The House today (April 4, 2009) passed its budget resolution (H. Con. Res. 85) on a vote of 233-196, adopting a $3.5 trillion FY 2010 budget. The resolution supports extending the Bush tax cuts for all but the top income group, for which the current law calling for a rollback of rates would be allowed to apply. Regrettably, that means that the budget resolution is less progressive than it should be, providing significant tax cuts to those who are in the top income distributions. This is especially true since the House did not make permanent, as President Obama had proposed, the cuts to the payroll taxes that are of particular benefit for ordinary Americans. The House budget resolution also scrapped the limitation on some tax deductions to 28%. Though that kind of limitation is a complicating factor, it should have been adopted. The House also diddn't include the cap-and-trade regime to cut down on greenhouse gases.
Over in the Senate, the consideration of S. Con. Res. 13 is still underway. That resolution assumes an AMT patch that is not offset through 2012. The Senate passed two amendments of interest on the estate tax: S.A. 873 creates a deficit-neutral reserve fund that would allow creation of an exemptio amount of $5 million per spouse, while S.A. 974 creates a point of order against any legislation that provides estate tax relief beyond the $3.5 million exemption per spouse assumed in the underlying resolution, unless there was an equal amount of tax relief first to taxpayers earning less than $100,000 annually. I am still amazed that Congress can even consider the $3.5 million exemption level--the very very few estates that would be subject to this tax do not merit any tax relief whatsoever--why, in a time of huge trillion-dollar deficits, is the Senate even considering extending more tax relief to the ultra-wealthy by raising the estate tax exemption amount to such a high level?? Once again, it seems obvious that it is the wealthy for whom Congress toils.
And at the G-20 summit in London, there is a new consensus to push harder against tax haven countries and to establish sounder regulation of financial institutions, including hedge funds. The official communique acknowledges the depth of the economic crisis and pledges to take necessary measures to "restore confidence" and "repair the financial system" and to "strengthen financial regulation." The countries agree to "take action against non-cooperative jurisdictions, including tax havens [and] to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information." Strengthening financial supervision and regulation means that each country must "ensure our domestic regulatory systems are strong." That means, explicitly, a need "to extend regulation and oversight to all systemically important financial institutions, instruments and markets. This will include, for the first time, systemically important hedge funds."
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