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Thursday, February 26, 2009
(BN) Obama Seeks $1 Trillion Tax Increase on Highest-Paid Americans, Companies
Bloomberg News, sent from my iPod touch.
Obama Seeks $1 Trillion Tax Increase in Budget Plan
Feb. 26 (Bloomberg) -- President Barack Obama proposed almost $1 trillion in higher taxes on the 2.6 million highest- earning Americans, Wall Street financiers, U.S.-based multinational corporations, and oil companies to pay for permanent tax breaks for lower earners.
Obama's 2010 budget proposal, released today, would reinstate the top two Clinton-era tax rates of 36 percent and 39.6 percent in 2011, up from the 33 percent and 35 percent the richest Americans now pay. It would raise taxes on capital gains and dividends to 20 percent for top earners, up from the 15 percent set by former President George W. Bush in 2003.
The tax increases, which Obama vowed to impose as a presidential candidate, would be the first on high-income earners since 1993 and would reverse a course set by Bush of lowering the tax burden on the nation's wealthiest people.
"It's a clear repudiation of Bush's policy," said Peter Morici, an economist at the University of Maryland in College Park. "It's more Obama Robin Hood."
Obama's budget does keep in place Bush's tax cuts that benefit lower- and middle-income earners and it preserves a sliver of policy that benefits the more affluent: A preferential tax rate on corporate dividends. Before Bush, dividends were taxed as ordinary income, or at rates as high as 39.6 percent in the 1990s.
'Hugely Positive'
"It is a hugely positive step to keep that part of the '03 changes," said Pamela Olson, who was the top tax official in Bush's Treasury Department when the tax rate on dividends was reduced. "It's good economic policy, good corporate governance policy, and good tax policy."
Higher-income earners, primarily families with more than $250,000 of income, would face an additional tax burden under a proposal to reinstate limitations on their itemized deductions, which would subject more of their income to tax. In all, top- earning households would pay $636.7 billion in additional taxes over the next decade, Obama's budget estimates.
Linda Beale, a tax-law professor at Wayne State University Law School in Detroit, said "many will object to reinstituting phase-outs for itemized deductions because of the complications that creates."
Representative Mike Pence of Indiana, the No. 3 Republican leader in the House, said Obama can expect a wall of opposition to his proposed tax increase on top-earners. Roughly half of Americans earning $250,000 are small-business owners, and the proposed increase will stifle the troubled economy, he said.
'Overwhelming Opposition'
"There will be overwhelming opposition from the American people and House Republicans to the idea that we should raise taxes during a recession," Pence said in an interview. "Raising taxes in a recession is not a strategy for recovery."
Representative Jeb Hensarling, a Texas Republican, said in an e-mail, "You cannot help the job-seeker by punishing the job creator."
The higher taxes on individuals will largely be used to pay for expanded health coverage for lower-income Americans and to make permanent Obama's tax breaks such as a payroll tax credit worth up to $1,000 that was adopted on a temporary basis in the $787 billion fiscal stimulus measure earlier this month.
"He's being so generous at the lower-income level that making $200,000 is going to be like falling off a cliff," said Dustin Stamper, an analyst in the National Tax Office at Grant Thornton LLP. "Say what you want about the Bush tax cuts favoring the rich, but this is just becoming punitive."
AMT Lives On
Obama's budget also assumes Congress will continue to index the alternative minimum tax for inflation. The AMT is a parallel system that can impose higher rates on families earning between $75,000 and $500,000 when their deductions are too high relative to their income.
Executives at private-equity firms, venture-capital firms, some hedge funds and other partnerships that receive a 20 percent "carried interest" in the firm's profits would see their tax burdens nearly triple under Obama's budget.
Most of their carried interest currently is taxed at the 15 percent rate for long-term capital gains. Obama is asking Congress to tax the profit share as ordinary income, arguing that it's a form of wages; under his plan, most executives would pay 39.6 percent.
That proposal will likely reignite a debate that was waged by Congress in 2007 when the House of Representatives approved the change and the Senate never considered it.
Corporate Tax Increase
Obama proposed $353.5 billion in higher taxes on corporations over the next decade, the bulk of which would come from "reforming" rules that allow U.S.-based multinational corporations such as General Electric Co. to defer U.S. tax on profits they earn overseas. GE has about $75 billion offshore on which it has never paid U.S. taxes, according to its regulatory filings.
Obama's budget estimates such reforms and beefing up Internal Revenue Service enforcement of international tax rules would generate $210 billion in additional revenue over the next decade. He also proposed to limit tax shelters by requiring they serve a business purpose by redefining the tax code's "economic substance doctrine."
