IRS Announces 2011 Air Transportation Tax Rates

The Internal Revenue Service today announced the 2011 inflation adjustments to the excise taxes on air transportation.

Excise taxes apply to the domestic segments of taxable air transportation and to the use of international air facilities. The Airport and Airway Extension Act of 2010, Part IV, signed into law on Dec. 22, 2010, extends these excise taxes to air transportation that begins or is paid for no later than March 31, 2011.

These excise taxes are adjusted annually for inflation:
•    For 2011, the excise tax on the domestic segment of taxable air transportation is $3.70, unchanged from 2010.
•    The excise tax for 2011 for international flights that begin or end in the United States is $16.30, up from $16.10 in 2010.
•    The tax on use of international air facilities also applies at a reduced rate to departures of interstate flights that begin or end in Alaska or Hawaii. For 2011, the international air facilities tax on these flights is $8.20, up from $8.10 in 2010.

The new rates take effect Jan. 1, 2011.

Tax cut deal: What to expect in your paycheck

Come January, you'll start to see some changes in your paycheck, as the new Social Security tax break that President Obama signed into law Friday takes result. The measure, part of a sweeping package of tax cuts, will decrease the amount of money workers pay into Social Security in 2011, which will mean more take-home pay for many workers, although not for all.

Workers normally pay 6.2% on their first $106,800 of wages into Social Security. As a result of the tax cut deal passed by the House on Thursday night, they will only pay in 4.2% in 2011. So, for every thousand dollars in wages per paycheck up to the cap, one would only have $42 withheld (4.2% x $1,000), rather than $62 (6.2% x $1,000).

But given how late in the year it is, it may take employers a pair of pay periods to get everything working as it should. Employers typically need a few weeks to program and test their new payroll systems. The IRS just issued guidance on Friday morning, a few weeks later than normal because Congress waited until the very last minute to render its decision on tax policy for 2011.

"It could be the third paycheck of the year before you see a 'normal' check," said Scott Mezistrano, senior manager of government relations of the American Payroll Association.

Here's what that might mean:

Say you make $1,000 a paycheck. Your first paycheck in 2011 may have $62 withheld -- or $20 too much -- because your employers' payroll tax system has not been fully re-programmed, Mezistrano said. To compensate you for that, only $22 may be withheld in your second paycheck (4.2% x $1,000 - $20).

And, with any luck, by your third paycheck in 2011, everything will be set to the right dial. The IRS on Friday asked employers "to adjust their payroll systems as soon as possible but not later than Jan. 31, 2011. For any Social Security tax over withheld during January, employers should make an offsetting adjustment in workers' pay as soon as possible, but not later than March 31, 2011."

How much more they will net relative to this year depends on whether they qualified for the expiring Making Work Pay credit. That credit provided up to $400 to any working individual making less than $75,000 (or up to $800 for working couples making less than $150,000).

For instance, individuals who make $50,000 will see a bump of $1,000 in take-home pay, which is $600 more than the Making Work Pay credit they got this year. For a couple at that income level, it will mean $200 more than they received under Making Work Pay.

For people making less than $20,000 (or couples making less than $40,000), they may actual see a drop of about $210 on average in their take-home pay relative to this year, because the payroll tax break will be worth less to them than the Making Work Pay credit was.

The IRS noted that the Social Security tax break for 2011 will have no effect on your future Social Security benefits, which are based on your career earnings.

Deal on Bush-era tax cuts

In an eleventh-hour compromise, United States President Barack Obama struck a deal with his well-established Republican opposition to extend Bush-era tax cuts for another two years.

The cuts, introduced in 2001 by the former President, George W. Bush, were set to end on December 31 since Congress was forbidden from making them permanent under rules at the time. The situation saw both the White House and the opposition digging in their heels as the deadline approached.

President Barack Obama had initially hoped to protect the tax cuts for middle-class Americans while allowing the benefit to lapse for the richest two per cent a distinction that Republicans sought to block.

Under the bargain struck this week, Mr. Obama will have his way at smallest amount on one item on the White House agenda the extension of unemployment benefits and a payroll tax cut that will improve the lot of ordinary Americans.

In remarks following the negotiations, Mr. Obama said he “completely disagreed” with the Republican view that the tax cuts, including for the wealthiest, should be made permanent. “A permanent extension of these tax cuts would cost us $700 billion at a time when we need to start centering on bringing down our deficit,” he said.

He, however, said he would not accept the “chilling prospect” faced by middle-class Americans of a tax rise on January 1, 2011, and unemployment insurance payouts drying up. “Make no mistake; allowing taxes to go up on all Americans would have raised taxes by $3,000 for a typical American family. And that could cost our economy well over a million jobs,” he said.

While the deal marks the breaking of a stalemate that could have spelt economic doom for millions of American households still reeling from the effects of the downturn, some experts noted that Mr. Obama has endangered the support of his liberal base.
Economist Paul Krugman recently argued against precisely such a deal, saying: “Mr. Obama should draw a line in the sand, right here, right now. If Republicans hold out, and taxes go up, he should tell the nation the truth, and denounce the blackmail attempt for what it is.”

Under the bipartisan deal, American families will retain not only the Bush-era tax cuts, but also those introduced under Mr. Obama.

Mr. Obama said that in exchange for a temporary extension of tax cuts for the wealthiest, middle-class tax credits such as the Earned Income Tax Credit and the Child Tax Credit would persist, as would the American Opportunity Tax benefitting nearly eight million students.

The agreement will also see unemployment insurance extended for a further 13 months, a direct benefit to nearly three million Americans.

State finances billions in the red

The State's finances were 13.3 billion euro in the red even though the Government took in more tax than predictable. The latest Exchequer figures showed revenue officials took in 470 million euro more in levies than predictable.

The Department of Finance said a higher-than-predicted corporation tax intake joint with smaller surpluses in excise and VAT offset falls in income tax. Despite the better than expected returns, taxes are still 1.3 billion euro below the first 11 months of last year.

Michael Noonan, Fine Gael finance spokesman, said the figures exposed a deep split in Irish society, revealing the hardship now facing huge numbers of Irish families. "On one side, the multinational sector and large companies are enjoying a reasonable resurgence," Mr Noonan said.

Striking a more conciliatory tone, Joan Burton, Labour's Finance spokeswoman, said that after three years of haemorrhaging tax revenues there was now evidence Exchequer figures were stabilising.

"Due to the continuing depressed state of the economy, tax gate are 646 million euro, or 4.1%, down on 2010 for the year to date," Ms Burton said.

"This serves to underscore the challenge facing any government in meeting the onerous repayments negotiated by the Fianna Fail government in their bailout agreement with the EU-IMF troika. "

Gold inches down, US data calms economic concerns

Gold edged down in thin trade on Thursday after encouraging U.S. jobless claims data calmed some worries about economic growth, but concerns over tensions on the Korean peninsula could present some support.

Bullion barely reacted to news that Vietnam's central bank has granted additional quotas for domestic companies to import gold between now and the year end, but dealers noted buying on plunges from consumers in Asia.

Spot gold eased $4.42 to $1,369.29 an ounce by 0240 GMT - well below a lifetime high around $1,424 struck in early November. It had hit an intraday low around $1,367 an ounce. U.S. gold futures fell $4.5 to $1,368.5 an ounce. U.S. markets are shut on Thursday for the Thanksgiving holiday.

"I would say emotions are still bullish. The conflict between North and South Korea is not going be solved within a short period of time," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

"It will take a bit of time. There may be more buying at below $1,370." North Korea warned of additional military attacks if South Korea makes "reckless military provocations again," its official media said on Thursday.

The United States says it considers North Korea's actions were an isolated act tied to leadership changes in Pyongyang, and many experts say the North carried out the shelling to burnish the image of the inexperienced and little-known younger Kim.

U.S. crude futures firmed on Thursday, extending a rally from the day before on optimism about the U.S. economic recovery, but the Thanksgiving holiday in the United States and concerns over tensions on the Korean peninsula may limit further gains.

BC government call off 15 per cent income tax reduction

The proverbial carrot that Premier Gordon Campbell hangs in front of millions of British Columbians has been suddenly yanked away.
Two weeks after Gordon Campbell announced he was stepping down as Premier, the provincial government has decided to hang the 15 per cent reduction in personal income tax rates for the first $72,000 of personal income that was promised in Campbell's televised address last month.

