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Washington Cancels Tax Breaks to Fund New Jobs

September 21st

This week President Obama announced his intentions to fund his plan for $447 billion in new jobs by eliminating a series of tax breaks. Over the next ten years, the plan will cancel approximately $467 billion in tax breaks for privileged American taxpayers, including oil and gas companies, hedge-fund managers, and households with income over $200,000.

The President’s plan is headed to Congress later in the week. Though the President has urged Congress to approve the package, many expect that the plan will experience substantial opposition from Republicans. Over the summer, the Republicans have repeatedly said that they would never end tax breaks, claiming that to do so would hamper the recovery of the US economy.

Ending Wealthy Tax Breaks

In order to fund President Obama’s new job plan, a number of tax breaks for the wealthy and elite are due to be cut. This would include, most notably, a new limit on itemized tax deductions. Individual tax deductions would be capped at $200,000, while families would be limited at $250,000.

In addition, the treatment of carried interest would change significantly. Instead of being taxed specially at the capital gains rate, carried interest would be considered “ordinary income,” and therefore taxed under standard income tax regulations

Tax breaks for oil and gas companies are also expected to be reduced or cancelled entirely. Similarly, corporate jet depreciation rates would change significantly.

Wealthy taxpayers could expect to be facing much higher tax levies, as well as audits and expectations of handing over previously unpaid taxes. This bill could potentially make a substantial impact in the fight to bring more equity to the US tax code. Supporters are confident that the majority of Americans will favor a plan that eliminates unequal subsidies for the rich in order to bring jobs to ordinary citizens.

 
 
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