich folks are just as patriotic as poor folks--you just have to ask them,” claimed Biden. “I spoke to a group of millionaires about taking away their tax cut, and when I explained how I'd use it, they gave me a standing ovation.”

Health Care

Joe Biden is known for his fight for an ethical and easy health care system for America. Working closely with Social Security as well as Medicare, he has been a big part of numerous changes that have already been made to health care in this country. If elected as Vice President, Biden has claimed that he would like to work alongside Obama to strengthen prescription drug programs and make them affordable and available to everyone.

Biden recognizes that Medicare has many flaws and that it requires improvement. He would like to open programs to promote wellness and disease prevention, waive co-payments, and advance technology within the medical industry. He hopes to fund these new programs by repealing the Bush tax cuts for the top 1% and withdrawing troops from Iraq. However, there are noticeable flaws in Biden's health plans such as his neglect to recognize youth needs. Most of his plans emphasize senior health, which is important but should not be the only part of his plan.

Gas Prices

Taking on the OPEC monopoly is one of the riskier moves Biden wants to make. Some critics think this will not help but hurt the problem, as OPEC is not the only cause of high gas prices. Biden’s other energy plans are to invest in new alternative energies will be pricey at first, but have the potential to save billions in the long-run.

Education and Taxes

Biden has worked on numerous bills designer to make education more affordable, and introduced the college ACCESS legislation that provides a refundable tax credit for struggling students to help pay for tuition. The legislation also expanded grants for low-income families. To pay for the legislation Biden voted yes on shifting $11 billion from corporate tax loopholes to education.

Death Tax Exemption

While in the Senate Biden voted against raising the Death Tax Exemption from $1 million to $5 million. He felt the tax did not apply to most Americans, and only gave more money to wealthy heirs and heiresses such as the notorious Paris Hilton.

AMT Repeal

Senator Biden also voted against repealing the Alternative Minimum Tax (AMT). As we all know, the tax was originally meant to only target only the very wealthy, but is now being levied on thousands of middle class America due to inflation. However, Biden noticed that repealing it entirely would surely put us into deficit, decrease government revenue, and unbalance the budget even more. However, Biden has claimed that he would favor adjusting the ATM for inflation and the standard of living for 2008.

Balanced Budget

Sen. Biden is adamant about his fight for a balanced budget. He voted for the balanced budget amendment in 1997, and voted against making tax cuts a priority over national debt reduction in 2000. He also stated that interest rates should be lowered across the board, and that tax breaks on investment dividends should be repealed.

Hedge Funds

Biden has never been discrete about his dislike of hedge funds, and believes they are a main cause of the credit crunch in the United States. He also disliked equity funds and cites them as another cause of the country’s current financial crisis.

Foreign Aid

When the Georgia-Russia dispute first broke out, Biden immediately called for $1 billion in emergency aid. After meeting personally with Georgia’s president, he was adamant and convinced of his decision. In February of 2008, Biden also pushed for a massive increase of non-military financial aid to Pakistan.

Tax Issues in 2008 Democratic Party Platform

With the Democratic National Convention underway the Democrats have released their 2008 Party Platform. You can download a PDF of the full platform by clicking here, but below are the tax-related contents, thanks to Tax Prof.