Campbell says this is not the time when he or cabinet should be tying the hands of the future leader. "They will still have the chance where they can bring in the tax cut retroactively January 1, if they decide to do that."

But Finance Minister Colin Hansen says they can't say when or if the tax cut would be re-instated. "The choice as to whether or not to proceed with that should be made by the new premier in conjunction with the cabinet at that time."

NDP Leader Carole James says she was against the tax reduction to start with, but this is a whole new Pandora's Box, "To pull back on that tax cut now, it shows that the government is completely focused on damage control, on their own problems, and sadly it's British Columbians who are hurting because of that."

Brian Bonney with the Canadian Federation for Independent Business says taking away this tax benefit is a big fault. "You give people hope correct before Christmas that they're going to have some extra money to pay off a few bills in the new year, and in one foul pounce that seems to be taken away from us."

He says this is yet another box when politics has trumped good public policy and created unnecessary uncertainty for businesses.

The tax reduction would have taken effect January 1 of next year, provided it received legislative endorsement. It would have become the second largest personal income tax relief gauge in BC's history.

The government will still roll out a throne speech and budget in early February, but won't proclaim any programs until a new party leader is chosen later that month. There will also be what the Executive Council calls a "status quo" budget, with no new proposals beyond what is statutorily required.

Kan. gov.-elect against revoking sales tax hike

Gov.-elect Sam Brownback said Thursday that he opposes a quick revoke of this year's Kansas sales tax increase, an idea circulating among Republican legislators. The incoming GOP governor did leave room for him to back the idea in upcoming years. Brownback already has said he wants to amend the state's tax system to promote economic growth. But Brownback said the Legislature shouldn't revoke the sales tax increase next year because of the budget problems. He takes office and the Legislature assembles its annual session Jan. 10.

"We're short of capital for the state, and I don't think it's something that we should be doing at this time," Brownback told reporters after a Veterans Day ceremony in Topeka. "Our economic situation is not even." Rep. Owen Donohoe, a Republican from the Kansas City-area suburb of Shawnee, suggested in a recent letter to colleagues that GOP House members make the revoke a top priority. He acknowledged in an interview that he hadn't spoken with Brownback about it.

In his letter, Donohoe called on colleagues to commit to a conventional agenda, noting Republicans' big election gains. The GOP picked up 16 House seats, giving those 92 to Democrats' 33. "With the sweeping consent of the Kansas voters, we have a rare opportunity to effect substantial legislation that reflects fiscal and family values in the next session," he wrote.

House Speaker Mike O'Neal, a Hutchinson Republican who, like Donohoe, opposed the tax increase, said it's fair to debate revoking it. However, he also said legislators may want take a longer-term look at tax policy and consider plummeting individual and corporate income taxes to spur growth. Brownback said last week that he'd liked to cut individual income taxes.

"I think that all comes into the discuss that we certainly will have," O'Neal said. The sales tax rose from 5.3 percent to 6.3 percent in July. Outgoing Gov. Mark Parkinson, a Democrat, had pushed for the increase, saying it was necessary to keep away from crippling cuts in education funding and social services. The tax increase is expected to provide $314 million for state programs during the current fiscal year and more than $370 million during the fiscal year that begins in July 2011.
For the first three years, a small portion of the revenues will help support a 10-year, $8.2 billion transportation program that legislators approved this year, also at Parkinson's urging. The sales tax is due to drop to 5.7 percent in July 2013, with all funds raised by the last 0.4 percent going to transportation. O'Neal acknowledged that revoking the increase next year could "hamstring" the program.

"There's a lot of moving parts here," he said. Parkinson and other supporters of the sales tax increase dispute that it stabilized the state's finances. But the state also used federal stimulus funds to bolster aid to public schools and spending on social programs.

Kansas officials expect no additional incentive funds, leaving a $492 million gap in the next fiscal year's budget. "We've got to balance our budget," Brownback said, adding that his goal is to chapter out accounting moves the state has used in previous years to help paper over some problems.

But the governor-elect also refused to portray the sales tax increase as good. "When you raise taxes, you send a signal to the rest of the country (that) you're a high tax state," he said. "We've been a high tax state in this district, so the way to grow is not that way."

To Tax More Rich ‎

Washington State, where politics is as liberal as it gets, has an initiative on its Nov. 2 election ballot to charge a personal income tax on the “rich,” according to an Oct 26 special report by the Tax Foundation. Presently it’s one of seven states with no individual income tax. Washington State voters, along with other Americans will be worriedly awaiting Congress’s decision in the lame duck session next month whether to let the Bush tax cuts expire on Dec. 31. President Obama and his fellow lefties in Congress have bellowed endlessly that the Bush tax drops favor the “rich.”

Washington State’s Initiative 1098 would initiate an income tax on high earners at a rate of 5 percent on income over $200,000 ($400,000 for couples) and 9 percent on income over $500,000 ($1 million for couples). “Officials guess that the new tax would raise approximately $2.2 billion per year. Of that amount $600 million would be used to decrease property taxes by about 4 percent and provide additional credits against the state gross receipts tax.” New spending on health care and education would assert the left over $1.6 billion.

If proposition 1098 passes, “a constitutional challenge is likely,” writes Joseph Henchman. Director of state projects for the Tax Foundation. Since the income tax was ruled unconstitutional in the state, voters there have discarded previous attempts to accept an income tax. “Washington’s planned new income tax “would be out of the norm in two respects, said Henchman. “It will relate to all adjusted gross income with no exemptions or deductions, and it will apply only to high-income earners.” Further, “just as numerous other states are overturning so-called millionaires’ taxes or allowing them to expire, Washington would be accepting one.”

Washington’s constitution has a uniformity section. Its purpose has been described as “strict constitutional supplies requiring equal and uniform taxation.” The initiative’s extremely slim base (exempting over 98 percent of taxpayers) would probably violate that provision,” Henchman wrote. In essence, a mass of voters would decide whether to impose a tax on 1.2 percent of the population.

Sales tax receipts up for most in county

Most all of the entities that collect a local sales tax in the county saw tax receipts up over year-ago statistics, according to the latest information from State Comptroller Susan Combs. The City of Corsicana saw sales tax receipts increase 3.98 percent from year ago statistics. The city’s split of sales taxes for the month was $416,471.65, up from $400,512.00 from one year ago. For the year-to-date, sales tax receipts are down 1.01 percent, with receipts totaling $4,122,672.68 for 2010, compared to a year-to-date total of $4,165,154.97 for 2009.

Statewide, sales tax receipts were up 6.8 percent from year ago figures. Gains in almost all sectors, including oil and gas, construction, manufacturing, wholesale trade, retail trade and restaurants were noted, Combs said in a release announcing the latest statistics. The collections actually symbolize sales taxes collected in September from sales made in August 2010.

Even with the 1.01 percent arrears from year ago statistics, city leaders are happy with that figure — they had budgeted a loss of 1.58 percent for the year. Should next month’s figures come in at or near 2009 levels, the city will end the economic year very close to what it had projected, around $4.9 million.
Going forward in the budget just adopted, city leaders have estimated a drop of about $100,000 from this year’s projection, although it could be spring before a correct projection on receipts could be made.

It’s very important that we end the year where we thought we were going to. It is a good sign. It is really very satisfied to see (August) not in a ‘negative’ category. That has not been the trend this year.

Only four tax entities in Navarro County Mildred, Navarro, Oak Valley and Richland saw decreases for the month from year ago figures. Combining all taxing entities in the county, receipts were up 4.58 percent from the same month a year ago, and down 1.05 percent for the year, with $442,578 collected for the month, and $4,386,088.71 year-to-date.

Fight over Bush-era tax slash moves to campaign trail

Congress prepared to leave town without voting to expand the Bush-era tax cuts Wednesday, choosing to shift the fight over one of the year's biggest partisan battles from the halls of Congress to the political campaign trail.Both Democrats and Republicans see latent political gains in carrying the tax fight to their home states, banking on their ability to induce voters that the other side is to blame for the impasse. Congress is expected to put the issue to a vote in the post-election lame-duck session.

