Home Business Economy & Politics Barack Obama seeks tax rises in $4 trillion budget proposal

Barack Obama seeks tax rises in $4 trillion budget proposal

President Barack Obama has sent a $4 trillion budget proposal to Congress with significant tax rises, primarily on companies and the wealthy.

Barack Obama’s plan would use new taxes to remove current budget caps and fund infrastructure projects.

The president spoke at the US homeland security department, which faces a funding shortage at the end of February.

However, analysts say it is unlikely the Republican-controlled Congress will approve the proposals.

Barack Obama’s spending plan is considered the opening gambit in an expected negotiation with Congress.

Republican budget officials are expected to put forward their own proposals in a few weeks time.

GOP representatives accuse Barack Obama of reverting to tax-and-spend policies without changing the biggest areas of government spending – social security and health programs.

Paul Ryan, the Republican’s top budget official, said Barack Obama was exploiting “envy economics” in his proposal.

“This top down redistribution doesn’t work,” Paul Ryan told NBC.

Photo Reuters

Photo Reuters

Among the new tax rises is a one-off 14% tax on US profits made overseas, as well as a 19% tax on any future profits as they are earned.

No tax is currently due on foreign profits as long as they are not brought into the US.

The $238 billion raised would be used to fund infrastructure projects across the country.

According to Audit Analytics, US companies made $2.1 trillion-worth of profits abroad at April 2014.

Among Barack Obama’s proposals are:

  • tax credits for child care and “second earners”
  • earners taxed at the top rate would only be able to take tax deductions at a lower rate
  • an increase in capital gains tax from 20% to 28%
  • a tax rise on cigarettes over 10 years from $1.01 per pack to $1.95

Barack Obama also called for an end to spending caps on the military and most domestic agencies first put in place in 2011.

Calling the caps “mindless austerity”, Barack Obama’s budget eliminates such limits for the six years they are scheduled to remain in place, representing a spending increase of $362 billion.

Barack Obama warned congressional Republicans on February 2 that he would not accept lifting caps on national security spending without doing the same for domestic programs.

“I will not accept a budget that severs the vital links between our national security and our economic security,” he said.

“Those two things go hand in hand.”

The spending plan also includes proposals Barack Obama promised in his State of the Union speech last month, including free community college tuition.

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Clyde is a business graduate interested in writing about latest news in politics and business. He enjoys writing and is about to publish his first book. He’s a pet lover and likes to spend time with family. When the time allows he likes to go fishing waiting for the muse to come.