NEW YORK (CNNMoney.com) - President Obama's fall agenda has grown largeras some of the biggest decisions - and fights - over health care reform have been punted to September ... at the earliest.
But health reform is not the only major initiative he wants to get done. Far from it. There's climate change. There's reforming Wall Street. And, of course, there's passing a budget for 2010 at a time of huge deficits. Running in the background to all of this will be one of the biggest
issues the Obama administration must address: taxes.
"As soon as they can clear health care off the plate, it will be taxes, taxes, taxes," said Anne Mathias, director of research at Concept Capital's
Washington Research Group.
Health reform taxes: Before health care can be cleared off the plate, Obama will have to answer some key tax questions.
For starters, he will need to be more explicit about what he will accept in terms of increasing taxes to pay for health reform and indicate exactly which of the revenue raisers on the table in Congress he considers deal-breakers.
The president originally proposed limiting the itemized deductions that high-income tax filers could take, an idea that fell flat with lawmakers. He doesn't like what had been a leading idea in the Senate to help fund reform –taxing what are currently tax-free health benefits that workers receive from their employers. But at various times he has indic ated indirectly he might be open to it in some limited form.
Now the idea gaining currency in the Senate is to tax insurers who offer very expensive plans. Critics say such a tax could either be passed on to workers through higher premiums or reduced benefits. In the House, meanwhile, the leading idea is to impose a surtax - or additional tax - on thehighest-income households.
"The problem here is there are no good ideas," said Clint Stretch, managing principal for tax policy at Deloitte Tax.
Translation: Only proposals to cut taxes typically generate support.
Winning the debate over a tax hike is guaranteed hard slogging. Estate taxes: Regardless of what happens with health reform, lawmakers
and the administration will have to make a decision about what to do about the estate tax. Otherwise, it will be repealed for one year, starting on Jan. 1,2010.
Since that's revenue the country can't afford to lose, what's most likely to happen is that Congress will extend the estate tax for one year at the 2009 exemption levels, Mathias and Stretch said. In that case, the first $3.5 million of an individual's estate would be exempt from the federal estate tax. And the taxable portions of the estate would then be taxed at rates up to 45%.
Then in 2010, lawmakers are likely to address what to do with the estate tax on a more permanent basis. Obama has proposed making the estate tax permanent at the 2009 exemption levels.
But doing so will look like a revenue loser over 10 years. That's because it would raise less tax money than what's set to happen under current law. If nothing is done by 2011, the first $1 million of an estate would be exempt from the tax and the top rate would be 55%.
Climate change taxes: Whether or not lawmakers succeed in getting a climate change bill ready for the president's signature before the year is out, there is likely to be discussion over several revenue issues. For example, what to do with revenue generated from a cap-and-trade program in which carbon-emission permits are bought and sold?
Corporate taxes: Obama has said he wants to close what he calls corporate tax loopholes.
The administration laid out a few proposals to that effect earlier in the year, particularly with regard to U.S. companies doing business overseas. And Obama created a tax reform panel and asked it to make suggestions by Dec. 4 about how to raise more revenue. Corporate tax breaks are a focus for the group.
But it's not clear how Obama's corporate tax proposals will fly given that taxwriters on Capitol Hill have already crafted many of their own
proposals. Some lawmakers only want to curb corporate breaks and simplify the corporate tax code if rates are lowered, a step Obama has not yet proposed.
"The Hill knows where it wants to go on tax reform generally. They want to close the tax gap and they want to do international tax reform," Stretch said. But he doesn't envision the changes as big revenue raisers per se. Rather, he said, the overarching goal would be to make U.S. businesses operating abroad more competitive.
"It won't be about raising revenue, but about lowering rates. The point of doing it is to generate more business," Stretch said.
Although discussions will be had, he only thinks there's a 50/50 chance that international corporate tax reform will be completed in the next year. Kitchen sink taxes: There are a host of tax provisions that, barring lawmaker action, will expire in 2009 and 2010. Many are tax breaks that companies and individuals have come to expect and which lawmakers typically extend every year. Among these are the research and development credit for businesses, relief from the Alternative Minimum Tax for middle- and upper-middle-income families and various renewable energy tax credits.
What's very possible is that extensions for most such expiring provisions will be bundedl into one bill at some point next year. "There's no way they can get through 2010 without a tax bill," Mathias said.