The decision introduces a fiery matter into an election in which control of the House, and possibly the Senate are in the balance. What happens to the $3.7 trillion tax package will feel the pocketbook of almost every voter. It also has major implications for the federal budget and U.S. economy in the residue of President Barack Obama's first term. Most Democrats support extending the tax cuts to all but top earners -- individuals making $200,000 or more and families earning $250,000, for whom they favor letting the Bush cuts lapse. Unless Congress acts, all the tax cuts will slip at year's end. Republicans and some conservative Democrats favor extending the cuts for all, arguing that tax cuts for wealthier Americans would help businesses expand and create jobs.

Voters who are focused on pocketbook issues this campaign season will be offered two distinct views on the tax cut debate. As the tax cuts loomed large over the final days of congressional debate, both the House and Senate conducted a flurry of votes, even though both Democrats and Republicans were anxious to leave Washington for the campaign season. Congress was on track to reach an agreement to keep the government running by approving a stop-gap spending bill called a continuing resolution that would hew to 2010 spending levels. The resolution was needed because Congress had failed to pass any of its annual appropriations bills.

Both the House and Senate also conducted a series of votes this week on core issues designed to underscore Democratic priorities, even though the bills had little chance at final passage before the midterm elections. The House on Wednesday passed legislation to fund a new health program for responders and community members injured in the Sept. 11, 2001, terrorist attacks in New York, and re-open the federal victims' compensation fund. The bill has not passed the Senate.

As a last effort to address the nation's stubborn unemployment rate and promote jobs, the Senate voted also on an outsourcing bill that offered a payroll tax holiday to firms bringing overseas jobs back to the United States and imposed tax penalties on those that ship jobs overseas.The outsourcing bill failed largely along party lines, with some Democratic dissent, in what Sen. Mitch McConnell of Kentucky, the Republican leader, called "about as pure a political exercise as you can get."As the tax cut debate hangs over the political season, both sides offered a glimpse of the arguments as they prepared to make the case to voters.

"It's irresponsible for them to leave town," said Rep. John Boehner of Ohio, the Republican leader, as Democrats made it clear they would not be bringing the issue to the floor. "This is no way to run the people's House."Many economists say that as the economy continues to struggle it would be unwise to raise taxes on the middle class. They give credence to the proposal from Obama and Democrats to extend tax cuts for those making less than $200,000 and families making less than $250,000, despite the $3 trillion cost.But economists are split over extending $700 billion in tax breaks for the wealthy, as the GOP want to do.

Mark Zandi, chief economist at Moody's Analytics, has argued for phasing out the tax break for the wealthy but not until after 2011.Studies from the Tax Policy Center show just 1.7 percent of all American taxpayers earn more than the $200,000 cut off.

Tax credits hype as key to homelessness

Tax cuts -- and not more funding for government-led programs -- could be the key to helping end homelessness in Canada if Ottawa offers tax credits to entice private enterprise into building more low-income housing, according to a policy paper released by the University of Calgary.

The report, issued by the university's School of Public Policy on Tuesday, says U.S.-style tax credits could help stem the tide of condo conversions and make it more financially feasible for developers to construct new multi-family rental units.
Affordable housing has become particularly critical in cities like Calgary, where roughly a third of all multi-family rental housing units in this city have vanished since 1992, and resident research associate for the University of Toronto's Cities Centre, who also co-authored the report.

"Homelessness is a problem that will be solved only with the connection of the private sector. We deem we must pay attention to tax incentives and regulatory measures to harness the energy and efficiency of the private sector.
The tax incentives being planned are based on the U.S. low income housing tax credit, which has been operating since 1986.

It would modify existing Canadian tax laws to offer breaks to developers who include affordable housing units in new construction. Building owners making major repairs on apartments with an eye to converting them into condominiums could also be eligible for the tax credits, if they make a long-term pledge to maintain the units as rentals.

While the tax credits would divert $50 million in tax revenues from federal coffers in its first year, $100 million in the second year and $150 million in its third year, it would fund between 3,500 and 5,000 rental units nationwide.
Alberta's share of this boost to rental spaces would be between 300 and 500 units.
The tax cuts are a small government investment that could yield dramatic results because they offer a financial incentive for private business to get involved in helping address a social concern, said Ron Kneebone, director of economic and social policy research for U of C's school of public policy.

And ultimately it will be the taxpayer who is going to win the race.

Business pushes to extend tax cuts

The business community and anti-tax groups are sloping up their campaign to win an extension of the Bush tax breaks for the wealthy and hand President Barack Obama and his economic team a defeat just in time for Election Day.

This battle, however, is about other than just winning one policy fight. It’s also about clutching an eleventh-hour opportunity and maximizing gains that have largely eluded corporate interests since Obama took office.

With Democrats on the ropes on the campaign trail and cringing from the idea of another tough vote, conservatives now find themselves with a better than fair shot at getting all of President George W. Bush’s tax cuts extended — at least for a couple of years, a prediction that would have been deemed laughable two years ago.

Then, if the Democrats fall in November, the business community can try to make those tax cuts permanent and still pocket a handful of other tax breaks that Obama put on the table in topical weeks — a move one corporate insider dismissed mockingly as “flailing in the face of November.”
Business leaders disagree that a tax hike timed to hit the wealthiest Americans in January would stall job growth by hobbling small businesses and shrinking money available for investments that could help spur new economic activity.

Advocates of revoking the tax breaks dispute that argument, saying only a tiny percentage of small businesses would be affected and that an influx of federal cash is needed to help pay for the extension of Bush’s middle-class tax cuts and support more-effective jobs programs.

To push back on that message, the U.S. Chamber of Commerce on Wednesday will steer into town executives from more than 40 small-to-medium-sized businesses for a tax policy briefing that will close with a lobbying blitz on Capitol Hill.

The Business Roundtable, meanwhile, has 87 chief director officers from major corporations coming to Washington the same day, and their dance cards are full, too. Among those scheduled to assemble down with the CEOs are White House chief of staff Rahm Emanuel, Sen. Ben Nelson (D-Neb.), Sen. Susan Collins (R-Maine) and Rep. Dave Camp (R-Mich.).

“Our situation is that this is not the time to raise any taxes. The economy is very frail,” said Johanna Schneider, the Roundtable’s executive director for external affairs.

The Chamber’s grass-roots division has also helped engender more than 75,000 letters from constituents to lawmakers about the need to extend the credits; a similar letter was generated by its Tax Relief Coalition, which represents just about every trade group in town.

“We will go to the House Democrats who sent a letter to the president in January calling for an extension of the tax cuts and others — a increasing number of them on the battle trail — to try to see if they will join with us,” said Bruce Josten, the Chamber’s executive vice president for government affairs.

Americans for Tax Reform, a conservative group also calling for extension of the tax breaks, is running radio ads in House districts, placing belief pieces in local newspapers and writing letters to Capitol Hill lawmakers updating them of what ATR is doing in their home districts.

“We’re centering on the districts because lobbying is a waste of time when there is an election coming. Democrats and Obama may vote to prolong the tax rate reductions for two years because they fear losing the next election. They can’t be swayed it is bad policy,” said Grover Norquist, ATR’s president. “The only way to change their minds is to make them afraid of the voters. And if they don’t change their minds, the voters can change them.”

DTC provides some relief to tax payers

The much-awaited Direct Tax Code (DTC) Bill, which aims to replace the existing Income-Tax Act, 1961, has finally been presented in the Parliament and once approved by both Houses, it will be enacted as a law, effective from April 1 2012. While a lot had been anticipated from the DTC in terms of widening of tax slabs and reduction in tax rates, the proposal in its current form does not have a great deal for the aam aadmi. For one, though the tax slabs for individual tax payers have been widened, the resultant savings in the hands of the individual tax payers is just a pittance.

TAX SLABS: The DTC proposes to increase the limit of income exempt from tax to `2 lakh from the current `1.6 lakh for individual and to `2 lakh from `1.9 lakh for working women. This will result into a minimum saving of `4,000 per annum for individuals and `1,000 per annum for women.

