Posts Tagged ‘Taxes’

Obama Proposes New Tax Credit for Small Businesses That Hire

Thursday, May 17th, 2012

March 16, 2012 – 11:49 a.m.
By: Rob Mendelbaum
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In a bid to retake the initiative on small-business policy, President Obama Wednesday is expected to propose a 10 percent tax credit tied to new hiring. But the policy appears designed as much to draw a political distinction as to generate new jobs. In describing the proposal, which Mr. Obama will flesh out in a visit to a Washington-area small business, the administration drew a sharp contrast with a Republican small-business tax cut that passed the House last month, which the White House contends is too tilted toward the wealthy.
Under the White House proposal, which the president previewed in a video address over the weekend, a company would get credit against income taxes worth up to 10 percent of the increase in total wages in 2012, which could come either in the form of salaries for new hires or raises. A company that increased its payroll by $4 million would see a $400,000 income tax credit.
The tax credit is capped at $500,000 to make it more valuable to smaller companies. And the White House specifically targets middle-income earners by limiting the proposal to the top wage that is subject to Social Security tax, $110,100. “Unlike the House Republican proposal,” the White House said in a news release outlining the tax, “the president’s proposal ensures that companies that offer raises only to already well-paid executives would be ineligible for the tax relief.”
The Republican bill allows companies with fewer than 500 employees to deduct 20 percent of their income in 2012, though the deduction is limited to half of cash wages paid to employees. In its statement, the White House said that the Republican bill “would cut taxes of hedge fund managers, law partners and many of the wealthiest Americans regardless of whether they employed or hired a single worker.” An analysis by the Tax Policy Center estimates that almost half of the benefit of the tax cut would go to people earning more than $1 million.
House Republicans have countered that their measure, as the majority leader, Eric Cantor, put it, “puts more money into the hands of small-business owners so they can reinvest those funds to retain and create more jobs and grow their businesses.” The nonpartisan Congressional Joint Committee on Taxation has disputed this claim, but it’s not clear that the president’s proposal would add many jobs either — it could simply reward companies that planned to increase payroll anyway.
Nor is it clear that the president’s proposal will win over Republicans in Congress, or their small-business allies. Kevan Chapman, a spokesman for the National Federation of Independent Business, the conservative advocacy group, said in an e-mail that the tax credit is “not a big help to small businesses that are struggling or treading water.” Rather, he said, “our members are mostly concerned about the threat of rates going up and some of the most popular tax-extenders going away at the end of the year. That’s what the president and Congress need to work on.”
In fact, the president also plans to propose extending through 2012 one of the incentives on the N.F.I.B.’s agenda: the special 100 percent bonus depreciation for 2011 that was signed into law as part of the deal to extend the Bush tax cuts. Bonus depreciation is broadly popular, and this part of the president’s proposal may have a better chance of becoming law.

In a bid to retake the initiative on small-business policy, President Obama Wednesday is expected to propose a 10 percent tax credit tied to new hiring. But the policy appears designed as much to draw a political distinction as to generate new jobs. In describing the proposal, which Mr. Obama will flesh out in a visit to a Washington-area small business, the administration drew a sharp contrast with a Republican small-business tax cut that passed the House last month, which the White House contends is too tilted toward the wealthy.

Under the White House proposal, which the president previewed in a video address over the weekend, a company would get credit against income taxes worth up to 10 percent of the increase in total wages in 2012, which could come either in the form of salaries for new hires or raises. A company that increased its payroll by $4 million would see a $400,000 income tax credit.

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Assessing the Small Business Tax Cut

Tuesday, April 24th, 2012

By ROBB MANDELBAUMYou're the Boss - The Art of Running a Small Business

April 23, 2012, 3:24 PM

Click here to view the full article.

