President Obama’s budget proposal includes new tax increases that hit everything from deductions for top earners to packs of cigarettes.
I think Buffett is the source and Obama doesn’t understand how to prepare a balance budget!
Though the president’s newly released plan claims to include $580 billion in new revenue over the next decade, when all taxes and fees are counted the real number is slightly higher than $1 trillion.
Republicans already have said they will not countenance new tax increases, after they already agreed to raise rates on top earners as part of the fiscal crisis deal. But both sides are sure to engage in an exhaustive debate in the weeks and months ahead, particularly as a looming debt-ceiling deadline forces Congress to try to reach a deal.
Here are a few of the notable tax increases in Obama’s 2014 budget blueprint that are likely to prove controversial in that debate:
- The biggest item by far is a plan to reduce the value of itemized deductions for top earners, so that they can only reduce their tax liability to 28 percent of income. This would affect deductions for charity, mortgage interest and other expenses — as well as other select preferences for the top 3 percent of families. The change is projected to bring in $529.3 billion over 10 years.
- The plan would implement the so-called “Buffett Rule,” the tax change named after Warren Buffett that Obama has long sought. The change would require that “wealthy millionaires” pay at least 30 percent of their income — after charity — in taxes. The White House estimates this would bring in $53.4 billion.
- Though the president’s proposal to curb the growth of Social Security was touted as a budget “cut,” the change would also bring in more revenue. The proposal would change the inflation formula, which would in turn curb the growth of benefits. In doing so, that same formula would adjust tax brackets and raise about $100 billion over 10 years.
- Buried deep in the budget is a proposal to raise the federal cigarette tax by 94 cents a pack. The hike is projected to raise $78 billion, to pay for an early childhood education program. The federal tax per pack would go from $1.01 to $1.95. “In addition to financing important investments in early learning, the proposed tobacco tax increase would have substantial public health benefits, particularly for young Americans. Researchers have found that raising taxes on cigarettes significantly,” the budget document said.
- The budget includes a slew of other tax changes and fees too numerous to mention, but they include: a “financial crisis responsibility fee” on financial firms that is projected to raise $59.3 billion; an increase in the aviation passenger security fee projected to raise $18 billion; and a limit on the total accrual of certain retirement benefits projected to raise $9.3 billion.
Though Obama is pushing Republicans further than they want to go on taxes, he claimed Wednesday that he’s meeting them “more than halfway” — considering separate spending cuts and changes to entitlements.
“If you’re serious about deficit reduction, then there’s no excuse to keep these loopholes open,” he said.
But Republicans argued Wednesday that Obama should not hold those entitlement changes “hostage” to calls for tax increases.
Republicans also complained that, despite $1.8 trillion in claimed deficit reduction, the budget would still not balance under the president’s plan.