On the positive note, the new proposal aims to abolish the distinction between the individual and a women tax payer, bringing both of them at par — at least as far as payment of taxes is concerned. But given the rising cost of living with each day, an additional disposable income of about `4,000 and `1,000, respectively, does not sound much appealing.

From today, consumers buying new vehicles will be cuffed with a carbon emission tax.

In February this year the National Treasury announced that the tax which is aimed at encouraging people to drive more environmentally friendly cars.

Primarily the tax will apply only to passenger cars, but it will eventually be extended to commercial vehicles.

Automobile Association NAAMSA says South Africans will have to get used to the idea of having 'green taxes' to help protect the environment.

Nico Vermeulen says the tax is calculated based on how much carbon dioxide a car emits per kilometer.

He explains how motorists will be affected by the new CO2 tax: "The average vehicle will probably incur an additional cost to the consumer of about 2.5%, that is assuming the manufacturer and importer costs are passed on to the consumer.

"But in the case of a number of cars, the increase in the cost to the consumer - as a result of the tax - could be between five and six percent."

But Vermeulen says the tax on all double-cabs will only be implemented next year March, as the industry is still testing the fuel consumption in these vehicles.

INCOME TAX LIMIT TO BE HIKED TO RS. 2 LAKH

Tax ceiling for women, senior citizens to be raised to Rs. 2.5 lakh
New Delhi, Aug. 28 (JP) - The 50-year-old Income Tax Act with its many layers of incomprehensible laws and clauses will be revamped with the new streamlined Direct Taxes Code (DTC) that will come into force in the next Finance year.

The new tax code is expected to widen the tax base, put an end to unnecessary exemptions, moderate tax rates and finally add to the government’s revenues.

The DTC Bill, which has been approved by the Union Cabinet, will be placed before the Parliament on Monday.

The new tax slabs proposed in the DTC will raise the exemption limit to Rs. 2 lakh per annum against the current Rs. 1.6 lakh. For women and senior citizens, the exemption limit would be Rs. 2.5 lakh per annum.

Under the present IT Act, women have to pay a tax on an income of Rs. 1.9 lakh per annum or more while senior citizens have to pay a tax on income of Rs. 2.4 lakh.

A person earning Rs.10 lakh per annum would save Rs. 21,540 additionally each year when compared to the existing tax regime.

Similarly, women too stand to gain on the same income of Rs. 10 lakh per annum, as they will be saving around Rs. 23,450 while senior citizens (over 65 years) will save an extra Rs. 18,300 more.

Will companies hit MAT?
The DTC Bill, which will be vetted by the Parliament on Monday also seeks to impose Minimum Alternate Tax (MAT) at 20 per cent of the book profit, compared to 18 per cent at present. The corporate tax rate has come down from 40 per cent in 2000 to 33.22 per cent currently while MAT has inched upwards from 8.5 per cent to 19.93 per cent .

Meanwhile, Finance Ministry officials exuded confidence that the Bill will come into force by the deadline of April 1, 2011.

How to battle against the "Blogger's tax"

GO, BLOGGERS, GO.

An uproar on a so-called "blogger's tax" went a little viral earlier this week, when some bloggers got letters from the city asking for $300 to cover a business-privilege license.

The item became the subject of many other blogs, including libertarians and those on the far right who are using this as a way to promote the evils of big government.

We'd like to use the uproar, too, as a way to promote the idea of long-overdue reforms to the city's tax code, especially as it relates to business.

The fee in question is not a tax on bloggers; it's a fee for the privilege of doing business in the city, and it applies to all businesses no matter how much money they make. The problem is, if you make $100 from your blog, you're considered a business, and must have a license.

After that, it gets even worse.

The city will also impose a tax on any money your blog makes. That's because the city not only taxes profits, but also gross receipts. So it doesn't matter what you spend to make your blog viable. Whatever nickels and dimes you generate from advertising or other arrangements will also be taxed.

More than one proposal that could address this is rattling around. A 2009 mayoral task force recommended the city carry on its course to eliminate the gross-receipts portion of the business- privilege tax. But that won't happen for 15 years.

Meanwhile, Council members Maria Quinones- Sanchez and Bill Greene have their own proposal, which would actually increase the tax on business receipts but establish criteria that would exempt the first $100,000 of those receipts.

Both proposals deserve scrutiny. And we hope the latest howls from the blogging community will get people to focus attention on tax reform, especially since it's the first to fall off the table when serious fiscal problems hit. The city should have a regular mechanism for reviewing the tax code.

As the bloggers' outcry demonstrates, "business" is no longer limited to bricks and mortar enterprises; in fact, the idea of business is no longer always about making a sustainable living. Blogging in particular often combines commerce with free expression. Should such enterprises have their own tax category? Should we consider all revenue to be equal, whether it comes from a hard-goods manufacturer, service provider, or information technician? We encourage bloggers to keep this alive and get Council and Mayor Nutter to review these issues regularly.

Sliced Bagels, Taxes on Top

What's the tax on a bagel? It depends how you slice it—or in the case of New York, if you slice it.




In New York, the sale of whole bagels isn't subject to sales tax. But the tax does apply to "sliced or prepared bagels (with cream cheese or other toppings)," according to the state Department of Taxation and Finance. And if the bagel is eaten in the store, even if it's never been touched by a knife, it's also taxed.

Tax cut rollback proven to help

Yes, if you make more than $250,000, according to the Democratic proposal your taxes will go back to where they were before the Bush tax cut. If not, they will not change.

The writer said, "We all know what happened when Clinton won the election." Yes, he restored the tax rates close to what they were before Reagan lowered them, and the Republicans screeched that it would cause a recession. What we got was seven years of the best economy, and lowest unemployment, in my 60 years.

We then got Republican control of everything, a huge tax cut for the wealthy, and a war in Iraq, all of which added $3.3 trillion to the debit. Did anyone complain about the debit? Put a Democrat in the White House, and it's a problem. Now that these cuts will expire, which could help the debit problem, no you can't do that, it might cause recession. Same thing they said in 1993. Did it happen? No. Check the history.

All of this doesn't really shock me. The wealthy and powerful control the Republican Party. The same party that gave us deregulation of the banks. Isn't that what got us in this clutter? They did it once before with the Savings & Loans -- remember that mess? Now these same people want back in charge. They say it's all Obama's fault, but the economy going into the ditch is why they are out of power. Why would someone be so gullible to believe the same lies over and over? Let's roll back the tax cut for the wealthiest 2 percent and see what happens.

Treasury Secretary Timothy Geithner argued on Bush tax cuts

Extending tax cuts for the wealthiest Americans would imperil the fragile economic recovery, Treasury Secretary Timothy Geithner said, as the Obama administration pushes to let the Bush-era policies expire at the end of the year. The tax cuts should be extended for almost everyone. The exception is for married couples making more than $250,000 or a single person making $125,000 or more.

Geithner was justifying the administration's proposal to extend the George W. Bush tax cuts except for those making more than $200,000 a year. The Bush tax cuts for the middle class need to be extended, according to Geithner, to maintain incomes. However, long-term economic prospects require a signal that the federal government will get serious about its debt, so the rich need to pay more. Taking more from the rich won't be economically damaging, according to Geithner, because they are less likely to spend the difference.

The tax on dividends, for example, is currently 15%, but it could increase to as high as 39.6% if the 2001 and 2003 tax cuts expire. On top of this, a new 3.8% tax on investment incomes for high-income earners begins in 2013 to help pay for ObamaCare. The administration's arguments for higher taxes on capital center on fairness and the need for deficit reduction. Mr. Geithner argued that the wealthy tend to save more of their tax breaks than do other groups, so in letting their taxes rise; there would be minimal impact on economic activity.

If President Obama is interested in promoting growth now and in the future, he should commit to retaining the low tax rates Congress passed in 2003. A Treasury estimate shows the 10-year cost of extending the middle-class tax breaks is about $3 trillion. Extension of the breaks for higher earners adds $679.6 billion to the tab.

Sales Tax Holiday Blooms Shopping Season

Local shopping centers are gearing up for coming annual “Back to School” sales tax holiday a weekend as big as during the holiday shopping season.

The Missouri state sales tax of 4.225 percent will be dropped on clothes, computers and school supplies starting at midnight Aug. 6 and lasting through Aug. 8. Many municipalities also are dropping their local sales taxes for the weekend, letting customers buy qualified items tax-free.

