http://m.spiegel.de/article.do?id=675759&p=1
Tax Gridlock including on the FTT in my view.
Tax proposals are unlikely in Germany, as it could ruin their Center-Right business coalition. Germans keep saying Deutsche Bank should remain in universal banking, with no punitive bank taxes - and German banks can win over UK and US banking business if they go over board with unilateral reform. G7 is reinforcing G20 and IMF on the need for global financial-reform and no unilateral arbitrage action. US Congressmen both Democrat and Republican have said they can't hamper US banks if Deutche Bank and others are not subject to the same rules. The French finance minister wants French banks to stay universal too, and to shield them competitively. To pander to the global press, the French, British and German presidents are still floating a FTT. Also to placate restive charities, climate control and poor countries in need of funding. FTT is a mirage goal and on par with climate change and nuclear reduction. G20 will just talk throughout 2010 and I highly doubt concrete agreements will be made and ratified in home countries on serious financial-reform - if it truly hampers banks.
Most tax change is now in gridlock in the US and Germany. Probably UK too with upcoming elections. It's going to be a bank levy insurance plan or nothing in my view.
US tax gridlock going into the midterms includes expiration of Bush tax cuts, scheduled for 2011. Congress needs to vote to extend the Bush tax cuts for the middle class only, which is called for in the President's 2011 budget up for discussion now. The President does not want to extend the tax cuts for the investor-class, repealing the qualifying dividend tax rate, which will jump from 15% to 39.6% for the top rate. Plus, the President wants to let the Bush tax cuts expire on the rich.
I expect Republicans to say extend the Bush tax cuts for all taxpayers or at least investor's too or no extenders at all for anyone. If Congress does not agree on a selective extender or full extender, it threatens a stiff tax increase on the middle-class - during a fragile recovery and the midterms. The Republicans will carefully say they are not trying to defend the rich, but the highest two tax brackets apply to small-business job creators and you simply canât raise their taxes during a continuing jobs-recession. The Republicans will defend the dividends tax rate as helping to keep the stock markets up and it effects the middle-class mostly.
Congress ran into this same game of chicken and brinkmanship over the Bush estate tax cuts. The estate tax was repealed in 2010 and it returns to pre-Bush (much higher rates and tiny exemptions) in 2011. Congress was expected to delay the repeal and extend 2009 rates to 2010 and 2011. That did not happen. Republicans said fix it better or not at all.
The entire President's tax agenda has to go through the new 59/41 Senate dynamic and with the Tea Party getting stronger, what tax increase change can Congress pass at all before the midterms?
Of course this includes a FTT too. No way no how for an FTT in the US anytime soon.
