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For a decade, the focus in Congress was which taxes to cut. That’s about to change — in a very big way. Meanwhile, as Congress, candidates and their campaigns focus so much of their attention on taxes, more than one-third of U.S. workers say that presidential candidates are not adequately addressing key workplace issues.
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The Wall Street Journal — as of today owned by Rupert Murdoch’s News Corp. — yesterday provided a useful point-by-point summary of the tax increases being pushed in Congress.
There’s the 61 cents a pack tobacco increase, the tax on private equity partnerships, a boost to the tax on “carried interest” of hedge funds and private equity (15 percent to 35 percent), the higher withholding tax on U.S. subsidiaries of foreign companies, a capital gains increase, new energy taxes, etc., etc., etc.
Here’s a shortlist of the most notable proposals so far:
• A Senate Finance Committee plan to raise the federal tobacco tax by 61 cents to a total of $1 a pack to finance the SCHIP health-care expansion. The Senate figures this will raise $35 billion in revenue over five years.
• The so-called Blackstone tax on private equity partnerships that go public, raising their 15 percent rate to the regular corporate tax rate of 35 percent. Though this bipartisan Senate proposal hasn’t been scored yet for revenues, it may well pass Congress.
• A tax increase on the “carried interest” of hedge funds and private equity to 35 percent from 15 percent. This has been introduced in the House and endorsed by Ways and Means Chairman Charles Rangel and the major Democratic Presidential candidates. (New York Senator Chuck Schumer has told The New York Times that he’ll oppose this unless the tax increase also applies to real estate and other partnerships that also now pay the 15 percent carried interest tax rate.)
• Higher withholding taxes on the U.S. subsidiaries of foreign companies — “in essence, a tax increase on foreign investment in America,” as the WSJ puts it. Soon after this $7.5 billion tax proposal “came out of nowhere last week to appear in the House farm bill to pay for more agriculture subsidies,” it passed.
• Raise the capital gains rate to 28 percent from the current 15 percent. This would repeal the capital gains tax cut of 2003 as well as the 28 percent to 20 percent tax cut that Bill Clinton signed into law in 1997. Presidential candidate John Edwards proposed this 86 percent increase in the capital gains tax last week.
• Deny the domestic manufacturing deduction to oil producers. This is part of the Senate Finance Committee’s energy bill and is estimated to raise $11.4 billion over 10 years. How this will increase domestic oil production amid $77-a-barrel oil and widespread clamor for energy independence is one of those mysteries that Congress prefers not to explain.
• A levy on oil and gas produced from deep-water leases in the Gulf of Mexico. This tax on domestic energy production is also part of the House farm bill and purportedly will raise $6.1 billion.
• A tax surcharge of 4.3 percentage points on income of more than $500,000, which would take the top marginal rate to 39.3 percent.
“We’re probably overlooking some other tax increase proposals, and some of the above will be blocked this year by President Bush’s veto pen,” the WSJ notes. “But this kind of manic Congressional grasping at any and every revenue idea hasn’t been seen since the first days of the Clinton Presidency.”
Meanwhile, as Congress, candidates and their campaigns focus so much of their attention on taxes, more than one-third of U.S. workers say that presidential candidates are not adequately addressing wages, health care, retirement plans and other workplace issues, according to a recent survey by Harris Interactive.
Moreover, out of 752 full- or part-time employees surveyed, 23 percent also said they weren’t sure candidates were focusing enough of their campaigns on workplace issues.
“Candidates are acting tone-deaf when it comes to U.S. workers. Many voters spend half of their waking hours at work, so what happens there is very important to them,” Frank Kenna III, president of The Marlin Company, which provides employee communication focusing on workplace issues, said in the Harris Interactive survey announcement.
“Candidates need to do a better job showing that they’re in sync with those voters and their key workplace issues. That’s obviously not happening yet.”
What are your thoughts on these taxes and political/work issues?








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If Congress passes all these tax bills it will be shooting the American economy in the face.
Time is now for Congress to be accountable and responsible for the cost of government by deep cuts in spending and deep tax cuts across the board.
The only moral and practical economy is the free market.
Let’s see…
Increase taxes on risky behavior to pay for insurance for low/moderate income children…OK.
Make hedge funds & private equity pay the same tax rates as corporations held by you & me…OK.
Throw in the REITs and other private partnerships…OK… No…even better.
Raise witholding on tax haven companies that launder income through tax treaty subsidiaries…OK…except we may violate tax treaties doing it.
Use that money to subsidize US farmers making record profits growing corn for ethanol…whoops…there might be better uses for that revenue.
Raise the capital gains rate back to the level both donkeys and elephants agreed was hurting US investment in 1997…why not back to 20%?
Deny the domestic manufacturing deduction to oil producers…at $77/barrel I don’t think subsidies are necessary to encourage exploration and production.
A levy on oil and gas produced from deep-water leases in the Gulf of Mexico from which producers can expect to make huge profits…OK…wait…as part of the FARM BILL?!? More ethanol incentives, I suppose? I’m all for energy independence, but this seems like robbing peter to pay paul.
A tax surcharge of 4.3 percentage points on income of more than $500,000…just plain doublespeak for tax the rich.