For seven days in August, Maryland shoppers can purchase certain clothing items costing less than $100 without paying the state's 6 percent sales tax.

The Mississippi sales tax holiday weekend is July 30 and 31st. It's back to school shopping made easier in Mississippi, but retailers hope it's not just school shoppers cashing in. Clothing and shoes will be exempt from the state's sales tax; retailers say it's a time for customers to buy.

A 2007 law established Aug. 8-16 of this year as a "sales-tax holiday" because legislators thought that by now the state would have a budget surplus and could afford the revenue loss. But tough economic times have lasted longer than anyone expected, to the point where what the state is really doing now is giving up money it doesn't have.

The tax holiday is expected to cost the state treasury about $9 million in lost revenues. That's enough to provide 1,000 families with emergency housing assistance, or state college scholarships for 4,500 students. And it comes as the state is about to grapple with how to fill an expected $1.5 billion revenue hole resulting from lower revenues brought on by the recession.

Job Creation Tax Credit Causes and Effect

Whether the job creation tax credit signed in law last March is having any effect, Treasury Department officials reported. Though it took some time for a clear picture to develop, we're pleased to learn that the tax incentives the state grants companies to create jobs.

The Treasury study compared responses from the Labor Department's Current Population Survey the basis for the government's labor force data and the unemployment rate for three consecutive months to May. This tax program, part of the Hire Act of 2010, is intended to encourage businesses to add workers who have been out of a job for at least 60 days by making it cheaper to employ them.

Usually, the federal government collects Social Security payroll taxes on salaries, amounting to 12.4 percent of every employee’s wages (up to $106,800; any wages over that amount are not subject to Social Security taxes). Half of this payroll tax, or 6.2 percent, comes from the employee, and the other half, or another 6.2 percent, is collected from the employer. For the average wage of the 4.5 million workers cited by Treasury, employers could see up to $3,500 in tax savings for each, however that smaller firms may not be as aware of the credit as larger firms with larger human resources departments.

Under the Hire Act, businesses that hire the long-term unemployed do not have to pay this 6.2 percent tax on each worker for the remainder of 2010. Additionally, if these new employees stay on for a year, the employer gets another tax credit of $1,000. The challenge, of course, is making sure that the tax credit actually induces hiring, rather than just being claimed for people who would have gotten jobs anyway.

The Treasury Department is now trying to assess how well the program is working, and is finding it a challenging task. The Obama administration is trying to extend the act, which expires at the end of the year, in the hopes that it will still be around by the time word actually spreads.

Long Beach Tax on Medical Marijuana

Long Beach is joining the cities of Berkeley and Sacramento in considering a tax on medical marijuana collectives to help close their budget gaps. Proposed ballot measure would levy a 5% tax on medical pot collectives and another tax of 10% if recreational pot is legalized. But it would require a special election costing up to $450,000.

When Long Beach voters join other Californians in November to decide whether to legalize recreational marijuana, they may also get the chance to decide if it should be taxed. The City Council took a step toward putting a marijuana tax measure on the ballot that would levy a 15 percent tax bumped up from a proposed 10 percent on the recreational drug and a 5 percent tax on medical marijuana. City officials don't know how revenue the tax would raise, but they're looking for every penny to help eliminate an estimated $18.5 million budget deficit in the next fiscal year.

The Los Angeles suburb with a population of almost 500,000 scheduled a public hearing on the drug levy for Aug. 3. If the council later approves the wording, a ballot initiative establishing a 5 percent tax on the city’s 35 dispensaries could go to voters in November, according to Lori Ann Farrell, Long Beach’s director of financial management.

Long Beach joins California cities including the state capital, Sacramento, weighing marijuana taxes to bridge falling revenue from the worst recession since the 1930s. The nation’s largest state by population saw an explosion in the number of marijuana dispensaries after voters approved a 1996 referendum legalizing pot for medicinal use.

Discussion of the tax comes as the state prepares to vote on Proposition 19, a referendum on the November ballot. If approved, the measure would make it legal for anyone age 21 or older to possess one ounce or less of marijuana, and allow local governments to regulate and tax sales. The medical marijuana tax is modeled after one by the City of Oakland, which expects to collect $1 million a year in revenue from its four authorized dispensaries.

Home Buyers Rushing to Meet Sales Tax

Some home buyers who rushed to sign sales contracts to meet an April deadline for an up to $8,000 tax credit, may not get their money after all. Deadline to claim a federal tax credit as banks and title companies deal with a crush of closings.

Home buyers hoping to get the tax credit have until June 30 to close their deals. But the U.S. Senate failed to pass a bill that contained an amendment that would have extended that deadline to Sept. 30. The real-estate industry stepped up calls for an extension of the closing deadline in recent weeks amid concerns that some buyers might miss the deadline after a last-minute home-buying rush led to bottlenecks at banks, appraisal firms and title insurers. The Post-Standard last week said they have clients who won’t close before the deadline.

The American Recovery and Reinvestment Act of 2009 offered first-time home buyers an $8,000 credit for purchases made before Dec. 1, 2009. Then Congress passed a second law, the Worker, Home-ownership and Business Assistance Act of 2009, which extended the deadline to April 30 and added a $6,500 credit for repeat home buyers. Buyers had to close their deal by June 30. But a Senate bill that included the extension failed to secure enough votes last week and has been shelved.

The National Association of Realtor said that as many as 180,000 contracts that were signed by April 30 might miss the June 30 closing deadline. But it is unclear how many of those sales won't happen as a result of missing the tax credit.

New York’s Sales Tax on clothes to Close Budget

New York's leaders are studying the sales tax on clothing and other taxes and fees to balance a budget they are still drawing up, after failing to meet an April 1 deadline according to the Associated Press.

Two state officials said one of the so-called "revenue raisers" under discussion would increase the state's 4 percent sales tax on clothing. One of the officials said the proposal includes three or four tax-free clothes shopping periods each year, including before school begins in the fall and at the December holidays. Purchases of footwear and clothing under $110 are currently exempt. The officials spoke on the condition of anonymity because of the sensitivity of the talks.

Democratic Gov. David Paterson told reporters two specific taxing ideas increases in the rate on online reservations and rental cars weren't under discussion, but when asked if a clothing sales tax proposal was being discussed he said he wouldn't comment on ideas "piece by piece."

Legislative leaders will soon brief rank-and-file lawmakers on details of the talks. Lawmakers would be forced then to accept Paterson's budget provisions as part of an emergency spending bill or shut down government. The budget so far includes raising the cigarette tax to the highest in the nation. In addition, Paterson's proposal to cap all local property taxes among the nations highest appears unlikely at this point.

Cigarette Tax Hike in New York is good for Public Health

Cigarette taxes in New York would jump by $1.60 a pack under a tentative deal reached between Gov. David A. Paterson and legislative leaders, which would give New York the nation’s highest state cigarette taxes.

The average price in New York City, which imposes its own cigarette taxes, will be even higher, nearly $11 a pack. Those who prefer other tobacco products will also be forced to pay significantly more. The tax on smokeless tobacco will more than double, to $2 an ounce from 96 cents an ounce, starting on Aug. 1. And the wholesale tax on cigars, dips and other kinds of tobacco will rise to 75 percent from 46 percent.

The legislation will also include a plan to begin collecting taxes on cigarettes sold off the reservation by Indian tribes in New York, an issue that has provoked confrontations between State Police officers and protesting tribe members in years past.

The proposal would generate $440 million in revenue this year, helping close a state budget gap estimated at over $9 billion. But it is unclear whether there are enough votes to approve the plan in the State Senate, where Republicans have threatened to vote against any emergency budget bill that includes tax increases and some Democrats oppose efforts to collect taxes on cigarettes sold by the tribes.

“I think it’s wonderful,” said Peter Slocum, an official with the American Cancer Society. “Increased cigarette taxes have been one of the major successful public health interventions in the last decade in driving smoking rates to record lows in New York City and a lot of other parts of the country, too.”

Oil and Gas Industry Debated on Tax Break

The oil and gas industry measure by Senator Bernie Sanders, a Vermont independent, failed to muster even a simple 51-vote majority, although 60 votes were needed to pass it.