The midterm elections provide added incentive, she noted. "Democrats will want to campaign on extending popular provisions."
it was mu understanding there would not be any tax increases on the middle class?? a lie from The Joker??? surely not
Democrats can no longer deny that their party is the party of Tax and Spend. Wake up democrats....stop following blindly. You know Obama is wrong and a miserable failure....just admit it....that's the first step to recovery.
Its time to end the Republican domination of any of these issues and its time the Democrats start working together to end it instead of fighting each other. Do you hear me Blue Dogs? Or are you being bought off just like your Republican buddies?
Another CNN & RNC scare tactic! get a life CNN
We sat on our thumbs while Bush & Co. burned through trillions of dollars on a senseless war. We sat on our thumbs while deregulation made a mockery of free enterprise. We sat on our thumbs while our government tapped our phones without warrants and waterboarded prisoners. Now we expect to sit on our thumbs while "somebody else" bails us out of this mess. Higher taxes? Karma, anyone?
Estate taxes? So you pay your income taxes and your property taxes your whole life and then when you die the Government taxes your Estate at 45%? Is this not double taxation?
We've got to pay for this reckless spending sometime. As long as this debt looms over our nation it will hamper our economy and raise interest rates on government bonds. Thanks for the debt Obama, what do we have to show for it?
I don't care about paying more taxes if in return there is a decent health care system in this country which insures ALL Americans and does not deny insurance to those who have lost their jobs.
Obummer's track record for 7 months:
Increased the Bush Defict by Three Fold
More Pork in Bills
More Govt Spending
Bail out after Bail out
Increasing Taxes and Fees
Making HealthCare Socialist HealthCare
Yeah, some change. It got WORSE.
The only way to get anything meaningful in health care is to rid ourselves of the Republicans who in the end favor the status quo and let on that they are worried about taxes and the like. Where were they when under the bush era they plunged the country into absolute financial chaos while their friends in Wall Street got bailed out?
All this spending will catch up with the democrats, but they'll punt it down the road until after the 2010 elections just like they're doing with entitlement reform.
Same song, different singers.
"I promise not to raise middle class taxes, not one single penny"
John King and CNN, you have been outed! I felt you were the Conservative News Network, but now it turns out you are the Corporation News Network too. Hope the executives will be happy when no one is watching your network. Why won't you run the ad? Because it names an individual? Well, why don't you use the same policy when it comes to political ads lying about certain candidates? Why did you run the Jeremiah Wright video over and over, and over and over? CNN is really not a news network! It is a propaganda for the GOP and corporations network.
How many times does he have to say he is not raising taxes on the middle class only on the wealthy which I believe everyone supports. Trickle down eco has proved it DOES NOT WORK gop!
Repeal the bush tax cuts for the wealthy!
Why didn't any of you republicans oppose bush bankrupting this country with his war based on a lie and rebuilding Iraq? Why when this President is trying to rebuild this country you oppose it? Do you hate America?
Even if dems actually believed what Obama was saying on the campaign trail, how could they continue to support him? There were promises of transparency, promises of spending wisely, promises of clearing the national debt, where are those promises now? Candidate Obama said one thing, Presidunce Obama is doing another and it isnt even the end of the first year of his term. If you ever needed proof of the hypocrisy of a politician, especially THE ONE who is president now, compare his campaign speeches to what he is saying now to America. I CONTEND THAT FOR A NATION TO TRY TO TAX ITSELF INTO PROSPERITY IS LIKE A MAN STANDING IN A BUCKET AND TRYING TO LIFT HIMSELF UP BY THE HANDLE
Turbo Tim already give a hint, taxes will be increase; forget promise of Obambi he will not increase taxes for 95% of Americans paying their taxes. Of course these people saying they don't mind increase in taxes provided they have socialize medicine, are not paying income tax at the end of the year. 40% of Americans are not paying taxes, they're the biggest voice right now demanding socialize medicine; they have a lot to gain with nothing to lose. More government cheese at the expense of working Americans eking out a living, paying their taxes.
Taxes know no liberals or conservatives! and the current income tax system is a total failure replace it should be replaced with consumption tax and all illegals and even prostitution industry will be paying taxes!!
President Obama has spent 1.5 trillion dollars to date on his socialist utopian dream. There are more homeless and poor people now than ever on his watch, with absolutely no one speaking for them. Guess that dream only extends to liberals with cash and an education.