Yeterday, Karen wrote about the fiscal responsibility and the importance of paying our way and not leaving the burden of our excesses to our children. Yesterday, the Senate passed legislation that seeks to impart some fairness to our tax code, and included provisions written by Sen. Kerry to shift the weight away from working Americans, and force the wealthy and corporations to pay their fair share. Economist Brad Delong has some very interesting charts that point out how much better the Democrats have been at managing our nation's finances than Republicans despite their claims to the contrary. Although Republicans are fond of the term 'tax and spend' when referring to Democrats, the reality is that the current administration and Bush's Republican friends in Congress have become the party of 'borrow and spend', and their economic policies favoring corporate interests and the wealthy have driven us into a ditch. The founders would not have been pleased.

"Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise." --Thomas Jefferson to James Madison, 1785.

Under a Democratic administration, and with a larger majority of Democrats in Congress, we can reverse the inequities of the Bush administration. Senator Obama's tax plan will put more money in the pockets of average Americans and boost the economy by strengthening its foundation, while McCain's sends us further into debt.

Sen. Kerry spoke at Faneuil Hall last October on the topic of revising the tax code to impart some fairness, and two of his provisions were included in yesterday's passage of the tax relief bill.

Here's yesterday's press release on what happened.

Kerry Provisions Close Tax Loopholes for Hedge Funds, Freeze Giveaways for Big Oil

WASHINGTON, D.C. – Sen. John Kerry today announced the Senate’s passage of the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 and the Energy Improvement and Extension Act of 2008 which included two Kerry provisions to stop tax giveaways for hedge funds and big oil companies.

The first provision was introduced in response to news accounts of U.S. hedge fund managers deferring billions of dollars of compensation offshore. Earlier this Congress, Senator Kerry and Rep. Emanuel introduced legislation to prevent U.S. taxpayers from deferring compensation in offshore tax havens. The closing of this loophole would raise $25 billion over 10 years. The top fifty hedge fund managers earned a total of $29 billion last year.

“Low-income and middle class families – not hedge fund managers – are the ones who need tax incentives to save for retirement,” said Sen. Kerry. “At a time when our personal savings rate is near zero and CEOs are being paid 364 times as much as the average worker, Hedge fund managers can’t be allowed to avoid paying their share of taxes, leaving hard working Americans to foot the bill. It’s time to bring fairness and transparency back to our tax codes.”

Most Americans can defer income through a qualified retirement (e.g. 401k) and individual retirement account (IRA). In 2008, an individual can defer up to $15,500 in income into a 401(k) or similar accounts, and an additional $5,000 in an IRA. By contrast, U.S. based hedge-fund managers who operate offshore investment funds can defer unlimited amounts of their compensation. While the deferrals technically comply with current law, there are clear inequities in the amounts that middle-class American can defer through mainstream tax incentives for retirement and what high-income Americans can defer through offshore corporations. The Alternative Minimum Tax Relief Act of 2008 would require offshore deferred compensation to be included in income on a current basis.

The second provision freezes the domestic manufacturing deduction for oil and gas income at 6 percent, raising $5 billion over ten years. Currently, the 6 percent rate is scheduled to increase to 9 percent in 2010. The second quarter of 2008 saw over $44 billion in profits for oil companies and executives. In the nearly eight years of the Bush Administration, the “Big Five” international oil companies have seen $647.5 billion in profits. Senator Kerry introduced legislation in both the 109th and 110th Congress to scale back the manufacturing deduction for oil and gas companies.

“With oil executives raking in mindboggling profits as American families struggle to make ends meet, the last thing Big Oil needs is a tax deduction,” Kerry added. “This legislation is an essential step in the development of our clean energy industry and our fight against global climate change.”

Maybe now that our economy is falling apart, the Republicans in Congress have decided to listen to reason, and concede that a strong economy is reliant more on Main Street than on Wall Street. Or perhaps they just figure it's too close to election time to fight it. Either way, I guess we file this one under the category "better late than never".