It was offered as an amendment to a bill that would extend unemployment insurance for hundreds of thousands of jobless workers whose benefits ran out last month and also renew a set of popular business tax breaks. The bill faces a key procedural vote on Wednesday, but it appears doubtful that Democratic leaders will be able to muster the 60 votes needed to advance the bill to a final vote.

Only 35 senators backed the Sanders' amendment as a number of Democrats joined the Republican opposition to defeat it. Sanders argued that big oil companies making billions in profits do not deserve the tax breaks at a time when the nation is facing record budget deficits and rising debt.

"With a record-breaking $13 trillion national debt and an unsustainable federal deficit, the last thing we should be doing is giving tax breaks to oil and gas companies that have been making enormous profits," Sanders said.

Opponents argued that removing the breaks for oil and gas drilling would hurt small producers as well as big oil companies. Meanwhile, the Senate passed a measure offered by Democratic Senator Al Franken that would establish a homeowner’s advocate office to help people having problems getting mortgages adjusted in the Home Affordable Modification Program.

The tax extenders bill would add about $80 billion to the deficit over 10 years, according to the Congressional Budget Office. The bill's $126 billion in spending would be offset in part by the increase in taxes on investment fund managers. The so-called carried interest proposal would have fund managers pay the ordinary income tax rate of 35 percent on a majority of earnings from managing investors' money. They now pay a 15 percent capital gains tax rate on those earnings.

The Senate bill would tax 65 percent of fund managers' income at the higher rate. A tougher version passed by the House of Representatives would tax 75 percent at ordinary income rates.

Bottle Tax Proposed by Baltimore City Council

It's mind-blowing that City Council is talking about taxing the energy used by Baltimore's dwindling base of manufacturers as an alternative to the "bottle tax" of 4 cents a drink. Baltimore had 13,000 factory jobs in April the least ever recorded since the Labor Department began keeping track. That's down from 27,000 in 2000 and 43,000 in 1990.

The Baltimore City Council has endorsed more than $43 million in new or higher taxes on items including income and telephone lines, largely adopting a wrenching budget-balancing plan laid out by Mayor Stephanie Rawlings-Blake.

The tax of 4 cents per container, exempting milk and fruit juice bottles, was proposed by Mayor Stephanie Rawlings-Blake in April as a way to help raise $50 million in new tax revenue to help eliminate a looming deficit and avoid city layoffs and cuts to fire and police operations. It is estimated to bring in $11.4 million in new revenues annually.

A deposit on bottles would make a lot more sense, though it wouldn't achieve the purpose of the tax, which is to raise revenues for the city. Instead, a deposit would raise revenues for citizens and nonprofits while augmenting the efforts already being made to recycle glass and plastic.

Extended Holiday tax Massachusetts

Massachusetts lawmakers appear to be preparing for an extended holiday from the sales tax holiday.

With marginal improvements seen in state revenue and questions over whether a badly-needed influx of federal Medicaid funds will come through, the Legislature isn’t in any rush to approve a sales tax holiday bill this year.

This is around the time of the year when store managers in Massachusetts start wondering if they’re going to need to get ready for a sales tax holiday weekend in August. There are usually some necessary preparations, if even just to make sure the store is properly staffed for the throngs of shoppers that will (hopefully) show up.

The Legislature and Gov. Deval L. Patrick should consider calls to hold a tax holiday in August but only if revenues stabilize and the state can justify forfeiting as much as $15 million in taxes. But the Retailers Association of Massachusetts thinks conditions are more favorable this time around for the popular holiday. The trade group revived its annual June ritual of asking its membership to call lawmakers and urge them to approve a tax holiday. The group wants the Legislature to set aside Saturday, Aug. 14, and Sunday, Aug. 15, for the sales-tax-free event.

Last August, retail sales fall an average of 30 percent below August 2008 for Retailers’ Association of Massachusetts members, following five years of growth for the month, said the group’s president, Jon Hurst.

Baltimore City Council proposed new energy tax

A City Council committee approved more than $15 million in new taxes and announced a deal with hospitals and universities that will net the city another $20 million over the next six years.

But the taxation and finance committee delayed action on a proposal to apply the city's energy tax to industrial businesses, over what its chairwoman, Councilwoman Helen Holton, described as "a technical issue."

During a session devoted to finding new revenue to narrow the city's $121 million budget gap before the end of the fiscal year on June 30, Holton announced that city officials had reached an agreement with hospitals and universities on a payment in lieu of taxes, or PILOT, that would take the place of a proposed $350 annual fee for beds.

Under the terms of the deal, which was signed by the presidents of the Maryland Hospital Association and the Maryland Independent College and University Association, the nonprofits would pay the city $5.4 million for the first two years and smaller payments in the next four.

According to a copy obtained by The Baltimore Sun, the deal would protect hospitals and universities from increases to telecommunications and energy tax rates over the six-year period, although they would experience rate increases this year. The committee voted to increase hotel room taxes, parking rates, an excise tax on billboards and the energy tax for residents, nonprofits and nonindustrial businesses.

The same cannot be said of the major new tax proposal City Council President Bernard C. "Jack" Young has put on the table this week to replace most of the revenue from the beverage tax. Ms. Rawlings-Blake proposed increasing energy tax rates for residential, commercial and nonprofit users. Mr. Young is proposing adding industrial users to the mix on the grounds that it's only fair that they, too, shoulder some of the burden.

But because of the vastly greater amount of energy used by industry, such an increase would not be equitable. Consider this: Increasing the rate for all commercial and residential customers by 15 percent and increasing the rates for nonprofits by more than 50 percent would raise about $8.2 million; adding industrial users would, by itself, raise $9.1 million a year. That's a big burden spread among a small number of firms.

New Jersey Film and Television Tax Credit Program

Film producers, production workers, union organizers and even a TV actress put a touch of drama into a state Senate Budget Committee hearing in Secaucus, denouncing Governor Christie’s plan to suspend a film and television tax credit program in New Jersey.

Representatives from "Mercy" and "Law and Order: Special Victims Unit" urged Republican Gov. Chris Christie to reconsider ending the 20 percent tax credit the state has offered since 2006 to lure movie and TV production companies to the state. Both TV series are filmed largely in New Jersey.

The program provides $10 million a year in tax credits for television and film productions. Companies that spend 60 percent of their production budget in New Jersey are eligible for a tax credit of up to 20 percent of that expenditure.

Supporters say the economic activity generated by film and television companies attracted by the program brings in far more in taxes than is spent on the credits. But Christie’s office released a statement saying the state’s budget shortfall was so dire that “cuts had to be made and priorities considered in closing a $10.9 billion budget gap.”

The interest in New Jersey has a lot to do with the money the film and television industry spend to market and promote New Jersey based shows.

Oil Refining Industry Federal Tax

A key oil-refining industry organization is opposing a provision in a Senate bill that would quintuple a federal tax specifically used by agencies to clean up oil spills because it would increase fuel costs for consumers. Senate Democrats brought up a measure that would couple a fivefold increase in the tax oil companies pay into a spill fund with help for the jobless, doctors, and cash-starved states.

The National Petrochemical and Refiners Association sent a letter to Senators Harry Reid (D., Nev.) and Mitch McConnell (R., Ky.) opposing a provision that would increase the Oil Spill Liability Trust Fund tax from 8 cents a gallon of crude oil to 41 cents a gallon. The bill passed by the U.S. House of Representatives on May 28 had increased the tax to 34 cents a gallon, which NPRA didn't oppose.

NPRA didn't oppose the tax 34-cent tax increase passed by the U.S. House of Representatives on May 28 to ensure that the fund was adequately financed to respond to future oil spills, said Charles Drevna, president of the refining-industry organization. This provision was passed as part of a broader jobs bill that extended unemployment benefits and various tax incentives.

Even with those levies on investment fund managers, oil companies, and some international businesses, among others the measure would add about $80 billion to the deficit over the next decade.

Debate on Medical Device Manufacturers Tax

Medical device manufacturers are bristling over a key provision in the nation’s new health care law which they say forces them to shoulder an unfair cost of expanded insurance coverage.

