Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Terrific: Senate Dems offset cost of student loan bill with higher taxes on small business
Hotair ^ | 04/26/2012 | Morgan Richmond

Posted on 04/26/2012 10:16:20 AM PDT by SeekAndFind

Let the games begin. With Romney expressing his support earlier this week for extending the freeze in student loan interest rates, defusing this as a wedge issue just as the President was embarking on his college tour, Democrats in the Senate have decided to counter with, what else, the class warfare card. Via Bloomberg (emphasis added):

Senate Democrats and the White House are seeking a one-year freeze in the interest rate. The $6 billion cost would be offset by limiting a tax provision that allows some owners of so-called S-corporations to avoid paying Medicare payroll taxes on their earnings, Senator Tom Harkin, an Iowa Democrat, told reporters yesterday.

Harkin said the legislation would require the Medicare payroll tax on income of more than $250,000 a year earned at S-corporations with fewer than three shareholders.

“This is a loophole that needs to be closed anyway,” he said. “So this is the right time to do it and for the right cause.”

Current law exempts the profits earned by S-corporations from Social Security and Medicare taxes, taxing only the salaries earned by shareholders who are employed by these firms. The IRS requires the allocation of reasonable compensation for work performed, so closely held S-corporations cannot (legally) classify all of their net income as profits, thus bypassing these payroll taxes. To call it a “loophole” is disingenuous. It’s no more a loophole than hundreds of other avenues through which businesses and individuals can cheat on their taxes, if they are willing to subject themselves to the consequences of breaking the law.

Millions of small, family owned businesses around the country are classified as S-corporations, and would be caught up in this tax net for no reason other than that they are small, and successful. And keep in mind that the profits which are credited to shareholders of S-corporations often remain in the business, funding the salaries of new employees and other investments.

The worst of it is that this a new, permanent tax on small businesses – $9 billion over 10 years according to the CBO - to fund the cost of just one year of the interest rate freeze ($6 billion). If this is the “right cause” then the cause isn’t long-term financial relief for college students, it’s the re-election prospects of Democrats in November.

Backing this bill would be a dangerous precedent to set ahead of the real class warfare battle to come this summer, and thus Republicans in Congress, as well as the Romney campaign, should withhold their support unless another means is found to pay for it.


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: education; scorps; smallbusiness; studentloans; taxes; tuition

1 posted on 04/26/2012 10:16:34 AM PDT by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

Oil companies should not feel alone. Democrats want to crucify business in general— just different ways for different sectors.


2 posted on 04/26/2012 10:22:17 AM PDT by Clara Lou
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

So, in other words, the democrats in their efforts to make people dependent upon them have raised taxes on small businesses which will dampen new hiring causing them to continue to be more dependent on democrat handouts...perfect world isn’t it???? (sarc off)


3 posted on 04/26/2012 10:22:34 AM PDT by Wpin ("I Have Sworn Upon the Altar of God eternal hostility against every form of tyranny...")
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
Hahahahaha! Who did they think was going to hire all those Womyn’s Studies, Renaissance Literature, Ethnic Studies, Creative Writing and Arts & Crafts majors who took out those student loans?!
4 posted on 04/26/2012 10:24:26 AM PDT by 2ndDivisionVet (Ich habe keinen Konig aber Gott)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

They get lower interest rates on their college loans in return for no job after graduation.


5 posted on 04/26/2012 10:25:41 AM PDT by reg45 (Barack 0bama: Implementing class warfare by having no class!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Insanity.


6 posted on 04/26/2012 10:27:49 AM PDT by BenLurkin (This is not a statement of fact. It is either opinion or satire; or both)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

helping get rid of jobs will certainly help these graduates (rolling eyes)


7 posted on 04/26/2012 10:30:41 AM PDT by BookmanTheJanitor
[ Post Reply | Private Reply | To 1 | View Replies]

To: 2ndDivisionVet
Who did they think was going to hire all those Womyn’s Studies, Renaissance Literature, Ethnic Studies, Creative Writing and Arts & Crafts majors who took out those student loans?!

But if The Won wins at least we know the Grievence Studies majors will be OK.

8 posted on 04/26/2012 10:31:26 AM PDT by Drill Thrawl (The United States of America, a banana republic since 1913)
[ Post Reply | Private Reply | To 4 | View Replies]

To: SeekAndFind

I hope the House, which is supposed to be the body that initiates revenue related bills, dumps this quickly. As for pitting small businesses against students, that tactic is to be expected from the Obama administration.

If “republicans” were smart, they would tie the decrease in interest rates to schools that receive the benefit of student loans. Schools making bad loans would have to pay higher “fees.” The more bad loans they make, the more “fees” they would have to pay the govt. Hopefully this would discourage schools from giving loans to the destitute as well as raise money to offset the loss of interest rate increase.

There is no relationship between small business and student loans. Small businesses gain nothing and lose everything with this harebrained idea from Obama, the dems and the RINOs in the Senate. This is an economy killer.


9 posted on 04/26/2012 10:34:00 AM PDT by Waryone (Remember your ABCS (anybody but commie socialists) = ABM (anybody but Mitt), ABO (anybody but Obama))
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
Harkin said the legislation would require the Medicare payroll tax on...

As an alternate arguement shouldn't Medicare taxes go to something like, oh I don't know, Medicare? Just sayin'.

10 posted on 04/26/2012 10:34:23 AM PDT by Drill Thrawl (The United States of America, a banana republic since 1913)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

What does Medicare have to do with student loan rates?

Oh, no the Feds are going to make(steal) less money. Why don’t they cut spending? I know, I know there is no point asking that question.


11 posted on 04/26/2012 10:35:02 AM PDT by Stayingawayfromthedarkside
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

I hope these students realize they too will be crushed by higher taxes when they graduate and if they have any dreams of owning their own business and get ahead, they’re wasting their money because stupid is as stupid does.

