Bankers Oppose IRS Regulation Of Foreign Investments

By Andrea Salazar

Representatives from financial institutions in Texas and Florida fear loss of investments if the IRS moves ahead with a proposed regulation requiring banks to report the deposit interest paid to foreign investors.

The Financial Institutions and Consumer Credit Subcommittee held a hearing on the recent IRS proposal. Currently, banks do not report the interest foreign investors earn from American banks, nor do foreign investors pay federal taxes on that interest.

At the hearing, Rep. Bill  Posey (R-FL) emphasized that the policy is not necessary to enforce U.S. tax laws and will harm the economy instead.

“Make no mistake about it, the proposed regulation will drive hundreds of billions of dollars out of America, and cause irreparable harm to an already fragile U.S. economy,” Posey said in a statement.

Alex Sanchez, president and CEO of the Florida Bankers Association, emphasized the threat the IRS regulation would impose on foreign investors from South America, whom he says are the majority of investors.

“People do not trust their institutions in their home countries,” Sanchez told the subcommittee. “They’re worried about an economic collapse where their currency will be worthless. That’s why they have their monies in the United States of America.” 

However, Rebecca Wilkins, senior counsel on Federal tax policy for Citizens for Tax Justice, supports the IRS measure as a way to curb tax evasion.

“We do not believe that the United States should be a tax haven for citizens of other countries who wish to evade their tax obligations to their home country,” Wilkins said in her testimony.

Posey, along with Rep. Gregory Meeks (D-N.Y.) have introduced legislation to block the IRS from forcing banks to release the deposit interest information of foreign investors. They also sent letters, with bipartisan support, to President Obama and Treasury Secretary Timothy Geithner asking them to withdraw the proposed regulation.

Paul Ryan Takes Aim At Obama, Defends GOP Budget Proposal

By Andrea Salazar

House Budget Committee Chairman Rep. Paul Ryan (R-Wis.) accused President Obama today of “sowing social unrest” as he travels across the country promoting his jobs bill.

Ryan said that as a presidential candidate, Obama pledged to put politics aside to tackle the country’s problems. However, the chairman said the president has not followed his own advice.

“Instead of working together where we agree, the President has opted for divisive rhetoric and the broken politics of the past,” Ryan said during a speech at The Heritage Foundation in Washington, DC. “He is going from town to town, impugning the motives of Republicans, setting up straw men and scapegoats, and engaging in intellectually lazy arguments, as he tries to build support for punitive tax hikes on job creators.”

Ryan later defended his budget proposal, which came under severe attack earlier this year by Obama and congressional Democrats. 

“The President has wrongly framed Republican efforts to get government spending under control as hard-hearted attacks on the poor,” Ryan said. “In reality, spending on programs for seniors and for lower-income families continues to grow every year under the House-passed budget – it just grows at a sustainable rate. We direct tax dollars where they’re needed most, and stop spending money we don’t have on boondoggles we don’t need.”

Instead of working toward “equality of outcome,” Ryan suggested working toward “equality of oportunity” by reforming the tax code, instead of raising taxes on the rich.

“Let’s stop trying to pick winners and losers in Washington, through the tax code or through spending, and just lower the rates and broaden the base so everybody’s treated the same and so that our companies are competitive,” Ryan said.

Poll: Americans Favor Jobs Plan, Taxing Rich

President Obama’s plan to raise taxes on the wealthiest Americans as a method of paying for the American Jobs Act has gained some considerable support from the American public, according to recent poll figures. 

A new poll released by Gallup found that seven in ten Americans favor increasing taxes on corporations by eliminating tax loopholes. Additionally, 66 percent also favor proposed tax rate increases on individuals earning more than $200,000 and families earning more than $250,000. 

Among conservative voters, 53 percent agree on eliminating corporate tax deductions while just 41 percent favor tax hikes on individual and household incomes. Comparatively, nearly 86 percent of Democrats and those leaning to the left favor hiked taxes on both entities. 

Additionally, poll figures found that Americans generally approve of the President’s jobs plan. Most notably, a proposal that would provide tax cuts for small businesses , which includes incentives to hire workers, garnered wide bipartisan support with Republican and Democratic voters, 84 and 87 percent, respectively.  