The companies say a 2.3 percent excise tax on medical devices like heart defibrillators and surgical tools for hospitals, health centers and ambulance services will cost them an estimated $20 billion in new taxes over the next decade. And they say that will force them to lay off workers and curb the research and development of new medical tools.

The tax, which doesn’t kick in until 2013, has also pitted the state’s two senators against each other. “Many small to midsize medical device companies will owe more to the federal government in taxes than they make in profits," said Mark Leahy of the Medical Device Manufacturers Association. It could have been worse: the initial proposed tax was $40 billion.

Sen. John Kerry, a Democrat, who helped arrange meetings between medical device companies and Democrats leaders in Congress to convince them to cut in half the original proposed tax hike, maintained there would be a benefit for the companies. He explained about the expanded marketplace for 32 million people who are going to buy the products.

The tax, which doesn't kick in until 2013, has touched a nerve in Massachusetts, the state that provided the blueprint for the health care law. Massachusetts is also a hub for medical device companies, with more than 200 firms calling the state home. It has also pitted its senators against one another.

California has the highest number of medical device workers with more than 72,400 followed by Massachusetts with nearly 22,000, Florida with nearly 20,000 and Minnesota with more than 18,000, according to industry estimates. Other states with significant medical device hubs include: New Jersey, Pennsylvania, New York, Texas and Ohio.

When the negotiations started it was going to be $40 billion and our industry negotiated it down to $20 billion.

G20 Implementation of Global Bank Tax

Canada may have scored a win at the G20 with the decision to let countries decide for themselves about whether to implement a bank tax, but there’s plenty more to fight over, opposition critics say. The G20 finance ministers agreed in Korea over the weekend not to designate a global bank tax, the funds from which would have been used for future bank bailouts.

They are pushing for stricter regulations, something the Canadian government and opposition parties’ support, but won't have a proposal ready until the November summit. Liberal finance critic John McCallum says the devil will be in the details, predicting debates over how much capital banks will require holding. The higher the capital ratios forced on the banks, the more secure the system is, but the fewer banks will be able to lend money in the short run.

So there will be a big debate about how high those capital requirements should be and also on how long they should allow the banks to implement them. Canada opposes the bank tax and deployed cabinet ministers around the world to lobby against it. Prime Minister Stephen Harper also discussed it in his meetings last week with British Prime Minister David Cameron and French Prime Minister Francois Fillon, who both support the tax.

The Tories argued having a safety net would let the banks make risky investments, knowing there was money available to bail them out. NDP finance critic Thomas Mulcair says he wants to see the government discussing a financial transaction tax with the G20, an idea supported by international development groups who want the world's richest countries to impose a 0.05% tax on financial transactions to fund humanitarian aid.

“Those countries with serious fiscal challenges need to accelerate the pace of consolidation. We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions,” the G20 said in a communiqué issued after the talks.

Attempts to introduce the global bank levy to fund future bailouts were ditched after opposition from Japan, Canada and Brazil, whose banks needed no public aid during the crisis. But the group said the financial sector should make a “substantial” contribution toward the cost of any rescue.

Los Angeles County Homeowners Tax Reductions

About 405,000 homeowners in Los Angeles County can expect to see lower property taxes later this year, the county assessor said Wednesday.

Those most likely to receive property tax reductions purchased their homes or condominiums after July 1, 2003, Assessor Robert Quon said, just as the housing market bubble began to inflate.

In some cases, however, tax reductions were made for some homes purchased earlier than 2003, including in Compton, East Los Angeles, Van Nuys, Paramount and Pomona. In hard-hit Lancaster and Palmdale, those who purchased homes as early as the 1980s may see tax cuts.

The average reduction for single-family homes is about $1,800; for condo owners, it is $1,500. About 290,000 houses and 115,000 condos qualified for the reduction. In Lancaster and Palmdale, which have seen a severe drop in property values, those who purchased homes as far back as the 1980s may see tax reductions.

The reduction in property taxes may be significant. For single-family homes, the average reduction in property taxes is about $1,800; the average savings for condo owners is $1,500. The reductions will be seen on property tax bills later this year.

New Hampshire Senate are Voted for LLC Tax

The New Hampshire Senate swallowed hard, but voted for a reasonable compensation bill that keeps the so-called "LLC tax" in place, at least for now. Only Sen. Jack Barnes, R-Raymond, voted against the bill in protest, but the rest of the Senate agreed to it, leaving the fate of the LLC tax repeal to budget deliberations in special session.

Repeal of the LLC tax did not make it into HB 1607 which deals with reasonable compensation that the House and Senate are voted. The whole debate over extending the interest and dividends tax to limited liability company distributions (more commonly known as the "LLC tax") focused attention on the reasonable compensation issue, but House members say the two are unrelated.

The New Hampshire House and Senate have passed legislation setting the amount state business owners are allowed to deduct for themselves as earnings, before they are taxed on profits. The bill sets $50,000 as a so-called "safe harbor" as reasonable compensation business owners can pay themselves without justifying it to state revenue officials.

The Department of Revenue Administration has been increasingly questioning such deductions, and the $50,000 threshold will lessen the fear among business owners, though most business groups think the figure is too low especially the $50,000 limit is per entity, as opposed to each individual in a business ownership. The compromise passed the Senate, 23-1. The House approved it with no debate and a loud "no," but the chair ruled that the motion passed.

Here are some other measures approved by lawmakers that will become law, unless prohibited by Gov. John Lynch:

• Under SB 408, trade groups and chambers of commerce would be able to form alliances to purchase health insurance for members. As a last-minute addition to the bill, the Insurance Department was told not to prevent leasing companies from using a group rate that would include many of its clients to buy insurance.
• Under SB 480, those who wish to appeal environmental board decisions would be able to only go to court over interpretation of the law, and not on matters of fact.
• Under HB 491, all things being equal, the state would give local vendors preference in bidding (with Department of Transportation contractors exempted), and those contractors that violated law in the last two years would be barred from bidding.
• Under HB 1168, a person would no longer be denied unemployed benefits for gross misconduct involving dishonesty but instead for a theft of more than $500, and only if that theft was connected to his or her work.
• Under HB 1239, developers would receive a timely permit from the state Department of Environmental Services, or their permits will be approved automatically (stricter conditions than contained in an earlier version that gave developers their money back.) Under HB 1380, developers also wouldn't have to pay for duplicate review from local planning board.
• Under HB 1267, municipalities would be able to force hawkers and peddlers to submit to criminal background checks in order to obtain a license.
• Under HB 1461, municipalities would be able to regulate sellers' display of martial arts weapons, with an eye of protecting marketing to children.
• Under SB 411, those with permits for large groundwater withdrawals would have to comply with local regulations.
• Under SB 420, insurers offering prescription drug benefits would be required to allow participants to use non-mail order pharmacies.
• Under SB 181, the Department of Safety, not the Liquor Commission, would be in charge of liquor licensing, enforcement and education. Licensing and education would start in July, but the enforcement switch wouldn’t take place until July 2011.

Biodiesel Tax on Memorial Day Recess

In a voting frenzy prior to the Memorial Day recess, the U.S. House of Representatives has extended the $1 a gallon biodiesel tax credit that expired Dec. 31, despite indications even late that the vote would be delayed until June.

The extension, which was part of a package that includes, continued unemployment benefits and other tax breaks, would keep the biodiesel credit in place until the end of this year. The legislation still needs to be approved by the Senate, but that vote is not expected until after the recess.

On behalf of the state’s biodiesel plants, nearly half of which are idled or shuttered, the Iowa Biodiesel Board today applauded the U.S. House of Representatives for passing a bill that included extension of the federal biodiesel tax incentive.

The biodiesel industry desperately waited for Congress to act on H.R. 4213, The American Jobs and Closing Tax Loopholes Act of 2010, to reinstate the much needed $1 per gallon tax credit before the Memorial Day recess, but time for this to happen has run out essentially. The tax credit will be retroactive as written and the RFS2 volume requirements will go into effect on July 1 regardless of the tax credit’s status.

Oklahoma’s Tax Cut on Wireless Technology

Based on the theory that wireless companies operating in Oklahoma would invest more in bringing new technology, such as cell phone towers, to the state, the Oklahoma House approved a tax cut on wireless technology. However, opponents of the bill called it a tax cut, saying passage would hurt public schools and counties, which receive money from ad valorem taxes.

