President Obama and Senate Democrats have been trying to implement the Buffett rule, a minimum tax on millionaires, which would remedy the problem of millionaires being able to pay lower tax rates than middle class families. One state lawmaker in Iowa thinks his state needs its own version — the Branstad rule — after Gov. Terry Branstad (R-IA) was able to pay just $52 in state income taxes on his nearly $200,000 in income:

Gov. Terry Branstad’s $52 state income tax bill in 2011 is proof that fixes are needed in the tax system, Sen. Robert Hogg, D-Cedar Rapids said today.

“Some people talk about nationally we need a Buffet rule, maybe in Iowa we need a Branstad rule,” said Hogg, who additionally noted that a person making between $30,000 to $40,000 a year can expect to pay somewhere around $1,000 or more in state income tax.

Branstad was able to pay such a low amount because Iowa is one of just six states in the country that allows residents to write off their federal income tax payments from the previous year on their current year’s tax return. So Branstad was able to apply his 2010 federal income tax payments — which were paid on the salary he received from his prior job as the president of Des Moines University — to this year’s state income tax bill.

Iowa loses $642 million annually due to this provision, nearly one quarter of its total income tax revenue. More than half of the benefit of the deduction goes to the richest 5 percent of Iowans, while 76 percent of the benefits go to the richest 20 percent. “States should take a hard look at eliminating, or at least capping, their deduction because of the impact this lopsided tax policy has on state budgets and tax fairness,” the Institute for Taxation and Economic Policy wrote. Branstad’s administration called his low tax bill an anomaly. (HT: CTJ)

Republican support for Senate Democrats’ plan to prevent an interest rate-hike on federal student loans will depend on how anti-tax zealot Grover Norquist feels about it, the top Senate Democrat said Tuesday. President Obama last week began pushing Congress to act on student loan interest rates, which will double in July if Congress doesn’t act. Senate Democrats will unveil a plan this week that pays for the extension of the lower rate by closing a loophole that allows certain businesses to avoid payroll taxes by gaming the tax system.

Closing the “John Edwards loophole,” named after the former senator who used it while practicing law, would raise enough revenue to offset the $6 billion cost of extending the current interest rate. But Senate Majority Leader Harry Reid (D-NV) sounded pessimistic about garnering Republican support yesterday, saying the GOP would take its cues from Norquist, who opposes closing loopholes to raise new revenue, before deciding whether to support it, the Las Vegas Sun reports:

“I think the proper question is, is it something Grover Norquist would accept,” Reid said, invoking the author of the anti-tax pledge to chide his opponents’ unwillingness to raise taxes. “He seems to be the marker for Senate Republicans. We’ll see.”

If Republican reaction today is any indication, Norquist hasn’t given his blessing to the Democratic plan. Minority Leader Mitch McConnell (R-KY), who says he supports the extension, blasted the plan on the Senate floor today, saying it would “raid[] Social Security and Medicare” while “making it even harder for small businesses to hire”:

MCCONNELL: Democrats want to pay for it by raiding Social Security and Medicare and by making it even harder for small businesses to hire. We happen to think that at a time when millions of Americans and countless college students can’t even find a decent job it makes no sense whatsoever to punish the very businesses we’re counting on to hire them. It’s counterproductive and clearly the wrong direction to take.

McConnell’s argument that the plan would undermine Medicare and Social Security makes no sense — though the taxes raised from closing the loophole would normally be directed toward those programs, they are not going there currently because they are not being collected at all.

Closing the loophole, as Citizens for Tax Justice explained in 2010, would actually benefit small businesses and individuals, leveling the playing field for those that don’t game the tax code to lower their rate. “When some small business owners avoid taxes, honest taxpayers make up the gap by paying higher taxes,” CTJ wrote. “Lawmakers who are concerned about the tax burden of small businesses need to do everything possible to close loopholes in the tax code so that all Americans pay their fair share.”

Our guest blogger is Melissa Boteach, director of Half In Ten at the Center for American Progress Action Fund.

House Republicans recently proposed cuts to nutrition assistance that will kick 280,000 low-income children off automatic enrollment in the Free School Lunch and Breakfast Program. Those same kids and 1.5 million other people will also lose their Supplemental Nutrition Assistance Program (formerly food stamp benefits) that help them afford food at home.

Ten years’ worth of these nutrition cuts could be prevented for the price of one year of tax cuts on 3,340 multimillion dollar estates that House Republicans are protecting in their budget.

