Don't Mess With Taxes

In case you missed the President's first address to the House, Senate and us television viewers last night, the Los Angeles Times' political blog Top of the Ticket has the full text of the speech.

So just what did Obama have to say about taxes? Not much, and that was essentially a plug for the Making Work Pay credit:

"If your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime.  In fact, the recovery plan provides a tax cut -- that's right, a tax cut -- for 95 percent of working families. And these checks are on the way."

We will, however, get a bit more detail tomorrow, when Obama's budget proposal is officially released.

What to look for tax-wise: There's a lot of speculation about just what we will see. In a nutshell, expect a decision to let Dubya's tax cuts for those earning more than $250,000 to expire after 2010.

Among those expiring tax breaks is the provision for the current low capital gains rates. For taxpayers in the four upper brackets, it's 15 percent. That will go back to its previous 20 percent level on Jan. 1, 2011.

The rate for folks in the two lower (10 and 15 percent) tax brackets is now zilch. Yep, it was zeroed out (from a 5 percent rate) for the 2008 through 2010 tax years. That's a great benefit, but realistically, not many lower income folks are big investors.

Presumably, that zero percent rate for those folks also will be bumped back up to its pre-Dubya level of 10 percent. But then again, Obama may decide to continue to give these particular investors more of a capital gains break.

There's talk that hedge fund and private equity executives will be taxed on "carried interest." That's their share of profits on investments, and it will be at the higher ordinary income tax rate rather than the lower capital gains tax rate as is now assessed.

Also don't be surprised by a rejiggering of the tax brackets to kick the top marginal income tax rate to 39.6 percent.

And a limit on deductions for filers in the 33 percent and 35 percent tax brackets has been mentioned.

Other wish-list items: And, of course, there will be Obama's fiscal plans to fund health, energy and the environmental programs. The Washington Post has an early look at the expected health care proposal.

Remember, too, that any president's budget is, in large part, a wish list. Ideas get floated, then tweaked  before -- or if and when -- they actually become law.

The process does, however, offer some insight into exactly what direction an administration wants to take.

Equal time: Oh yes, although we're not required to offer equal time, I do realize that there was a another side to last night's speechifying. The Wall Street Journal's Washington Wire has the text of Louisiana Gov. Bobby Jindal's response on behalf of the GOP,