President Obama sent Congress a record $4 trillion budget, a spending boost of 6.4%, that “would boost taxes on higher-income Americans and corporations, pushing past tight federal spending caps to fund an ambitious public works program and provide middle-class tax relief.” AP,
The budget documents reveal that all the tax increases will total $2 trillion, including a number of proposals Obama has made before to limit deductions the wealthy can take to reduce their tax bill.
Wealthy people would only be able to take tax deductions at the 28 percent rate even if their income is taxed at 39.6 percent and would also see an increase in their maximum capital gains rate to 28 percent instead of 20 percent.
A couple earning up to $120,000 a year would qualify for a new “second earner” tax credit of up to $500 as well as a maximum $3,000 child care credit for two children, triple the current credit of $1,000.
Not all of Obama’s tax hikes would hit the wealthy. His budget also proposes to raise $95 billion over the next decade by hiking the tax on cigarettes from the current $1.01 per pack to $1.95.
Obama’s spending plan would ease tight budget constraints imposed on the military and domestic programs back in 2011 when lawmakers were responding to the public outcry over deficits that were then topping $1 trillion a year.