Tax Edge

By Robert Steere, Toolkit Staff Writer

What better day to tout presidential tax policies than on April 15th - the day that millions of Americans are scurrying to complete and file their income tax returns (or, at least, their extension requests). And, at a morning press conference, President Obama did just that. In declaring the tax policies that guide his thinking about taxes, he highlighted several of the tax cutting provisions of the stimulus plan in the American Recovery and Reinvestment Act of 2009.

"We start from the simple premise that we should reduce the tax burden on working people, while helping Americans go to college, own a home, raise a family, start a business and save for retirement. Those goals are the foundation of the American dream, and they are the focus of my tax policy."

He said that the workers, innovators and students will be powering our recovery. He declared, "They need a government that is working to create jobs and opportunity for them, rather than simply giving more and more to those at the very top in the false hope that wealth automatically trickles down. And that's why my administration has taken far-reaching action to give tax cuts to the Americans who need them, while jump starting growth and job creation in the process."

President Obama identified several specific tax provisions that implement his tax policy. First and foremost is the Making Work Pay tax credit, a broad and sweeping tax cut for 95 percent of American workers. This, he indicated, is a core component of the Recovery Act, the impact of which was now being felt by American workers in the form of higher paychecks. "This tax cut will reach 120 million families and put $120 billion directly into their pockets," he said, "and it includes the most American workers ever to get a tax cut." He went on to say, "Together with the child tax credit, it ensures that a working parent will be able to support their family."

Second, he highlighted the help being given to small businesses by allowing them to carry back their 2008 net operating losses over the previous five years instead of the normal two-year carryback period. This could provide a record number of refunds for small businesses, and may give them the funds they need to maintain inventory and pay their workers.

Third, he noted that new tax provisions were geared to making college more affordable for everyone. The new American Opportunity education tax credit increases to $2,500 per student the pre-existing Hope education credit (previously $1,800), and expands its availability to all four years of undergraduate study instead of just two.

Fourth, helping more Americans purchase affordable homes is the key tax policy behind the new first-time homebuyer tax credit. "We must restore the home as a source of stability and an anchor of the American dream," said the President. "That's why we're providing a tax credit of up to $8,000 for first-time home buyers, which will put a home within reach for hard-working Americans who are playing by the rules and making responsible choices."

Fifth, the President declared that an essential aspect of his tax policy is that fiscal discipline must be pursued concurrently with tax relief. Deficit reductions must be identified and implemented. He observed that such reductions include cutting programs that don't work, contracts that aren't fair and spending that we don't need, as well as doing away with the unnecessary giveaways that have thrown our tax code out of balance.

"We need to stop giving tax breaks to companies that stash profits or ship jobs overseas so that we can invest in job creation here at home. And we need to end the tax breaks for the wealthiest two percent of Americans, so that people like me, who are extraordinarily lucky, are paying the same rates that the wealthiest two percent of Americans paid when Bill Clinton was president," said the President.

As his final tax policy point, the President stated the obvious - "We need to simplify a monstrous tax code that is far too complicated for most Americans to understand, but just complicated enough for the insiders who know how to game the system." And he made a promise - "I want every American to know that we will rewrite the tax code so that it puts your interests over any special interests. And we'll make it easier, quicker and less expensive for you to file a return, so that April 15th is not a date that is approached with dread every year."

In conclusion, President Obama claimed, "We've given tax relief to the Americans who need it and the workers who have earned it. And we're helping more Americans move toward their American dream by going to school, owning a home, keeping their business and raising their family."

Related items:

Small Gains for Small Business in 2009 Stimulus Package

President's Budget Backs $28 Billion in Small Business Loan Guarantees

IRS Decides To Be Generous with Credit for New Homebuyers

Congress Approves Massive Spending Bill Along Party Lines

Senate Finance Approves "Stimulus" Package with AMT Patch

White House Stands Firm on $500 Tax Credit in Economic "Stimulus" Package

Obama, House Democrats Unveil $825 Billion Economic Stimulus Bill

Lawmakers May Deliver Small Business Tax, Pension Relief Before Year-End

Congress Passes Tax Extenders as Part of Bailout Bill

Posted April 20, 2009.