Early last week, the Democrats held a vote on a tax bill that defined their political philosophy but had no chance of passing. That was the Paying a Fair Share Act of 2012, better known as the Buffett Rule, which failed to get the 60 votes necessary for the Senate to take up the bill. On Thursday, House Republicans countered by passing their “Small Business Tax Cut.” The bill cleared the House handily, 235-173, largely on party lines, but it is no more likely to become law than the Buffett Rule.
Under the Small Business Tax Cut, introduced by Eric Cantor, House majority leader, any company of any sort with fewer than 500 employees would be eligible to deduct 20 percent of income in 2012, though the deduction is limited to half of cash wages paid to employees. (That means, for example, that a company with $10 million in income but a $3 million payroll would see the $2 million deduction reduced to $1.5 million.) The tax deduction would be in effect for only one year and would cost the Treasury $46 billion.
“We need to stop and think about what kind of country we want to be. And do we want to be one with lower taxes, more growth and more jobs? Or do we want to be one of more government control and fewer opportunities?” Mr. Cantor said on the House floor. “Our bill puts more money into the hands of small-business owners so they can reinvest those funds to retain and create more jobs and grow their businesses.” Mr. Cantor cited a study that claimed the bill would create “more than 100,000 new jobs a year.”
But while the bill passed the House handily, it has raised objections from partisans and nonpartisans alike. Congress’s nonpartisan Joint Committee on Taxation discounted the measure’s stimulative effects in an analysis of the bill. The tax cut’s effects on the economy would be “so small as to be incalculable,” the committee said. “The one year of tax savings provided by the bill is unlikely to make the costs of much investment in physical capital or labor recruitment and training worthwhile.” (And the new jobs would not be created cheaply, from the government’s perspective: if the tax cut did create 100,000 jobs, the cost per job would be $460,000.)
The White House, which opposes the bill, pointed out in a statement that the deduction could actually discourage companies from making investments and hiring for the year that it is in effect because those additional expenditures reduce income. “With the deduction only available for one year, it is likely that some firms would reduce or delay new hiring or new investment as a result,” the White House said.
In fact, because the deduction is so large — 20 percent, remember — and because it ends abruptly when a company reaches 500 employees, it’s easy to envision yet another way that it might depress hiring among the largest eligible businesses. Imagine that a $10 million company has 495 employees and can take a $2 million income deduction. At the 35-percent tax rate, that deduction is worth $700,000. If that company were to hire five workers, it would lose the entire deduction. (If, on the other hand, the deduction were to phase out gradually as the headcount increased from, say, 400 to 500, the deduction  would be much smaller, and the choice would be much less stark for the company approaching the threshold.)
Even some Republicans objected to the bill. Tom McClintock of California, objected that the tax cut’s $46 billion cost was not offset by spending cuts. “Thus, it merely shifts current taxes into the future,” Mr. McClintock said after the vote, according to The Hill. Then he added, “nor does H.R. 9 do much to promote economic growth because it does little to reward new productivity at the margin. At best it produces a one-year ‘sugar high’ until the bills come due.” In all, 10 Republicans voted against the bill. (On the other hand, 19 Democrats voted to pass the bill.)
The measure now heads to the Democratic-controlled Senate, where it faces what judicious analysts like to call “an uncertain future.”

Early last week, the Democrats held a vote on a tax bill that defined their political philosophy but had no chance of passing. That was the Paying a Fair Share Act of 2012, better known as the Buffett Rule, which failed to get the 60 votes necessary for the Senate to take up the bill. On Thursday, House Republicans countered by passing their “Small Business Tax Cut.” The bill cleared the House handily, 235-173, largely on party lines, but it is no more likely to become law than the Buffett Rule.

Under the Small Business Tax Cut, introduced by Eric Cantor, House majority leader, any company of any sort with fewer than 500 employees would be eligible to deduct 20 percent of income in 2012, though the deduction is limited to half of cash wages paid to employees. (That means, for example, that a company with $10 million in income but a $3 million payroll would see the $2 million deduction reduced to $1.5 million.) The tax deduction would be in effect for only one year and would cost the Treasury $46 billion.

“We need to stop and think about what kind of country we want to be. And do we want to be one with lower taxes, more growth and more jobs? Or do we want to be one of more government control and fewer opportunities?” Mr. Cantor said on the House floor. “Our bill puts more money into the hands of small-business owners so they can reinvest those funds to retain and create more jobs and grow their businesses.” Mr. Cantor cited a study that claimed the bill would create “more than 100,000 new jobs a year.”

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Dueling Tax Proposals Affecting Small Businesses, Millionaires May Be Doomed

Tuesday, April 17th, 2012

Posted: 04/16/2012 12:48 pm Updated: 04/17/2012 12:30 pm

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By ALAN FRAM, THE ASSOCIATED PRESS

WASHINGTON — The day before Americans’ taxes were due, Senate Republicans defied President Barack Obama on Monday and prepared to block a Democratic “Buffett rule” bill requiring the nation’s top earners to pay at least 30 percent of their income in taxes.

A near party-line roll call was expected in a clash that was aimed more at winning over voters in this November’s presidential and congressional elections than in pushing legislation into law. Democrats were using the battle to paint themselves as battling for equality for a middle class that is struggling to find jobs and make ends meet, while Republicans called the measure a divisive Democratic distraction from the nation’s real problems that would not address the economy’s real woes.

“Times are tough for many middle-class American families,” said Senate Majority Leader Harry Reid, D-Nev. “But millionaires and billionaires aren’t sharing the pain or the sacrifices, not one bit.”

“Americans are tired of the blame game,” said Senate Minority Leader Mitch McConnell, R-Ky. “They want their president to solve problems, not point fingers.”

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How To File A Tax Extension

Friday, April 13th, 2012

How To File A Tax Extension.

EDITORIAL: State budget better, but process isn’t

Tuesday, April 3rd, 2012

Posted: Saturday, March 31, 2012 10:03 pm

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The first thing that should be acknowledged about the state budget is the improvement, for the second year in a row, in the ability of the governor and legislative leaders to pass it on time.

Accompanying that welcome change, however, has been the unwelcome but continuing tradition of the governor negotiating key elements of the budget in secret with the Senate leader and Assembly speaker.

We applaud Gov. Andrew Cuomo’s ability to get things done punctually, but we’d clap a lot harder if he conducted this bit of state business with the openness befitting its importance.

Cuomo set the stage for the budget deal with the tax reform package he pushed through in December, which included a small middle-class tax break and a small tax rate increase for the state’s top earners.

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