Monday, March 26, 2012

Budget for All details

The Congressional Progressive Caucus finalized some of the details of their proposed budget. A few of the many details follow:

Eliminate corporate welfare for oil, gas, and coal companies. The Budget for All repeals exploration and development expensing, preferential tax treatment of royalties, and domestic manufacturing deductions, among other tax preferences, for oil, natural gas, and coal producers.

Wall Street Gaming Tax. This policy would enact a tax on derivatives, credit default swaps, and other exotic financial products, including both sides of futures and forwards, option premiums and foreign exchange spot transactions. This is a tax levied directly against the types of opaque, complex trades that Wall Street manipulators used to inflate their profits and were a direct cause of the financial crisis. This policy would use tax base and rates as follows: stock transactions at 0.25%, bond transactions at 0.004%, option premiums at 0.25% per year to maturity, foreign exchange transactions at 0.004%, and futures and swaps at 0.01%

Millionaire and billionaire tax rates proposal. The Schakowsky plan asks the extraordinarily wealthy to pay a sensible share by creating five additional income tax brackets, the highest of which is still lower than the top bracket in place during nearly all of the Reagan Administration –

$1 – 10 million 45%
$10 – 20 million: 46%
$20 – 100 million: 47%
$100 million - $1billion 48%
$1 billion and over 49%

Tax Capital Gains as Ordinary Income & Eliminating Step Up Basis. This policy would eliminate any preferential treatment on long-term capital gains and qualified dividends (currently set at 15%), similar to the policy established by the 1986 tax reform signed by President Reagan. As one of the leading drivers of income inequality in this country, our nation must end special tax breaks for investment income. Further, by eliminating step-up basis and using the carryover standard instead, where capital gains taxes are levied upon the sale of assets, the basis for that tax will be founded on the true appreciation in the assets’ value.

Cap the benefit of itemized deductions at 28%. Only 30% of taxpayers itemize their deductions because the majority of Americans claim the standard deduction. Further, the value of a deduction corresponds to an individual’s marginal tax rate – making itemization highly regressive. For example, itemized deductions totaling $10,000 reduce taxes for a person in the 15 percent bracket by $1,500 (15 percent of $10,000) but cut taxes by $3,500 for a person in the 35 percent bracket (35 percent of $10,000). While “itemizers” are of all income levels, this proposal holds lower earners completely harmless, only affecting those currently in the top two income brackets.

Offer a Public Option. Republicans are pushing to repeal the health reform law before it has even been fully implemented. They want to return us to the old status quo, where health insurance premiums rise uncontrollably and the ranks of the uninsured continue to swell. Instead, our budget improves on the Affordable Care Act by allowing the Secretary of Health and Human Services to offer a public health insurance option that ensures choice, competition, and stability in affordable, high-quality coverage throughout the United States. This will save $104 billion over 10 years.

Domestic Investments. Domestic investments create jobs and lay the foundation for exceptional American industries competing in the global economy. The creation of an infrastructure bank would attract private investment toward critical infrastructure projects and facilitate private-public partnerships with our states and localities. Some projections estimate that the iBank could mobilize up to $625 billion in funding for infrastructure. A $556 billion surface transportation bill would help meet the overwhelming need for repair and construction of our roadways and aging infrastructure. Lastly, the Budget for All outlines a plan for nearly $2.1 trillion in widespread domestic investment, getting badly needed funds to valuable programs that are scheduled for starvation under current law.

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