• We must reform our tax code. It’s thousands of pages long, a monstrosity that high-priced lobbyists have rigged with page after page of special interest loopholes and tax shelters. We will shut down the corporate loopholes and tax havens and use the money so that we can provide an immediate middle-class tax cut that will offer relief to workers and their families. We’ll eliminate federal income taxes for millions of retirees, because all seniors deserve to live out their lives with dignity and respect. We will not increase taxes on any family earning under $250,000 and we will offer additional tax cuts for middle class families. For families making more than $250,000, we’ll ask them to give back a portion of the Bush tax cuts to invest in health care and other key priorities. We will end the penalty within the current Social Security system for public service that exists in several states. We will expand the Earned Income Tax Credit, and dramatically simplify tax filings so that millions of Americans can do their taxes in less than five minutes..
• [W]e will eliminate all income taxes for seniors making less than $50,000 per year. Lower and middle income seniors already have to worry about high health care and energy costs; they should not have to worry about tax burdens as well.
• [W]e will ... increase the Earned Income Tax Credit so that workers can support themselves and their families.
• We will expand the childcare tax credit....
• We will invest in women-owned small businesses and remove the capital gains tax on start-up small businesses.
• We will make college affordable for all Americans by creating a new American Opportunity Tax Credit to ensure that the first $4,000 of a college education is completely free for most Americans. In exchange for the credit, students will be expected to perform community service. ... We will enable families to apply for financial aid simply by checking a box on their tax form.
• We will ... make the Research and Development Tax Credit permanent.
• We will invest in American jobs and finally end the tax breaks that ship jobs overseas.
• We will exempt all start-up companies from capital gains taxes and provide them a tax credit for health insurance. We will provide a new tax credit for small businesses that offer quality health insurance to their employees.
• We will end tax breaks for companies that ship American jobs overseas, and provide incentives for companies that keep and maintain good jobs here in the U.S.
• We will not raise taxes on people making less than $250,000, and will eliminate all income taxes for seniors making less than $50,000. We recognize that Social Security is not in crisis and we should do everything we can to strengthen this vital program, including asking those making over $250,000 to pay a bit more.
• And if you invest in America, America will invest in you: we will ... establish tax incentives for college students who serve, and create scholarships for students who pledge to become teachers.
• We will support fathers by ... removing tax penalties on married families....

New McCain Commercial Attacks Obama’s Tax Proposal

A new commercial from the McCain camp titled “Taxman” recently hit television screens across the country to attach Obama’s new tax plan. Below is an embedded video of the commercial.

Thanks to the Associated Press, below is the script of the commercial as well as analysis from Douglass K. Daniel.

SCRIPT:
"Celebrity? Yes. Ready to lead? No. Obama's new taxes could break your family budget. The press warns the 'taxman cometh.' Obama's taxes mean 'higher prices at the pump.' Obama's taxes a 'recipe for economic disaster.' Higher taxes. Higher gas prices. Economic disaster. That's the real Obama."

ANALYSIS:
“This terse ad is misleading because it targets a broad audience yet makes a key assertion — ‘Obama's new taxes could break your family budget’ — that at most applies only to a narrow group.

Previous ads from the McCain campaign have straddled and at times crossed the line of accuracy in criticizing Obama's policies. This ad bases most of its charges on newspaper editorials. Thus, by citing their opinions, the spot shifts the burden of accuracy from the McCain campaign to others in an effort to appear more credible.

The new ad contains a major caveat when it says Obama's new taxes ‘could’ break the family budget. That family, under the Obama plan, would have to be earning $250,000 or more a year to see its taxes rise. Nearly all those watching the ad would fall outside that group.

The phrase ‘taxman cometh’ appeared in a July 1 editorial in The Wall Street Journal that decried Obama's tax policies.

As presented in the McCain ad, the charge of higher gasoline prices is ambiguous. Obama hasn't suggested raising the federal tax on gasoline. The McCain campaign attributes the prospect of higher prices at the pump to analyses — the one cited in the ad came from a Washington Post editorial published Aug. 6 — that conclude that the costs of Obama's proposed windfalls profit tax on the record earnings of oil companies would eventually be passed on to consumers.

That Obama's plan is a ‘recipe for disaster’ is the opinion of the Las Vegas Review-Journal, which criticized Obama in an editorial published Sept. 20, 2007. It said he sought to raise the tax rate on the top income bracket from 35 percent to 39.6 percent, nearly double the tax rate on capital gains and dividends, and eliminate all tax breaks for the gas and oil industries and private equity firm managers.

When the editorial appeared last fall it was unclear how much of an increase in the capital gains tax Obama favored. On Thursday, Obama's economic advisers said the tax rate would increase to 20 percent, not to nearly 30 percent, and again only for those earning $250,000 or more. The advisers also said Obama would indeed seek rates for the top two income tax brackets at 36 and 39.6 percent to match the levels of the 1990s. All other brackets would remain at today's rates, they said.

To the charge of ‘economic disaster,’ Obama's advisers would probably point to the relative prosperity of the 1990s, the era whose tax rates they seek to return to. McCain rejects allowing the Bush administration tax cuts to expire on schedule, saying that would result in higher taxes. Obama counters that the Bush tax cuts favored the wealthy to begin with.”

McCain Tax Cuts Would Bloat Deficit Or Take Huge Spending Curbs

The Wall Street Journal had added this interesting article on the disadvantages of McCain’s tax plan. Below is picture that summarizes his plan, but you can check out the full article by clicking here.