On September 12, President Obama provided the legislative text for the “American Jobs Act” that he summarily described during a September 8 speech to a Joint Session of Congress. In terms of taxes, the following summarizes the primary new and reduced taxes:
Tax Increases, totally $461 billion:
- Limiting Itemized Deductions and Other Exclusions to 28% $400 billion
- Repeal of Oil & Gas Exploration Incentives 40 billion
- Taxing “Carried Interests” as Ordinary Income 18 billion
- Reducing Corporate Jet Depreciation 3 billion
Tax cuts, totalling $188 billion
- Payroll tax holiday through 2012 $175 billion
- Tax Credits for Hiring Long-tem Unemployed 8 billion
- 2012 Extension of Bonus Depreciation 5 billion
Total of above
The two large items in the above would be a big deal if they could actually be passed. Details of each of these proposed tax changes are described in this article.
While Republicans could certainly support some of the changes in the American Jobs Act, passing an overall bill that does not add to the deficit will be nearly impossible. Nevertheless, it is important to understand the President’s current tax proposals in planning long-term tax positions.