Our guess is that most Americans knew immediately where they stood on President Barack Obama’s plan to reduce the nation’s deficit by more than $3 trillion by adopting the “Buffett rule.”
You probably looked at the plan in one of two ways: (1) The president is right, and the wealthy should not pay taxes at a lower rate than the middle class; or (2) The president is wrong and should not raise taxes on the “job creators” among us.
That debate is sure to be the focal point of the 2012 presidential election.
However, the loud noise on both sides of that debate may be drowning out the discussion about Obama’s American Jobs Act, which perhaps has more nuances than the deficit reduction plan.
We’ll start with the impact of the jobs bill in Wisconsin.
The plan begins with tax cuts intended to help America’s small businesses hire and grow. Obama’s plan would cut the payroll tax employees pay in half from 6.2 percent to 3.1 percent. The bill would cut an employers’ portion of Social Security payroll taxes in half, from 6.2 percent to 3.1 percent. Self-employment taxes also would be cut in half for sole proprietors and partners. In Wisconsin, 110,000 firms and their employees would receive a payroll tax cut under the plan, the White House said.
Employers also would receive tax credits if they hire new employees.
Obama’s plan includes $50 billion in immediate investments for highways, transit, rail and aviation. The plan would make immediate investments of at least $575.4 million in Wisconsin that could support a minimum of approximately 7,500 local jobs.
Obama plans to invest $35 billion to prevent layoffs of up to 280,000 teachers, while supporting the hiring of tens of thousands more and keeping police officers and firefighters on the job. The funds would provide $536 million to Wisconsin to support up to 7,400 jobs.
Obama is proposing a $25 billion investment in school infrastructure that would modernize at least 35,000 public schools. Wisconsin would receive $368.7 million in funding to support as many as 4,800 jobs.
The plan proposes to invest $15 billion in a national effort to put construction workers on the job rehabilitating and refurbishing hundreds of thousands of vacant and foreclosed homes and businesses. Wisconsin could receive about $27.4 million to revitalize and refurbish local communities.
Obama’s plan proposes $5 billion of investments for facilities modernization needs at community colleges. Wisconsin could receive $79.9 million in funding in the next fiscal year for its community colleges.
The question after all of this, of course, is how would this plan be financed? Obama says his plan would be paid for with a combination of spending cuts in other areas, allowing some Bush era tax cuts to sunset and raising some other taxes, primarily on the wealthiest citizens.
The tax hikes would include:
Limit certain itemized deductions. For families with income of more than $250,000, the bill would cap the value of an itemized deduction at 28 cents for each dollar deducted. Under current law, itemized deductions can be worth up to 35 cents for every dollar deducted.
Certain “carried interest” income earned by hedge funds and investment partnerships would be treated as capital gain income and taxed at a 35-percent rate, up from the current 15 percent.
The allowable deductions for the depreciation of corporate jets would be spread out over seven years from the current five years, enabling the government to collect more taxes sooner.
Credits and allowances used by the oil and gas industry in determining taxable income would be reduced.
Let the debate begin.
