by Linda Beale
Harry Reid announced on Wednesday (Oct. 5) that the Senate would take up Jobs Act legislation (S. 1549) soon, but that the offsets in the president’s proposals would be replaced by a 5% surtax on those making more than a million that would raise about $445 million. See Bolen & Lorenzo, Senate to Debate Jobs Bill Paid For with 5% Millionaire Surtax, BNA Daily Tax Report 194 DTR G-7 (Oct 5, 2011).
Note that this means that, once again, Congress will punt on the question of taxing fund managers fairly on their compensation, since the carried interest provision would be one of the offsets replaced by this provision. The carried interest provision should be passed no matter what other offsets are used. It is an unfair provision that treats fund managers as a specially protected category of worker with preferential rates on their compensation income. Time to end it, once and for all.
Not surprisingly, GOP senator Hatch complained that this small surcharge on millionaires would be a “massive” tax increase on “small businesses”. Id. How many times do we have to remind Congress that most small businesses don’t make millions in profits, that those who have millions can pay a 5% tax without undue distress (compared to those with a ten dollar bill being able to support their family with food and shelter), and that 5% of $1 million is not a “massive” tax increase. 50% of $1 million might be, but 5% is simply not.
Also posted at ataxingmatter