'Last-In, First Out'
He also proposed ending a tax-accounting technique called "last-in, first out" or LIFO, that primarily benefited oil and gas companies when oil topped $100 a barrel but is widely used across industries.
Republican senators in April 2006 floated such a tax increase but backed off after Exxon Mobil Corp. Chairman and Chief Executive Officer Rex Tillerson called the proposal a "backdoor windfall-profits tax."
In addition to oil companies, the repeal of LIFO would hit retailers, automakers and makers of non-automotive heavy equipment, textile makers, consumer products, drug companies, alcohol and tobacco manufacturers and wholesalers when times are good, according to tax experts.
The accounting method has been commonly used since the 1930s and is viewed as the most accurate measure of income for financial statement purposes, according to the congressional Joint Committee on Taxation, a nonpartisan panel.
To contact the reporter on this story: Ryan Donmoyer in Washington at rdonmoyer@bloomberg.net
Find out more about Bloomberg for iPhone: http://bbiphone.bloomberg.com/iphone
Obama Seeks $1 Trillion Tax Increase in Budget Plan
Feb. 26 (Bloomberg) -- President Barack Obama proposed almost $1 trillion in higher taxes on the 2.6 million highest- earning Americans, Wall Street financiers, U.S.-based multinational corporations, and oil companies to pay for permanent tax breaks for lower earners.
Obama's 2010 budget proposal, released today, would reinstate the top two Clinton-era tax rates of 36 percent and 39.6 percent in 2011, up from the 33 percent and 35 percent the richest Americans now pay. It would raise taxes on capital gains and dividends to 20 percent for top earners, up from the 15 percent set by former President George W. Bush in 2003.
The tax increases, which Obama vowed to impose as a presidential candidate, would be the first on high-income earners since 1993 and would reverse a course set by Bush of lowering the tax burden on the nation's wealthiest people.
"It's a clear repudiation of Bush's policy," said Peter Morici, an economist at the University of Maryland in College Park. "It's more Obama Robin Hood."
Obama's budget does keep in place Bush's tax cuts that benefit lower- and middle-income earners and it preserves a sliver of policy that benefits the more affluent: A preferential tax rate on corporate dividends. Before Bush, dividends were taxed as ordinary income, or at rates as high as 39.6 percent in the 1990s.
'Hugely Positive'
"It is a hugely positive step to keep that part of the '03 changes," said Pamela Olson, who was the top tax official in Bush's Treasury Department when the tax rate on dividends was reduced. "It's good economic policy, good corporate governance policy, and good tax policy."
Higher-income earners, primarily families with more than $250,000 of income, would face an additional tax burden under a proposal to reinstate limitations on their itemized deductions, which would subject more of their income to tax. In all, top- earning households would pay $636.7 billion in additional taxes over the next decade, Obama's budget estimates.
Linda Beale, a tax-law professor at Wayne State University Law School in Detroit, said "many will object to reinstituting phase-outs for itemized deductions because of the complications that creates."
Representative Mike Pence of Indiana, the No. 3 Republican leader in the House, said Obama can expect a wall of opposition to his proposed tax increase on top-earners. Roughly half of Americans earning $250,000 are small-business owners, and the proposed increase will stifle the troubled economy, he said.
'Overwhelming Opposition'
"There will be overwhelming opposition from the American people and House Republicans to the idea that we should raise taxes during a recession," Pence said in an interview. "Raising taxes in a recession is not a strategy for recovery."
Representative Jeb Hensarling, a Texas Republican, said in an e-mail, "You cannot help the job-seeker by punishing the job creator."
The higher taxes on individuals will largely be used to pay for expanded health coverage for lower-income Americans and to make permanent Obama's tax breaks such as a payroll tax credit worth up to $1,000 that was adopted on a temporary basis in the $787 billion fiscal stimulus measure earlier this month.
"He's being so generous at the lower-income level that making $200,000 is going to be like falling off a cliff," said Dustin Stamper, an analyst in the National Tax Office at Grant Thornton LLP. "Say what you want about the Bush tax cuts favoring the rich, but this is just becoming punitive."
AMT Lives On
Obama's budget also assumes Congress will continue to index the alternative minimum tax for inflation. The AMT is a parallel system that can impose higher rates on families earning between $75,000 and $500,000 when their deductions are too high relative to their income.
Executives at private-equity firms, venture-capital firms, some hedge funds and other partnerships that receive a 20 percent "carried interest" in the firm's profits would see their tax burdens nearly triple under Obama's budget.