On April 18 the House Agriculture Committee passed a bill cutting over $33 billion from SNAP over the next decade. About one-third of these cuts ($11.5 billion) comes from putting restrictions on “categorical eligibility,” a provision that enables states to better coordinate between programs and improves access to assistance for low-income families.

By restricting this provision, the bill would kick an average of 1.8 million low-income people a year off of food aid and end automatic enrollment in free school meals for 280,000 children in struggling families.

The Republican budget sells this bill as an effort to “reduce lower‐priority spending” to avert military cuts that will otherwise take place in January 2013 due to the debt deal agreed to last summer. But when it comes to reducing the deficit, it’s clear the House would rather ask low-income kids and families struggling against hunger to foot the bill than asking multimillion-dollar estates to pay their fair share.

Case in point: As part of the 2010 tax-cut compromise, House Republicans insisted on including a tax cut on multimillion dollar estates, adding an estimated $11.5 billion to the deficit this year alone. That’s the same amount they’re now claiming is necessary to cut from low-income families through these restrictions.

By making it more difficult for low-income schoolchildren to access school breakfast and lunch, this bill will likely increase child hunger, which is associated with worse educational outcomes and higher long-term health costs. Both of these trends affect our economy and our deficits over the long run.

We should reconsider reduced spending on “lower priority” items — a.k.a breakfast, lunch, and dinner for low-income children — and instead adopt a deficit-reduction approach that asks everyone to pay their fair share—including multimillion-dollar estates.

President Obama signed the Stop Trading on Congressional Knowledge (STOCK) Act earlier this month, which was passed after a 60 Minutes investigation revealed that members of Congress were profiting from information they received in their official capacity. House Financial Services Chairman Spencer Bachus (R-AL), for instance, made nearly $30,000 trading on information he received during private briefings during the 2008 financial crisis.

The original version of the STOCK Act that passed out of the Senate included a provision that would have required Washington insiders who sell intelligence to corporate America to register as lobbyists. However, that provision was ultimately stripped from the bill by House Republicans. And according to an analysis by The Hill, it was Wall Street lobbying that proved the catalyst:

A review by The Hill of lobbying records from the first quarter of 2012 found that many of the financial sector’s biggest names lobbied on the Stop Trading on Congressional Knowledge (STOCK) Act. Many bolstered their forces with new lobbyists, while others turned to K Street for the first time as the bill moved toward President Obama’s desk to become law.

A concern for many in financial services was a provision that would have required “political intelligence” consultants to register as lobbyists and disclose their clients. Financial lobbyists were worried that would lead to thousands of research analysts having to register for even the briefest contact with Capitol Hill.

House Republicans stripped that measure from the final piece of legislation, spurring allegations from Democrats and some Republicans that the party was doing Wall Street’s bidding.

When the watered down bill passed the Senate, Sen. Charles Grassley (R-IA) — who sponsored the provision on political intelligence — blasted Congress, saying, “I won’t ascribe motives to anyone in this body, but I know that today’s actions only serve the desires of obscure and powerful Wall Street interests.” And it turns out that he comment was right on the mark.

The United Kingdom is officially back in a recession, after seeing growth drop 0.2 percent in the first quarter of this year. But neither Prime Minister David Cameron nor Chancellor George Osborne are backing down from their Conservative government’s adoption of austerity measures.

“The solution to a debt crisis cannot be more debt,” Cameron said, after calling the latest growth numbers “very, very disappointing.” Cameron even bragged about his nation’s low interest rate on its debt. Osborne, meanwhile, said in a statement that “the one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt.”

Osborne predicted back in November that Britain would not experience a double dip recession. But with the implementation of his austerity plan, the UK is not only experiencing a worse recovery than the one following the Great Depression, but is doing worse than the rest of the Eurozone (despite the fact that the UK doesn’t face the monetary policy restrictions that the Euro nations face):

Of course, it’s not like the Eurozone, with it’s own set of austerity measures in Greece, Spain, and other nations, has fared well:

As the New York Times noted yesterday, austerity has fueled a backlash in Europe, causing the Dutch government to fall and the French to vote against incumbent Nicolas Sarkozy in the first round of their presidential election. Spain, Italy, Belgium, the Netherlands and the Czech Republic are all back in a recession. Yet the sort of budget cutting that led to these results is the same as that which Republicans want to bring to the U.S.