Tax Proposals in the 2011 Budget: What's In It for You?
WASHINGTON, Feb. 2, 2010— -- President Obama's $3.834 trillion budget would cut taxes for a large portion of the American population, but at the same time, the proposals are designed to levy heavy taxes on large firms, banks and high-income individuals and families.
Here's a look at some of the Obama administration's tax proposals and how they would affect Americans:
The budget overall includes more than $140 billion in tax cuts "designed to ease the burdens that middle class families face in caring for children, paying for college, and saving for retirement," according to the administration's budget "Greenbook."
The White House is seeking to make permanent the tax cuts introduced by the Bush administration in 2001 and 2003, for individuals making less than $200,000 per year and families earning under $250,000.
The Obama administration is also proposing to extend the "Making Work Pay Tax Credit" from 2009 for one more year. As part of that tax credit, individuals will receive $400 and couples filing jointly $800 on their tax returns. The administration estimates that under the program, $37 billion of tax relief was provided to 110 million families. The credit was funded through the $787 billion stimulus program signed into law last February.
Yet at the same time, those in the tax bracket above that limit -- higher than $200,000 for individuals and $250,000 for families -- will see an automatic decrease in their paychecks as the tax cuts for that income group expire at the end of this year. The tax rates will rise for individuals, from 33 percent to 36 percent and for couples, from 35 percent to 36 percent.
"I think he [Obama] has a really good chance for it becoming law because it doesn't require any action on the part of Congress," said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants.
The tax increase is expected to bring in about $678 billion for the government over the next 10 years.
"The sounds you hear are the sounds of hard choices being made," one senior administration official told reporters Monday. "There is going to be a reckoning. There is going to be a time when we as a country have to deal in a bipartisan way with bringing down our deficit."
