White House: Closing tax loophole could fund student loans
Source: Reuters
ABOARD AIR FORCE ONE | Tue Apr 24, 2012 2:30pm EDT
(Reuters) - The White House said on Tuesday that it was reviewing whether a small business tax loophole should be closed to pay for an extension of low interest rates on student loans that President Barack Obama wants Congress to deliver.
The loophole allows some shareholder-employees of so-called "S corporations" to avoid paying the Medicare payroll tax on their earnings.
"We've certainly been in discussions with senators about that - that is certainly an option that is a good potential option," said White House press secretary Jay Carney traveling with Obama. "It meets the standard we set that we cannot pay for it in a way that harms students."
Obama was heading to North Carolina on the first leg of a tour of three battleground election states in which he will urge Congress to stop interest rates from rising on 7.4 million students. The action could appeal to middle class and younger voters vital to his hopes for re-election in November.
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Read more: http://www.reuters.com/article/2012/04/24/us-usa-obama-education-taxes-idUSBRE83N0ZM20120424
ret5hd
(20,523 posts)but, just sayin', shouldn't we use the Medicare payroll tax witholdings to pay for medicare?
PoliticAverse
(26,366 posts)kelly1mm
(4,735 posts)result in any funding being available for a program other than medicare?
Igel
(35,359 posts)In fact, it's one of the fastest growing portions of the US budget. It's one reason that curtailing the increase in health care expenses would help the projected budget deficit. (And, no, this was not part of the health care law a few years back. Intentionally so.)
Medicare requires a hefty chunk of $ every year to avoid mandated cuts (the mandate dates from 2002 or before, and has never been applied).
If you increased dedicated funds going to Medicare then, in principle, you could reduce the amount of money needed to fund the "Medicare gap"--the difference between dedicated income and budgeted expenses.
1StrongBlackMan
(31,849 posts)close that loop-hole, I would suggest a far more substantial fix that would fund a lot of stuff for a long time ...
How about removing the cap on Medicare payroll tax and apply it, at a lower rate, to ALL income whether earned or passive.
The formulation being floated will affect the true small business owners (like my wife, who is struggling with a one person consultancy shop) far more than the "fake" small business owners, earning millions.
So if your gonna take from S-corps, remove the cap.