Archives For Obama

Now that President Obama is on the campaign for corporate tax reform, some small business leaders are trying to rehash arguments from the fiscal cliff negotiations over individual income tax rates.

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“The IRS sucks; Obama’s handling of the IRS sucks; Congress sucks (but not because they’re sucking on tax reform); wealth should be re-distributed, but it can’t be through a tax policy that re-distributes the wealth; I’m definitely paying too much in taxes, but I think my tax rate is fair.. did I just contradict myself?; oh well, I actually don’t care that much; you see, I don’t know much about taxes, but I definitely don’t like them!”

If you’re confused, you should be. If you think this is a joke, it’s not (not really, at least). Let’s break America’s sentiment down, phrase by phrase:

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As discussed in our last Joy of Tax Law article, Apple has sheltered $44 billion in offshore tax havens. Like Apple, many other U.S.-based multinational companies are able to protect many of their billion dollar profits abroad through a U.S. Treasury tax loophole called the “check the box” rule.

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President Obama today appointed Office of Management and Budget official Danny Werfel to serve as acting commissioner of the Internal Revenue Service.

Werfel, 42, replaces Steven Miller, who was asked to resign Wednesday in the wake of revelations that IRS employees inappropriately targeted conservative groups.

“Throughout his career working in both Democratic and Republican administrations, Danny has proven an effective leader who serves with professionalism, integrity and skill,” Obama said.

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It’s no surprise that acting IRS Commissioner Steven T. Miller submitted his resignation this week. Many were calling for his head, others for the obliteration of the agency altogether. Miller’s departure is the first of many slaps on the wrist for an agency struggling to wipe away the stain on its already fragile reputation.

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Last month President Obama proposed nearly doubling the federal tax on cigarettes from its current rate of $1.01 per pack to $1.95. CNN Money reports the increased revenue, estimated at $78 billion/10 years, would be used to fund childhood education and reduce smoking rates. If implemented, the administration will have raised the cigarette tax by more than 5 times its pre-Obama level of $0.39 per pack.

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The $1.2 trillion sequester, AKA the “austerity crisis,” or “fiscal cliff Part 2” takes effect at the end of this week (March 1). Without alternative legislation, $85 billion will be slashed from the rest of this year’s budget.  The across-the-board cuts would hit the Pentagon, social services programs, government agencies like the Department of Education, NASA, and National Institute of Health, and reduce payments to Medicare providers.

Most politicians agree that the sequester is, as House Speaker John Boehner put it, “bad policy,” but if you thought collective agreement on a top priority political issue would promote bi-partisan action and compromise, you must have missed the debt-ceiling debates and first round of fiscal cliff negotiations.

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Sen. Lindsay Graham

New revenues are the biggest stalemate to compromise.  The American Taxpayer Relief Act (ATRA), which extended tax breaks for 98% of Americans while raising over $600 billion in new revenue wasn’t enough for Democrats or the White House, who wanted at least twice that.  The Republican agenda on additional tax revenue is more divided, with some lawmakers such as Senator Lindsey Graham (R-S.C.) and Arizona Gov. Jan Brewer recently coming out in support of some new revenues in exchange for serious spending cuts.  Graham said he opposes the sequester because it’s “a lousy way to cut $1.2 trillion,” and that he would agree to $600 billion in new revenue pending Democratic compromise on reforming entitlements and of course, cutting spending.  Meanwhile, on CBS’ Face the Nation on Sunday, Brewer said:

“We know we have to be pragmatic. We know there has to be some kind of compromise, but dang it, they need to get the job done. They don’t need to leave the public out there hanging.”

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Tax-related issues took center stage in 2012. Between the drawn-out fiscal cliff negotiations, Romney’s 47% comment, the persistence of the Occupy movement, updated rules from the IRS and the presidential election, there was no shortage of tax talk. The talk becomes reality for Americans tomorrow (Jan. 30, 2013), when the IRS officially begins the 2012 tax filing season. In this post, we outline the highlights, predictions, changes, opinions and other worthy information on the 2012 tax filing season.

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The deal was a last ditch effort to save automatic spending cuts and tax hikes induced by the fiscal cliff from crippling the economy; in that regard it was a success. It comes with a silver-lining though — Congress now has two more months to resolve trillions of dollars in sequestration. Embrace yourselves for the fiscal cliff, part two.

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