Tuesday, January 27, 2009

Making Sausage--or Stimulus Tax Legislation?

It's now the Senate Finance Committee's turn to consider the tax part of President Obama's stimulus package and Ranking Member Charles Grassley (R-IA, not necessarily to be confused with R-Roth Tax Updates) has ideas of his own, one of which is a patch (why not a FIX?) for the alternative minimum tax. Meanwhile, Chairman Max Baucus (D-MT) is proposing a higher income phase-out on the proposed Making Work Pay credit and a smaller "temporary" (I am always skeptical of temporary changes in tax or any other law) increase in the child tax credit, increases some businesses tax credits related to energy and suspends taxes on the first $2,400 of unemployment benefits. From the House, Minority Leader John Boehner (R-OH) wants (but is unlikely to get) a reduction (10-5 and 15-10) in the lower two tax rates, a small business tax deduction of 20% of their income, making unemployment benefits nontaxable again and a credit to homebuyers able to pay at least 5% down.

Most of the above proposals will not be in the final bill, but are interesting measures of what the Democrats plan to include and what the Republicans hope to include. Best ideas of the group are probably Boehner's reduction in the bottom rates and Baucus's partial suspension of unemployment benefits taxability.


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