Domestic Taxes

A proposed financial regulatory reform bill contains loopholes allowing for future bailouts and Republicans will stand united against the bill, Senate Minority Leader Mitch McConnell (R-Ky.) said Monday on the floor. 

McConnell expects all 41 Senate Republicans will vote against moving to debate the measure at 5 p.m. today. 

"A vote for cloture is a vote that says we're doing listening to the American people on this issue," he said. "A vote against ending this debate is a vote for bipartisanship, for working out an iron-clad solution to the problem of 'too big to fail."

Democrats need 60 votes tonight to end a Republican filibuster on the bill and bring the debate to begin on the measure. 

"As we consider this legislation today, Republicans are also acutely aware of the fact that government solutions to big, complex problems like this one are rarely as effective as they're made out to be, especially when they're rushed," McConnell said. 

Democrats and Republicans have been trying to reconcile the major components of the bill but hadn't reached an accord by Monday afternoon while Senate Banking Chairman Chris Dodd (D-Conn.) and the panel's ranking member Richard Shelby (R-Ala.) met this afternoon to discuss the bill. 

House Democrats are encouraging members to make the tax cuts they’ve delivered a key part of their reelection strategy.

The groups blasted tax increases on businesses and wealthy individuals and families in the budget in a letter to lawmakers.

Rep. Chaka Fattah (D-Penn.) on Thursday called for President Obama's debt commission to condider legislation that would tax all transactions to help reduce the country's growing deficit and $12.8 trillion debt. 

Obama's Bipartisan National Commission on Fiscal Responsibility and Reform will begin discussions next week on ways to stem the tide of red ink in Washington.

Fattah has introduced legislation imposing a 1 percent tax on all transactions, retail and financial, except stock sales. The tax would be broadly applied to any transaction involving cash, check or credit card, and would replace existing federal taxes on individuals and businesses. 

The White House is looking at several revenue raisers to pay for legislation extending several expired tax breaks, lobbyists told The Hill. Read more...

Sen. Chuck Grassley (R-Iowa) on Thursday said findings by the nonpartisan Congressional Budget Office show that the new health care mandate is a tax that will hit people President Obama vowed to protect from tax increases. 

"The mandate is a tax increase that hits middle-class America the hardest," he said in prepared remarks. "And these people make less than $250,000, which breaks the president's pledge to not raise taxes on individuals earning less than $200,000 and families earning less than $250,000 a year." 

The new healthcare law obligates the IRS to penalize taxpayers who fail to purchase adequate health insurance, a rule known as the health care mandate. Grassley argues that since the mandate amends the Internal Revenue Code the penalty is actually a new tax.

The CBO predicts 3.9 million people will pay $4 billion to the IRS between 2017 and 2019 for not having adequate health coverage. It also projects that 76 percent of them will make no more than roughly $59,000, for individuals, and $120,000, for families. Grassley contends these are not wealthy taxpayers by Obama's definition and therefore should not have to face a tax increase. 

"These individuals and families are middle-income and lower income," Grassley said. "They aren't wealthy. The president and his supporters in Congress are celebrating the benefits of health reform, but they also have an obligation to acknowledge the other side of the coin."

The CBO estimates that 21 million non-elderly residents will be uninsured in 2016, but won't be penalized. Some will be exempt based upon income or because premium costs exceed a certain percentage of their income. Others will be waived from having to comply with the mandate because of hardship or religious beliefs.

Speaker Nancy Pelosi (D-Calif.) on Thursday alluded that the bank tax being discussed by congressional tax writers may not end up in the financial reform bill since its revenue generating prowess could be better used elsewhere. 

The tax could raise as much as $90 billion.

"We have an agenda for job creation, investment in the education of our children and the rest that will require some payfors," she told reporters.  Read more...

The right-leaning Americans for Tax Reform on Thursday claimed if President Obama creates a value-added-tax he will break his campaign promise to not raise taxes on individuals earning less than $200,000 and couples making less than $250,000. 

The group argues that despite the tax being incurred at the time of production, and not at the point of sale like a consumption tax, its cost is passed along to consumers by increasing the cost of goods sold. Many of these consumers would be middle and lower income wage earners and subjected to what is essentially a backdoor, or hidden, tax.     

"It is passed along until it literally becomes as much an inherent and cloaked component in the price as transportation or labor," the group stated. Read more...

In his pursuit to offset legislation extending several expired tax breaks, House Ways and Means Chairman Sandy Levin (D-Mich.) could close a loophole that allows S corporations to avoid paying employment taxes. 

Levin could also prevent the "splitting" of foreign tax credits, which can occur when a company applies the credits from one subsidiary to the income of another. The Chairman would require the tax credits only apply to income that the credits are linked to. 

Taxing carried interest at a level above current capital gains tax rates is also being discussed by members, among other provisions. 

Levin plans to complete work on the extender package before Memorial Day. 

A value-added tax (VAT) is a "novel" idea for the U.S., President Barack Obama said Wednesday.

The president neither ruled in nor ruled out implementing a VAT on goods and services, saying that he is waiting to see what recommendations the committee he's set up on deficit reduction will generate.

"You know, I know that there's been a lot of talk around town lately about the value-added tax -- that is something that has worked for some countries," Obama said in an interview with CNBC. "It's something that would be novel -- for the United States."

The executive director of the White House panel on deficit reduction, Bruce Reed, has told Fox News that the VAT is in the mix of options for the commission, while House Speaker Nancy Pelosi (D-Calif.) said last fall that the VAT is among a number of revenue-generating options that are "on the table."

The VAT is a tax on manufacturers at each stage of production on the amount of value an additional producer adds to a product.

The president said that before he says the idea makes sense or not, he "want[s] to get a better picture of what our options are."

"And my first priority is to figure out how can we reduce wasteful spending so that we have a baseline of the core services that we need and the government should provide," Obama explained. "And then we decide how do we pay for that.  As opposed to figuring out how much money can we raise and then -- not have to make some tough choices on the spending side."