They deserve the ‘0-future’.


12 posted on 04/26/2012 10:43:07 AM PDT by TribalPrincess2U (Anyone not wanting an ID or purple thumb to vote isn't worthy of voting privilege.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: 2ndDivisionVet
You need an education in "Government Guaranteed Loan Interest Rate" ~ as long as that loan's interest is at or above the interest rate government itself pays there is no subsidy involved.

Even if the loans were privately made, the lender suffers little or no risk on them since they are not dischargeable in court. As a consequence they should easily be traded at close to the market rate for any collateral loan, or mortgage ~ and with a government guarantee, that'd be at the lowest possible rate which is somewhere between 3.5% and 4.0%.

There is no need to OFFSET these loans with a tax on somebody else.

No Freeper should ever be persuaded that any Democrat can be truthful or honest about anything.

13 posted on 04/26/2012 10:45:33 AM PDT by muawiyah
[ Post Reply | Private Reply | To 4 | View Replies]

To: Stayingawayfromthedarkside

Why doesn’t the Government just tap in to university endowments in order to offset student loans under the guise of universities unfairly and arbitrarily setting tuition rates?

Some of those universities, such as Harvard, have absolutely insane levels of endowment.


14 posted on 04/26/2012 10:46:44 AM PDT by catman67
[ Post Reply | Private Reply | To 11 | View Replies]

To: SeekAndFind

Tell the students to quit school now and get a job. Stopping the increasing debt now will offset the higher interest cost. They’re not learning anything there anyway and employer’s don’t give a damn right now about degrees.

If they want to stay in school, then they’ll have to pay the higher cost to do so. This is the real world, even though the democrats and their republican handmaidens continously try to hide or delay its realization.


15 posted on 04/26/2012 10:50:46 AM PDT by cotton1706
[ Post Reply | Private Reply | To 1 | View Replies]

To: cotton1706
Yes, that’s right folks, as part of the reconciliation bill that passed this week, Obamacare allows the government to do a hostile take-over of the entire student loan business. for no reason other than power and control. But why? Well according to the bill, follow the money. According to the budget figures, increases imposed on student loans will now help pay for Obamacare.

Wonder why no one is talking about this on Student Loans?

16 posted on 04/26/2012 10:54:21 AM PDT by scooby321 (h tones)
[ Post Reply | Private Reply | To 15 | View Replies]

To: SeekAndFind

Obama thinks the students and younger voters will go for him in 11/2012 as strong as before. To make it more sure, he is promising them freebies on student loans and similar benefits.

Of course no government payment to a selected group is free, some other group, here small business, must be forced to pay more.

If our kids really learned in school, they would see Obama’s promises as false.


17 posted on 04/26/2012 10:55:37 AM PDT by RicocheT (Eat the rich only if you're certain it's your last meal)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

As usual, the democrats are liars. It is not a “loop hole” that S corporation shareholders do not pay payroll taxes on the dividends or the distributions they receive. It is sound tax logic and policy not to apply the payroll tax to that dividends and distributions. It is just a tax increase that will hurt small businesses.


18 posted on 04/26/2012 11:03:35 AM PDT by HwyChile
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
Three questions:

A. Would it not be better if Congress "paid for" the interest rate subsidy by cutting Federal spending by $6 billion next year (or roughly 0.167% of the budget)?

B. Why the hell is Congress involved with determining the interest rate charged on any kind of loan, or with subsidizing private debt?

C. Why do Republicans continually allow themselves to be drawn into Democrat traps (in this case, they'll be accused of hurting students to help the "rich")? Because they're unprincipled and nearly as greedy as Democrats. Whoops - sorry, I answered that one myself.

19 posted on 04/26/2012 11:06:40 AM PDT by andy58-in-nh (America does not need to be organized: it needs to be liberated.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Stayingawayfromthedarkside

This
‘What does Medicare have to do with student loan rates?”
is THE question

WTF, Dems really think people are stupid.


20 posted on 04/26/2012 11:11:23 AM PDT by RWGinger (Simpl)
[ Post Reply | Private Reply | To 11 | View Replies]

To: Wpin

Never let a “crisis” go to waste....


21 posted on 04/26/2012 11:21:55 AM PDT by pfony1
[ Post Reply | Private Reply | To 3 | View Replies]

To: Wpin

Never let a “crisis” go to waste....


22 posted on 04/26/2012 11:22:18 AM PDT by pfony1
[ Post Reply | Private Reply | To 3 | View Replies]

To: Wpin

Never let a “crisis” go to waste....


23 posted on 04/26/2012 11:22:34 AM PDT by pfony1
[ Post Reply | Private Reply | To 3 | View Replies]

To: SeekAndFind

Joe the Plumber gets his taxes raised to pay the student loan bill for Trent, the Sustainable Policy Analyst at the Center For American Progress.

Sounds about right.


24 posted on 04/26/2012 11:32:29 AM PDT by Buckeye McFrog
[ Post Reply | Private Reply | To 1 | View Replies]

To: BenLurkin

LOL Dems stuck on , higher taxes , higher taxes ,higher taxes ,could have wiped out all the debt just using Obamas vacation money


25 posted on 04/26/2012 11:39:15 AM PDT by molson209
[ Post Reply | Private Reply | To 6 | View Replies]

To: SeekAndFind

Just in case anyone thinks about hiring.....NEVER MIND!


26 posted on 04/26/2012 12:04:23 PM PDT by Uncle Miltie (FOCUS ON FACTS: 0bamaCare Hated. Worst Recovery. Failed Stimulus. Worst Deficits.)
[ Post Reply | Private Reply | To 1 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson