President Obama?s budget on Monday will include many tax proposals he has offered before. One new addition is the Buffett Rule.
NEW YORK (CNNMoney) ? Raise taxes on those making more than $250,000. Limit deductions for the wealthy. Make an expanded college tax credit permanent.
Sound familiar?
When it comes to taxes, President Obama?s 2013 budget proposal on Monday is expected to include a host of repeat performances.
In fact, many of the proposals he?ll make have appeared in every budget Obama has put out since taking office.
One addition this year: a so-called Buffett Rule to ensure that those making more than $1 million pay their ?fair share,? which President Obama has defined as paying at least 30% of their income in taxes.
But senior administration officials made clear that Monday?s budget will offer no details about how the Buffett Rule would actually work, saying only that it?s a guiding principle for overhauling the tax code.
Obama will include other more concrete, oft-made proposals that would increase the tax bite on high-income households, while calling for expanding or making permanent other tax breaks for the middle class.
Of course, the reason so many of the president?s earlier tax proposals appear again in his fiscal year 2013 budget is because they have yet to be adopted by Congress.
And they aren?t likely to gain much traction this year, either, given that election-year politics is expected to shut down policy-making in the divided Congress until after Nov. 6.
But the budget will frame Obama?s priorities on individual taxes as he stumps for reelection. As a preview, here are some of the highlights. (Bush tax cuts: The real endgame)
Extend most of the Bush-era tax cuts: Set to expire on Dec. 31, the 2001 and 2003 income tax cuts continue to be ground zero for partisan warfare.
From his days on the 2008 campaign trail, Obama has said he wants to make the tax cuts permanent for the vast majority of Americans. The only exception: He wants to let the top two tax rates ? currently 33% and 35% ? revert to their pre-2001 levels of 36% and 39.6%.
Most folks in the top two brackets, however, would still benefit from the continuation of the 10%, 15%, 25% and 28% rates on the portion of their income subject to the lower brackets.
Modify estate tax: Obama opposes eliminating the estate tax, but for the past three years he has pushed to keep it at a more generous level than would be the case under current law, where it would revert to a $1 million exemption level and a top rate of 55%.
Instead the president would like to raise the exemption level to $5 million and lower the top rate to 35%. (Obama?s tax record)
Limit itemized deductions for high-income households: As he has done in past budgets, Obama will propose reducing the value of itemized deductions for individuals making more than $200,000 (or $250,000 if married filing jointly). Today, they can deduct 33% or 35% of a qualified expense. Under the president?s proposal, they would only be allowed to deduct 28%.
Currently, those in the top two tax brackets (33% and 35%) have taxable income of at least $178,650 if they?re single or $217,450 if they?re married filing jointly.
Raise taxes on investment fund managers? income: As most Americans have learned from Mitt Romney?s tax returns, managers of private equity, venture capital and hedge funds are only taxed 15% on the portion of their compensation known as carried interest.
Obama would like carried interest to be taxed as ordinary income, which means those managers would pay more than double the rate they currently pay.
Make the expanded HOPE credit permanent: Renamed the American Opportunity tax credit and expanded in 2009, the partially refundable college credit is now worth up to $2,500 a year (up to 100% of the first $2,000 in qualified expenses and up to 25% of the next $2,500), and it may be claimed for four years? worth of college.
Eligibility to take the credit is limited to those with modified adjusted gross income below $90,000 ($180,000 for couples filing jointly).?
Source: http://g7finance.com/g7finance-news/obama-budget-tax-plans-aim-at-rich/
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