Thursday, November 19, 2009

China, Interest, and Taxes

China’s central bank, the China Investment Corporation, and other Chinese entities hold well over a trillion dollars in securities of U.S. federal debt and U.S. government sponsored enterprises. What is not widely understood is that the tens of billions of dollars of interest earned on these holdings are tax free. China piles up billions more simply collecting tax-free interest.

Democrats are proposing new taxes at an unprecedented rate to finance the extension of health insurance, new job creation, deficit reduction, and who knows what else. They include higher taxes on medicare and income and a transaction tax on financial instruments. Democrats say that all revenue options must be on the table. To this end, and to accommodate still other taxes, they have ordered two bigger tables to be delivered to the Senate Finance Committee and House Ways and Means Committee meeting rooms.

No comments :