Most of their carried interest currently is taxed at the 15 percent rate for long-term capital gains. Obama is asking Congress to tax the profit share as ordinary income, arguing that it's a form of wages; under his plan, most executives would pay 39.6 percent.
That proposal will likely reignite a debate that was waged by Congress in 2007 when the House of Representatives approved the change and the Senate never considered it.
Corporate Tax Increase
Obama proposed $353.5 billion in higher taxes on corporations over the next decade, the bulk of which would come from "reforming" rules that allow U.S.-based multinational corporations such as General Electric Co. to defer U.S. tax on profits they earn overseas. GE has about $75 billion offshore on which it has never paid U.S. taxes, according to its regulatory filings.
Obama's budget estimates such reforms and beefing up Internal Revenue Service enforcement of international tax rules would generate $210 billion in additional revenue over the next decade. He also proposed to limit tax shelters by requiring they serve a business purpose by redefining the tax code's "economic substance doctrine."
'Last-In, First Out'
He also proposed ending a tax-accounting technique called "last-in, first out" or LIFO, that primarily benefited oil and gas companies when oil topped $100 a barrel but is widely used across industries.
Republican senators in April 2006 floated such a tax increase but backed off after Exxon Mobil Corp. Chairman and Chief Executive Officer Rex Tillerson called the proposal a "backdoor windfall-profits tax."
In addition to oil companies, the repeal of LIFO would hit retailers, automakers and makers of non-automotive heavy equipment, textile makers, consumer products, drug companies, alcohol and tobacco manufacturers and wholesalers when times are good, according to tax experts.
The accounting method has been commonly used since the 1930s and is viewed as the most accurate measure of income for financial statement purposes, according to the congressional Joint Committee on Taxation, a nonpartisan panel.
To contact the reporter on this story: Ryan Donmoyer in Washington at rdonmoyer@bloomberg.net
Find out more about Bloomberg for iPhone: http://bbiphone.bloomberg.com/iphone
Sent from my iPod
Wednesday, February 25, 2009
Worst of U.S. Job Cuts May Be Over as Companies Freeze Pay, Survey Shows
> Worst of U.S. Payroll Reductions May Be Over, Survey Shows
>
> Feb. 25 (Bloomberg) -- More U.S. companies are adopting pay and
> hiring freezes to lower their labor costs during what is likely to
> be a prolonged recession rather than depending on further payroll
> reductions, a private survey found.
>
> The share of companies planning staff cuts fell to 13 percent this
> month from 23 percent in December, according to figures issued today
> by Watson Wyatt Worldwide Inc., an Arlington, Virginia-based
> workforce consulting firm. Fifty-two percent of the 245 employers
> surveyed have already made staff reductions, up from 39 percent two
> months earlier.
>
> "With over half of companies reporting that they have already made
> layoffs, they are now focusing on smaller, more sustainable cost-
> cutting actions," Laura Sejen, global director of strategic rewards
> for Watson Wyatt, said in a statement. "Companies have come to terms
> with the fact that this recession is going to last and that they
> can't slash their way out of it."
>
> The economy has already lost 3.6 million jobs since the economic
> slump started in December 2007, the biggest decline since World War
> II. Economists surveyed by Bloomberg News this month forecast the
> jobless rate will climb to a 26-year high of 8.8 percent by the end
> of 2009.
>
> Fifty-six percent of the companies surveyed have put in place a
> hiring freeze, up from 47 percent in a December survey, according to
> Watson Wyatt. Salary freezes have been implemented by 42 percent of
> respondents, up from 13 percent, and 68 percent of firms have
> enacted travel restrictions, up from 48 percent.
>
> Twelve percent of companies have reduced contributions to employee
> retirement plans, compared with 3 percent in December, and 13
> percent cut hours, up from 2 percent. The survey had a margin of
> error of plus or minus 6.2 percentage points.
>
> Feb. 25 (Bloomberg) -- More U.S. companies are adopting pay and
> hiring freezes to lower their labor costs during what is likely to
> be a prolonged recession rather than depending on further payroll
> reductions, a private survey found.
>
> The share of companies planning staff cuts fell to 13 percent this
> month from 23 percent in December, according to figures issued today
> by Watson Wyatt Worldwide Inc., an Arlington, Virginia-based
> workforce consulting firm. Fifty-two percent of the 245 employers
> surveyed have already made staff reductions, up from 39 percent two
> months earlier.
