Congress looks at taxes
After wrestling with health care and financial markets reform, the House of Representatives and the Senate now turn to some tax issues.
Retroactive taxes. There are many expired tax breaks that will be revived and made retroactive back to January 1:
Research and development credits for business
Writing off state sales tax as an alternative to state income tax
Reinstatement of the extra standard deductions for property taxes
Tax free IRA payment transfers to charities
Deductions for college tuition
Write offs for teachers’ supplies (even though it is a disgrace they have to pay for these)
Depreciation of tenant improvements in just fifteen years
Depreciation of restaurant renovations in just fifteen years
Depreciation of farm equipment in just five years
Breaks for small business. For companies with $50 million or less in assets:
A 100 percent capital gains exclusion of the sales of a small company’s stock
Stock must be held more than five years and is restricted to newly purchased shares
A larger deduction for new business start-up costs, up to $20 thousand
Additional funding of small business lending programs
Estate taxes. I never believed that we would get this far into 2010 without Congress addressing the death of the estate tax exemption breaks. The current law has expired. Unless there is a new law, next year the exemption will be lowered to $1 million and the maximum rate will go up to 55 percent. The impasse on passing new legislation is differences between Republicans and Democrats on the benefits to be provided to the heirs of large estates. You can probably guess the party that wants lower exemption amounts. Capitol Hill watchers predict that there will be a phased-in law with the exemption rising in steps from $3.5 million to $5 million. Forecasters believe that the top rate will lowered to 35 percent.
Congress will not let joblessness rise.
Unemployment.
In addition to the Jobs Bill already passed this year, Congress is prepared to provide additional incentives to companies to hire unemployed workers. The poor job numbers reported on June 4 will only increase the likelihood that new tax credits for new jobs will be passed into law. There will be no real escape from the recession until more Americans go back to work.