When the Supreme Court struck down the Defense of Marriage Act, social conservatives consoled themselves by saying that the action did not mandate gay marriage across the board. That remains a decision for each state. But it does mean that the Federal Government now recognizes gay marriage. That was made clear when the IRS and the Treasury Department announced that same-sex marriages, no matter what state they were performed in, will qualify for all marriage deductions and other tax benefits that husbands and wives receive. [Read more…]
Just what school children need: more internet! President Obama has a new signature program in the works. “ConnectEd” will provide high-speed internet access to schools, with its multi-billion dollar cost funded by new fees on cell phones. And the beauty of it, according to the administration, is that it can all be done–including the funding–apart from Congress. All it will take is approval from the Federal Communications Commission.
Wouldn’t this constitute taxation without representation? [Read more…]
The Constitution limits the federal government’s power, but it does give Congress the power to levy taxes. So Congress has historically used its taxing authority to pre-empt state laws and to exercise control over its citizens’ behavior. George Will discusses an essay by David B. Kopel and Trevor Burrus entitled “Sex, Drugs, Alcohol, Gambling and Guns: The Synergistic Constitutional Effects.” [Read more…]
The Fiscal Cliff bill did more than extend the Bush tax cuts for everyone except those who make $450,000. Here is a useful summary of what’s in the new law:
— Tax rates will permanently rise to Clinton-era levels for families with income above $450,000 and individuals above $400,000. All income below the threshold will permanently be taxed at Bush-era rates.
— The tax on capital gains and dividends will be permanently set at 20 percent for those with income above the $450,000/$400,000 threshold. It will remain at 15 percent for everyone else. (Clinton-era rates were 20 percent for capital gains and taxed dividends as ordinary income, with a top rate of 39.6 percent.)
— The estate tax will be set at 40 percent for those at the $450,000/$400,000 threshold, with a $5 million exemption. That threshold will be indexed to inflation, as a concession to Republicans and some Democrats in rural areas like Sen. Max Baucus (D-Mt.).
— The sequester will be delayed for two months. Half of the delay will be offset by discretionary cuts, split between defense and non-defense. The other half will be offset by revenue raised by the voluntary transfer of traditional IRAs to Roth IRAs, which would tax retirement savings when they’re moved over.
— The pay freeze on members of Congress, which Obama had lifted this week, will be re-imposed.
— The 2009 expansion of tax breaks for low-income Americans: the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit will be extended for five years.
— The Alternative Minimum Tax will be permanently patched to avoid raising taxes on the middle-class.
— The deal will not address the debt-ceiling, and the payroll tax holiday will be allowed to expire.
— Two limits on tax exemptions and deductions for higher-income Americans will be reimposed: Personal Exemption Phaseout (PEP) will be set at $250,000 and the itemized deduction limitation (Pease) kicks in at $300,000.
—The full package of temporary business tax breaks — benefiting everything from R&D and wind energy to race-car track owners — will be extended for another year.
— Scheduled cuts to doctors under Medicare would be avoided for a year through spending cuts that haven’t been specified.
— Federal unemployment insurance will be extended for another year, benefiting those unemployed for longer than 26 weeks. This $30 billion provision won’t be offset.
— A nine-month farm bill fix will be attached to the deal, Sen. Debbie Stabenow told reporters, averting the newly dubbed milk cliff.
Congress stayed up late last night and at 10:35 p.m. voted 257 to 167 to approve the Fiscal Cliff compromise. And the good thing is that since taxes automatically went up for everyone when the day began, with the expiration of the Bush tax cuts, Congressmen could keep their no-tax-hike pledges because their action was now a tax cut; that is, for everyone except those who make over $450,000. Also, people making over $250,000 may no longer claim the personal exemptions on their tax forms, so their taxes will go up slightly, allowing President Obama to keep his campaign promise.
The bill that had already been approved by the Senate also extended the Farm Bill, backing us away from the Dairy Cliff that would have doubled milk milk prices. The automatic spending cuts that were scheduled to go into effect when the Bush tax rates expired were postponed for two months. Nor does it raise the debt ceiling. Nor does it do much for the deficit. So the battles and brinkmanship will continue.