>
> "With over half of companies reporting that they have already made
> layoffs, they are now focusing on smaller, more sustainable cost-
> cutting actions," Laura Sejen, global director of strategic rewards
> for Watson Wyatt, said in a statement. "Companies have come to terms
> with the fact that this recession is going to last and that they
> can't slash their way out of it."
>
> The economy has already lost 3.6 million jobs since the economic
> slump started in December 2007, the biggest decline since World War
> II. Economists surveyed by Bloomberg News this month forecast the
> jobless rate will climb to a 26-year high of 8.8 percent by the end
> of 2009.
>
> Fifty-six percent of the companies surveyed have put in place a
> hiring freeze, up from 47 percent in a December survey, according to
> Watson Wyatt. Salary freezes have been implemented by 42 percent of
> respondents, up from 13 percent, and 68 percent of firms have
> enacted travel restrictions, up from 48 percent.
>
> Twelve percent of companies have reduced contributions to employee
> retirement plans, compared with 3 percent in December, and 13
> percent cut hours, up from 2 percent. The survey had a margin of
> error of plus or minus 6.2 percentage points.
Friday, February 20, 2009
At Work - Around the World
At work
When the economy makes big news, many photographs of people at work come across the wires, usually to help illustrate a particular story or event. By collecting these disparate photos over the past few months, I found that a global portrait emerged of we humans producing things. People assembling, generating, and building items small and large, mundane and expensive, trivial and important. I hope you enjoy this look into some people's work lives around the world. (45 photos total)
An aerial view of the snow covered Ruhr district, with the steel company ThyssenKrupp in Duisburg, western Germany, is seen. ThyssenKrupp AG, Germany's largest steelmaker, said Friday Feb. 13, 2009 company profits dropped sharply in the fiscal first quarter and that it would cut jobs as the world economic crisis caused a sharp fall in demand for steel. (AP Photo/Frank Augstein) #
A worker walks past chicken eggs stored at a major eggs production factory in suburban Beijing, China, Friday, Oct. 31, 2008. Three more Chinese brands of eggs containing melamine were identified and a local government has acknowledged that officials knew about the contamination for a month before it was publicly disclosed. (AP Photo/Andy Wong) #
A worker walks over steel bars at an iron and steel plant in Wuhan, Hubei province, China on November 1, 2008. Moves by China to restrict steel exports may push trade distortion problems into other industries down the line and run counter to world rules, a U.S. trade official said. (REUTERS/Stringer) #
Workers perform a quality check for newly made toys at the production line of a toy factory in the suburbs of Shanghai October 31, 2008. According to the owner of the factory, where most of the production is for export to the U.S and Japan, the slowdown of about 30% in client's orders can be mainly attributed to the global financial crisis. The number of Chinese firms exporting toys overseas halved in the first seven months of 2008, compared to the year before, the General Administration of Customs said on Monday. (REUTERS/Nir Elias) #
An operator walks in the control room of the closed third unit of the nuclear power plant of Kozlodui north east of the Bulgarian capital Sofia, Friday, Jan. 23, 2009. Bulgaria's parliament has approved plans to seek European Union permission to re-launch two old nuclear reactors mothballed when it joined the EU two years ago. The two aging 440-megawatt reactors at the Kozlodui plant were shut down in 2007. The government says Bulgarian businesses lost euro100 million (US$129 million) when Russian natural gas supplies were suspended for nearly two weeks. (AP Photo/Petar Petrov) #
An employee works at a workshop of Changning Steel and Iron Factory in Changzhi, Shanxi province, China on January 15, 2009. European Union trade officials will vote on Thursday in favor of imposing temporary antidumping duties of 25 percent on imports of Chinese-made steel wire rods, diplomats said. (REUTERS/Stringer) #
A woman spins raw silk yarn in a factory owned by Rwandan textile firm Utexwra in Rwanda's capital city, Kigali on January 19, 2009. Rwandan textile firm Utexrwa will launch the central African country's first range of silk products in February, as part of a strategy to more than triple turnover, the company said on Monday. The central African country's soil and climate are ideal for growing mulberry trees which silk-worms eat. The company said silk-worm rearers can earn three times more than coffee growers per hectare per year. (REUTERS/Hereward Holland) #
