Easy Come, Easy Go
On Monday, September 19, 2011, President of the United States (POTUS) Barack Obama unveiled his proposal on how to pay for the American Jobs Act (AJA, no bill number yet) as part of his overall plan for deficient reduction. The “Plan for Economic Growth and Deficit Reduction” was given to the Joint Select Committee on Deficit Reduction, which is charged with finding at least $1.2 trillion in budgetary savings. This plan includes a series of changes to the tax code and entitlement programs that would produce an estimated $3 trillion in savings over the next decade, in order to pay for the Jobs Act and to scale back the deficit. One of the cornerstones of this plan is a proposal to limit the value of itemized deductions and exclusions to 28 percent for households with a gross income over $250,000, or individuals with a gross income of $200,000. Since 1913, interest income from municipal bonds has been exempt from federal taxation, with no limit to the amount of tax-free interest that could be earned. Under the new proposal, interest proceeds from municipal bonds would only be tax-exempt until a high-income taxpayer’s deductions and exclusions reached the 28 percent cap. All interest earnings beyond that cap would be subject to federal taxation. Although the precise impact of this policy is still unclear, there is significant concern that reducing the benefits of municipal bond investments for high-income persons might make these bonds less attractive to investors, raising interest rates and reducing the amount available for municipal borrowers. House Republicans have rejected the proposed 28 percent limitation, contending that this provision represents a tax increase that would hurt charitable organizations and local and State governments. Thus, if enacted and the Republicans are right, it could adversely impact parks and recreation resources.
As noted last week, there are key elements to the AJA that provide opportunities for parks and recreation, such as the $27 billion in additional transportation investments that would yield nearly $750 million for Transportation Enhancements. Where do you think offsets and deficit reduction should come from and are you willing to actively promote that position to Congress as a means of funding Transportation Enhancements?
The Ferguson group