The property tax rate on new wireless technology infrastructure in the state would be nearly cut in half under a bill narrowly approved by the Oklahoma House. Supporters said Senate Bill 1589 would encourage wireless companies to build new towers and install electronic equipment in Oklahoma to improve the quality and range of cell phones. Opponents of the bill called it a tax cut, saying passage would hurt public schools and counties, which receive money from ad valorem taxes. The House passed SB 1589 by a vote of 53-43. It needed 51 votes to pass.

But telecommunications companies are among a handful of industries including gas and electric utilities, telephone companies and railroads that are centrally assessed on ad valorem taxes, which mostly fund local schools. Most companies are assessed locally in each of the state's 77 counties. Reducing the ad valorem assessment rate will result in less money for schools, Kiesel and others argued.

Tax Analysis of California and Maryland

Californians that claimed the mortgage interest rate deduction saved an average of almost $20,000 from their tax bill in 2008, according to a Tax Foundation analysis of new data from the Internal Revenue Service. Close behind were Hawaii and Nevada. The national average among the roughly one quarter of Americans who deducted mortgage interest from their taxes was $12,221.

But taxpayers in California benefited the most from taking advantage of the deduction. Californians who deducted mortgage interest saved an average of $18,876, several thousand dollars more than the typical Maryland homeowner who deducted mortgage interest on the 2008 federal income tax return. Folks who live in Maryland had the highest percent of tax returns claiming a mortgage interest deduction in 2008, according to fresh research from the Tax Foundation. Californians who deducted saved the most on their tax bill, an average deduction of nearly $20,000.

Overall, Maryland and California are the biggest winners. Maryland had the highest percentage of tax returns claiming the deduction, 37.9 percent, and average dollar amounts claimed were also high. It had the second-highest average deduction among all tax returns, $5,372, and counting only the tax returns that claim the mortgage interest deduction, the average Maryland tax return claimed $14,162 in mortgage interest. That is the fifth highest nationwide.

California had a lower percentage of tax returns claiming the deduction, but when Californians deduct mortgage interest, the amounts are high. Of California's 16.4 million tax returns, about three in ten deducted mortgage interest, 29.2 percent, 19th highest nationwide. But California ranked highest in average deduction among deducting returns, $18,876, and also highest among all returns, $5,520. Hawaii also ranked high, with its famously expensive homes, as did Nevada which has been growing so quickly that more of its home owners are in the early years of their mortgages when interest payments are high.

This analysis are a reminder of why the mortgage interest rate deduction, despite being assaulted by everyone from economists who say it distorts incentives in favor of home ownership to urban zealots who say it encourages sprawl, remains an untouchable tax break and a third rail of American politics.

America’s New Tax Changes

If you are an American homeowner, you know you're in trouble when the Communist Chinese are making more sense on taxes than your own state officials. In China, stocks have been bouncing up and down on rumors that the government will soon introduce a U.S.-style property tax. Whatever the wisdom of such a tax, Chinese officials at least appreciate that the effect would be to dampen their property market, which they fear is turning into a bubble.

Here in America, by contrast, most states and towns are dealing with depressed home prices and large budget gaps. Yet few are rethinking their property taxes. Two exceptions are Indiana and New Jersey, and if the candidates for governor are to be believed New York.

In Indiana, Republican Gov. Mitch Daniels has succeeded in lowering property taxes on homes to 1% of assessed value. In New Jersey, another Republican, Gov. Chris Christie, has introduced a reform package that would cap property tax increases to 2.5% each year. And in New York, Democrat Andrew Cuomo has just announced his candidacy for governor with a call for a 2% cap on property tax increases lower than the caps proposed by two of the state's leading candidates for the GOP nomination.

California has taxed corporations using a formula based on employment, property and sales in the state. When the new formula takes effect in 2011, it would allow a corporation to calculate its tax based on actual sales in the state, a move favored by California technology companies. The tax breaks are expected to cost the state $2 billion next year.

The New Jersey state has a projected $767 million shortfall over the next 13 months, raising the potential for even deeper budget cuts, according to new figures to be released. It’s not immediately clear why the income tax projections were off by so much whether the increased millionaire’s tax of 2009 did not bring in the desired amount of money, whether wealthy residents created a strategy to avoid paying the increase in that year, or whether it was just a worse year than expected for the average New Jersey resident.

Tax Proposed on Soda and Other Sweet Drinks

Makers and sellers of soda and other sweet drinks have intensified a fight against proposed taxes on their products, as a growing number of cities and states are weighing the measures to help fill depleted coffers.

A soft-drink bottler offered what it called a $10 million good will gesture donation for health and recreation programs in Philadelphia, as city officials there considered a proposal for an excise tax to help plug a budget hole and fight obesity. Politicians say the taxes will help curb rates of obesity and diabetes and can pay for health programs. But retailers and the beverage industry say the taxes are unpopular, unfair and simply won't work.

Industry officials are also considering trying to organize a referendum in Washington State to repeal a three-year excise tax on carbonated beverages of two cents on every 12 ounces. The moves come as officials in at least 20 cities and states have proposed new taxes or the removal of tax exemptions on non-alcoholic beverages so far this year. The beverage industry has spent millions of dollars since 2009 on lobbying and advertising against proposed taxes, including a federal tax initially proposed as part of the health-care reform bill.

So far, few such taxes have actually been imposed. The final federal health overhaul didn't include a soft-drink tax. And while several state and city legislators initially expressed enthusiasm for new soda taxes, only Washington State has approved a new excise tax on soda thus far, while Colorado removed a sales-tax exemption. Several other states have existing small taxes on soft drinks, but those stirring controversy are the proposals for new, larger taxes. Industry officials argue that taxes would penalize consumers at a time when people are already struggling and lead to lost jobs for bottlers and distributors.

Federal Income Tax Increases in Coming Years

The federal income tax increases over the next three years have led to lots of grumbling. But for all the back and forth about the percentages, something has been overlooked: what do these increases mean in real numbers? In other words, how much will wealthy people have left after they pay the higher taxes in the coming years?

What may surprise some people is that the various percentage point increases do not necessarily correspond with the reactions surrounding them. The 3.8 percent Health Care Act surcharge attracted much populist anger, but in many cases, it will result in a lower tax increase than the 0.9 percentage point rise in the Medicare tax. This is because of how and on what part of your income the taxes are applied.

By Summit’s calculations, that $250,000 tax increase would apply next year to a couple filing jointly with $5 million in annual income. The calculations also looked at people earning $500,000, $1 million and $3 million a year.

While the tax increase next year is substantial, another increase comes in 2013, when provisions to pay for the health care bill take effect. Following are some general estimates for people at the four different income levels. (By the way, these tax increases aim only at single people making more than $200,000 a year and couples with incomes above $250,000.) All the assumptions below were based on a married couple filing jointly and without considering the alternative minimum tax, a parallel tax system aimed at a certain slice of high earners that excludes many deductions.

According to Summit’s calculations, the couple earning $500,000 a year, with an assumed $75,000 in net investment income and an equal amount in itemized deductions, is looking at a tax increase of $20,327 in 2011, from 2010. That would bring their federal tax bill to $162,885.
A couple earning $1 million a year with $150,000 in investment income and the same amount in deductions would pay $48,427 more for a federal total of $363,235. Under the same assumption of investment income and deductions being equal, a couple earning $3 million a year could expect an increase of $145,627 in federal taxes, to $1,174,435, and one earning $5 million, an increase of $243,027 for a total of $1,975,835.

The Medicare increase would tax the first $250,000 for a couple at the existing 1.45 percent rate and anything above that at 2.35 percent. For the couple earning $500,000, this translates to an increase of $2,250, for a total Medicare tax of $9,500. In the $1 million situation, the tax would jump by $6,750, to $21, 250. For $3 million in income, it goes up $24,750, to $68,250. It rises $42,750, to $115,250, for the $5 million couple.

If the very wealthy couple had higher investment income, the tax could rise. But it is calculated by a formula that always compares the net investment income against the modified adjusted gross income and taxes the lower one.