People work on an assembly line of shoes at Thuong Dinh Shoe factory in Hanoi, Vietnam, Thursday, Nov. 20, 2008. Thuong Dinh Shoe factory produces shoes for domestic markets and for exports. Shoe exports are among top of Vietnam's export earners, earning $4 billion last year.(AP Photo/Chitose Suzuki) #
A laborer's hands are covered with paraffin wax inside a candle making factory in the northeastern Indian city of Siliguri October 24, 2008. Candles are sold in large numbers during Diwali, the annual Hindu festival of lights, when people buy candles to decorate their homes. The Diwali festival was celebrated across the country on October 28. (REUTERS/Rupak De Chowdhuri) #
Eladio Gonzalez sands and buffs Oscar #3453 at R.S. Owens & Company Thursday, Jan. 22, 2009, in Chicago. Oscar 3453 began its life with the transformation of a chunk of metal alloy into a 13 1/2-inch-tall statue at the factory where the statuettes have been made since 1983. (AP Photo/M. Spencer Green) #
A worker assembles a miniature locomotive at the Maerklin model train factory March 30, 2006 in Goeppingen, Germany. Maerklin is one of many German smaller manufacturing companies with rich traditions who have suffered under falling demand for their high-priced products. (Thomas Niedermueller/Getty Images) #
A man picks a bottle at an assembly line inside the Taiwan Beer factory in Jhunan, Miaoli County February 13, 2008. Taiwan Beer, made by the Taiwan Tobacco and Liquor Corp, will be sold in mainland China from May, amid warming ties between the two cross-strait rivals, according to local media. (REUTERS/Nicky Loh) #
Obama cigars ready to be packed in boxes are placed on a table at the Segovia Cigars Factory in the Nicaragua's northern province of Esteli February 4, 2009. While U.S. President Barack Obama tries to kick an old smoking habit, a Nicaraguan company has produced the latest in a flood of merchandise trying to cash in on his popularity -- "Obama" cigars. (OSWALDO RIVAS/Reuters) #
An employee works at the Ferronikeli smelting complex in Glogovac, central Kosovo February 12, 2009. The Ferronikeli ore mining and metallurgical complex, set up in 1984, was badly damaged during the 1999 NATO air strikes against Serbia. It was bought by a consortium of international investors in 2006. (REUTERS/Hazir Reka) #
A worker at Iraqi's Iskandariyah power plant works on a broken electricity-generating turbine shaft February 11, 2009 in Iskandariyah, Iraq. Built in the early 1980s, the Iskandariyha plant is Iraq's largest and most important, providing a significant percentage of the country's total electrical power. Years of neglect by Saddam's government, as well as a 1991 aerial strike by the US during the Persian Gulf War, have left the plant hobbled and sometimes only operating at half capacity. The plant burns Iraq's plentiful crude oil to generate power with almost no modern environmental regulations while its employees, numbering over 1000, work on dirty, oil-slicked floors with little safety equipment. (Chris Hondros/Getty Images) #
Workers ignite a kiln at a brick factory in Guruwali village on the outskirts of Amritsar, India on Tuesday, Nov. 4, 2008. Brick making is an unorganized industry, generally confined to rural and semi-urban areas and is one of the largest employment-generating industries in India. The laborers usually work for 12-14 hours a day to reach a target of 1,000 bricks a day, earning between US$ 60 to 100 a month. (AP Photo/Altaf Qadri) #
Child laborers sit at a police station after they were removed from a factory during a raid by policemen and activists of Bachpan Bachao Andolan, or "save childhood" movement, in New Delhi, India, Thursday, Oct. 23, 2008. 34 child laborers were rescued from a local embroidery factory. (AP Photo/Manish Swarup) #
Workers operate product lines in a dairy factory of Mengniu Dairy Group Co., one of China's largest dairy producers, in Hohhot, north China's Inner Mongolia region, Thursday, Oct. 16, 2008. China's dairy giants are trying to revive their brands and win back consumer confidence, saying melamine contamination problems that have tarnished the industry won't resurface. Nearly 6,000 Chinese babies remain hospitalized with kidney problems caused by contaminated milk powder, the Health Ministry said. (AP Photo/Alexander F. Yuan) #
New York Mayor Michael Bloomberg and a group of city officials, (bottom right), watch as the cutter head of a tunnel boring machine is lifted by crane before being lowered into an underground assembly chamber beneath 11th Avenue at 25th Street for use in the Number 7 subway line extension project Thursday, Feb. 19, 2009 in New York. The cutter head, 22 feet in diameter and weighing 100 tons, is the first piece of two massive tunnel boring machines that will slice through Manhattan bedrock as they bore underneath 11th Avenue from 25th Street to 41st Street, and then east to the existing Number 7 line's terminus at Times Square. (AP Photo/Jason DeCrow) #
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