Tax Week: President Obama Plans Tax Increases on Investment Income

 

April 12, 2010

This week, millions of Americans will be sending their tax returns to Washington…but no matter how much revenue the government takes in– one thing is certain — it won’t be enough to cover all the plans for federal spending which will more than double the U.S. debt over the next decade.

Doug Holtz Eakin, a former director of the Congressional Budget Office under Republicans says ” the projected debt is enormous, you know the next ten years we see the debt rise to 20 trillion dollars.”

No one believes that is sustainable. But to even stay at those levels, the administration’s counting on a doubling of federal revenues in the next decade…the first big chunk of which comes at the end of this year…when President Obama will let part of the Bush tax cuts expire, but reinstate others.

Bob Greenstein of the liberal Center on Budget and Policy Priorities says “given the serious longer term fiscal problems the country faces we just can’t afford to continue the tax cuts for the people at the very top.”

And Michael Linden, director for tax policy at the Center for American Progress, a democratic think tank, says, “it’s equity, equity, but it’s also about responsibility. We have a big problem that we are facing in this country  in terms of a large budget gap going forward. And I believe that the wealthy in the country have the responsibility to help solve that problem.”

In an effort to raise revenues, the president intends to raise the tax rates rise for singles making more than 200 thousand a year, and couples making more than 250 thousand.

Greenstein says this will bring in $826 billion over the next 10 years.

But critics say the only way revenues really increase is by expanding the overall economy. They argue tax increases, especially those on investment income that President Obama wants, will do just the opposite.

Alan Reynolds of the CATO Institute, a libertarian think tank, says “we need to focus more on getting the tax base to grow meaning wages and profits to grow than on trying to punish people for earning too much money.”

President Obama plans on pushing the capital gains tax rate from 15 to 20 percent.

The health care reform bill adds on top of that a new 3.8 percent Medicare surtax on all investment income, including dividends.

Brian Riedl of the conservative Heritage Foundation says “anytime the government raises taxes on savings and investments like they are with this new Medicare tax, you’re going to have less savings and investment.”

Excerpted; Continue reading Here.

 

======================================

 Will the UNIONS be exempt from these tax increases on investment income?

Will the SEIU Master Trust be included?

 

 OR Will the SEIU get another “pass” like they received under the Healthcare bill to have taxes on their Cadillac plans not begin until 2018?

 

Will the SEIU pay increased taxes on their SEIU Master Trust Fund or will Obama sign a waiver for them?

 

The SEIU Master Trust is a trust fund that holds the assets of three jointly administered, multiemployer pension funds, commonly referred to as “Taft-Hartley” funds. Taft-Hartley funds are created pursuant to collective bargaining agreements and governed by a board of trustees with equal voting power between labor and management.

 

Many Taft-Hartley funds have accumulated substantial holdings in publicly held securities.

At the behest of the Department of Labor and others, many of the trustees on these funds have been instructed that they have a fiduciary duty to vote all proxies and to use their positions as shareholders to maximize the investment returns for the trust fund. As part of this process, some funds are now seeking to use their positions as shareholders to pressure corporate boards to examine their executive pay practices and, where appropriate, to bring actions to recover “excessive” executive compensation. Actions such as that being threatened against these 29 companies and their boards—especially the initiation of litigation—would typically require the consent of both the union trustees, which include SEIU President Andy Stern, and the employer trustees.

.

http://www.morganlewis.com/documents/LEPG-WP_SEIUUnionOrganizingEfforts_April2009.pdf

As an aside:

Pension Fund Mismanagement Highlights SEIU Corruption