On March 26, the Senate Budget Committee voted out the Conrad budget plan for FY 2010.
Taylor, Key Senate Panel Backs Obama's Budget Blueprint, AP, Mar. 26, 2009.
Rogers, Conrad carves up Obama's budget, Politico.com, Mar. 25, 2009;
Summary of Chairman's Mark FY 2010 Senate Budget Resolution, Mar. 25, 2009;
The Chairman's Mark: FY 2010 Senate Budget Resolution, Mar. 25, 2009
Transcript of Remarks by Senate Budget Committee Chairman Kent Conrad at Markup of FY 2010 Senate Budget Resolution, Mar. 26, 2009;
Statement by Senate Budget Committee Chairman Kent Conrad on Budget Committee Passage of FY 2010 Senate Budget Resolution, Mar. 26, 2009;
The Conrad bill calls for making the Bush tax cuts permanent except for the highest earners and patching the AMT for 3 years without a requirement for any offset. It permanently extends the ridiculous section 179 expensing rules. It expands net operating loss carrybacks and eliminates capital gains taxes for small businesses. It makes the 2009 estate tax levels permanent (with indexing of the exemption amount) and extends all of the "temporary" tax provisions that would otherwise expire in 2009 and 2010 (the treatment of dividends favorably as net capital gains, the active financing exception that lets Big Banks pay no tax on their overseas income until they repatriate it, thus leading them to defer repatriation, etc.). It doesn't commit to making the Making Work Pay reduction in payroll taxes permanent or even to shifting the Pell Grants to the mandatory funding status proposed by Obama (merely providing for a "deficit-neutral reserve fund to allow for increases in Pell grants"). The budget bill doesn't endorse the cap-and-trade proposal supported by the President, and doesn't provide specifics on clean energy or paying for universal health coverage.
So the Senate Dems are more concerned about providing tax relief to those making $200,000 to $500,000 a year (the upper class that is hit by the AMT) or multimillionaires (estate tax "reform" for the ultra wealthy) than in providing much needed payroll tax relief to ordinary taxpayers who make the ordinary wages made by the huge majority of taxpayers in this country. The cost of the revenue reduction measures in the Budget Committee's proposal is $825 billion over 5 years, and suggests a deficit of $1.2 trillion in 2010.
And this is a budget bill written by Democrats?!? The summary calls estate tax "reform" and AMT relief "tax relief for the middle class." Folks, how many times must it be said that those who pay the estate tax are NOT middle class by any estimate, even going back several years to the $2 million exemption amount (amounting to $4 million for a couple). Nor are those folks who make $250,000 to $500,000 that are aided by most of the AMT patch middle class. They are, quite clearly, in the upper crust, the top quintile. The Blue Dogs are misplacing their priorities. One wonders why they are aiming for deficit reduction at all in their budget, rather than aiming for re-targeting spending away from the grossly bloated military budgets that have been produced by four decades of the "Reagan revolution" and back towards sustainable environment and people-oriented policies. But if they are going to aim for deficit reduction, why not do it by (i) letting Bush's estate tax cuts to benefit the wealthy die the death they are supposed to at the end of 2010, reverting to the 2001 estate tax rate; (ii) letting the AMT come into play for taxpayers making more than $200,000 a year, patching only for those at lower income levels; and (iii) enacting payroll tax cuts for people at the bottom by extending the "payroll" taxes to earnings from capital?
Senate consideration will take place next week, where the budget resolution, which requires only a simple majority and is not binding legislation, will likely pass.
Meanwhile, the Senate Finance Committee has posted the text of its tax bill, S. 722, the Taxpayer Certainty and Relief Act of 2009. The bill makes much of the Bush tax policy in favor of the wealthy permanent:
- AMT: the higher exemption amount is made permanent, with indexing for inflation
- Tax rates: replaces the pre-Bush 28% rate permanently with a 25% rate and the pre-Bush 31% rate permanently with a 28% rate, and for two years replaces the pre-Bush 36% and 39.6% rates with 33% and 35%, respectively;
- Capital Gains rates: makes permanent the Bush reduction in capital gains rates of 0% and 15% for everybody (but the rate for the top two brackets of income will revert to the still very low 20% )
- Credits: Adoption, Earned Income, and other Credits are made permanent, and the so-called "marriage penalty" relief is made permanent and families with 3 or more children get a larger child credit percentage
- Estate tax: the Bush estate tax reduction as of 2009 (3.5 million per taxpayer exemption, 45% rate) will be made permanent, and the exemption amount will be inflation adjusted.
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