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The Small Business Administration reports that small firms (fewer than 500 employees) employ just over half of all private-sector employees and have generated 64 percent of net new jobs over the past 15 years; created more than half of the GDP; hired 40 percent of high-tech workers, such as scientists, engineers, and computer programmers; produced 13 times more patents per employee than “large patenting firms;” and 52 percent are home-based. Firms with fewer than 500 employees accounted for 64 percent of the net new jobs between 1993 and third quarter 2008. When it comes to job-creation, Obama seems blindfolded to reality. He’s handicapped by never having run a business, planned or managed an operation to make money, or ever invented anything (other than distortions of the truth). He seems oblivious to the difference between earning money enough to be rich and just living like you’re rich.
Fed Chairman Ben Bernanke told the House Financial Services Committee July 23 that extending at least some of the tax cuts set to end this year would help strengthen the economy “still in need of stimulus.” He urged offsetting such a move with increased revenue or lower spending, according to a Bloomberg report. While many Democrats want to keep the tax reductions in place for families earning up to $250,000, Republicans want to continue the cuts for higher income folks as well. Continuing the reductions for families earning less that $250,000 a year will cost an estimated $255 billion. Extending the tax cuts for the wealthy would supposedly lose $55 billion in revenue to make up the cost of keeping top marginal rates at 35 percent, the IRS estimates. No one knows what Obama will eventually shoot for—keeping the Bush rates in place temporarily, letting them all expire, or just killing the rates for the “rich.”
Taxation at any time is complex. But you would think the Treasury Secretary would know what existing rates are. But, then, he didn’t know how to file his tax return honestly before Obama hired him. Our imperfect Secretary Geithner on CNBC July 7 said, “We’re [the Administration] going to make sure we keep at 20 percent the existing rates on dividends and capital gains.” But the not-so-know-it-all Treasury Secretary apparently didn’t know that existing top rates for dividends and capital gains are 15 percent, not 20 percent. They will go back to 20 percent if the law lapses December 31. But anybody who gets confused over his tax return can make a mistake.
In addition to the Bush cuts of 2001 and 2003, Obama has had Congress make changes, a few of which are due to expire at year’s end. Here are the main provisions to end (unless some or all are extended), as listed by the Joint Committee on Internal Revenue Taxation:
Reduced capital gains rates for individuals, dividends to individuals taxed at the same low capital gains rate. Ten percent as the lowest individual income tax rate. Reduction in other individual income tax rates–15 percent rate modified to 10 percent; and 28 percent, 31 percent, 36 percent and 39.6 percent rates are reduced to 25 percent, 28 percent, 33 percent and 35 percent, respectively. Dependent care limit—increase in dollar limit on expenses from $2,400 to $3,000 (and higher for more children in the family). Adoption credit and assistance increased to $10,000. Regular child credit—increased from $500 to $1,000. Tax credit for certain non-business energy property. Alternative motor vehicle credits for hybrid vehicles. Earned Income Tax Credit for joint returns. Phase out marriage penalty. Tax credits for alcohol-mix fuels. Tax credit for employer-provided child care. Tax credit for energy-efficient appliances. Work opportunity tax credit for unemployed veterans. Qualified school construction bonds—allocation of bond authority. Increase of standard deduction for married filers to double that of unmarried filer. Repeal of limitation of itemized deductions. Employer-provided educational assistance. Exclusion from tax on income for benefits to volunteer firefighters and emergency medical responders. Increase in dollar limitation for expensing. Student loans interest deduction benefits. Increase in contributions in education savings accounts. Special rules for qualified small business stock. Expansion and clarification of estate tax rules.
Political Mavens.com quotes the Congressional Budget Office as saying “Letting the Bush cuts expire will cost taxpayers $116 billion next year alone and $2.6 trillion through 2020.”
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