Results are based on telephone interviews conducted between Sept. 15-18 with a random sample of 1,004 adults over the age of 18. 

Obama Proposes New Taxes On Top Earners To Slash Deficit

President Obama made an impassioned appeal to Republican lawmakers to support his latest deficit reduction plan, details of which had already been released to the press by the time he took the podium on Monday morning.

(Click here for the White House’s summary of the plan)

Speaking in the White House Rose Garden, the president said his proposal represents a balanced approach to reigning in the nation’s bloated debt level while at the same time providing a shot in the arm to a fledgling economy.

“It’s a plan,” he said, “that reduces our debt by more than four trillion dollars, and achieves these savings in a way that is fair, by asking everybody to do their part so that no one has to bear too much of the burden on their own.”

Obama added that the measure would fully offset his jobs bill, a $447 billion plan that includes a mix of tax cuts and tax credits and spending on public works projects.

Like everything these days, the biggest challenge for the president will be getting Congress to support the plan. Republicans, led by House Speaker John Boehner (R-Ohio) and House Budget Committee Chairman Paul Ryan (R-Wis.), have already drawn a line in the sand over tax increases, which happen to comprise $1.5 trillion of the total savings found within Obama’s measure.

In a statement put out on Sunday, Ryan called the plan an example of “class warfare” — referring to Obama’s idea to raise tax rates on those making more than $250,000 per year. The president’s plan also includes the so-called “Buffett rule,” a nod to billionaire investor Warren Buffett, who has come out in support of raising investment taxes on those making more than $1 million per year.

The president, in his remarks this morning, pushed back strongly against Ryan’s assertion.

“I reject the idea that asking a hedge fund manager to pay the same tax rate as a plumber or a teacher is class warfare,” he said. “I think it’s just the right thing to do.”

Republicans will also likely accuse Obama of using gimmicks, such as counting $1 trillion in new cuts from ending the wars in Iraq and Afghanistan, to inflate total savings. However, as the Associated Press noted on Monday, Ryan included those future savings in his budget proposal earlier this year.

Increasing Payroll Taxes Would Preserve Social Security, Say Dems

A group of four Democrats partnered on Wednesday to unveil legislation aimed at protecting Social Security benefits for America’s seniors.

Republicans have lately been citing government reports showing that the popular entitlement could run out of money by 2038, and most of the GOP candidates for President have embraced the idea of restructuring the program for younger Americans. Some Democrats, however, have argued that drastically reforming the program is a bad idea.

“Despite a lot of right wing rhetoric to the contrary, Social Security is not going broke and has not contributed one penny to our serious deficit problem,” said Sen. Bernie Sanders (I-Vt.)

(Click here to see photos from today’s press conference)

Currently, Social Security is funded through payroll taxes paid by employers and employees. The cap on annual income subject to the tax is $106,800. According to the Social Security Administration, the program currently has a $2.5 trillion surplus and the Congressional Budget Office has reported that it can pay out every benefit to every eligible American for the next 27 years.

The Keeping Our Social Security Promises Act, proposed by Sanders, Rep. Peter DeFazio (D-Ore.) and Sens. Barbara Boxer (D-Calif.) and Sheldon Whitehouse (D-R.I.) would strengthen Social Security’s coffers by applying the tax to any income generated over $250,000 per year. The concept, as noted by Sanders, was advocated for by President Obama back in 2008, who called for raising the payroll tax on wealthy Americans.

“This is a simple fix. It solves the whole problem in a way that should be embraced by everyone,” Boxer said.

Tension arose when a reporter asked the lawmakers to weigh in on President Obama’s recent proposal in the American Jobs Act to extend the payroll tax cut for another year.

“Do I think the middle class deserve a tax break in the midst of this horrendous recession?” Sanders asked. “I d, but I would very much prefer it not come from continuing the cuts that we’re seeing in the payroll taxing.”

Boxer, however, was adamant that the payroll tax cut bill has legislation built within it to restore funds. 

Yet as Boxer was defending the payroll tax cut, DeFazio was shaking his head in rejection of her claim that the funds would be restored.

“No more tax cuts,” Defazio declared angrily. “We have the economy that tax cuts will give us and it is pretty pathetic, isn’t it?”

Obama’s proposed extension of the payroll tax cut holiday has received criticism from both sides of the aisle.