The president’s budget also included some significant tax provisions including:
- President Obama’s budget keeps up the campaign promise of taxing the wealthy by again reiterating his plan to let the Bush-era tax cuts expire for households that earn more than $250,000 a year and calling for the elimination of “unfair” tax breaks for millionaires. He talks about creating the “Buffett Rule” which would ensure that any household making more than $1 million a year pays at least 30 percent of its income in taxes. This will require a fundamental overhaul of the tax code for individual rates, capital gains, carried interest, and probably the alternative minimum tax.
- The president does plan to extend 100 percent depreciation and some advanced energy tax credits for renewable energy and some alternative power. The president also calls for the conversion of the deduction for energy efficient commercial building expenditures to a tax credit and a two-year extension of a modified version of the Build America Bond program.
- The plan calls for “Death” or Estate taxes to increase to 45 percent with an exemption of $3.5 million. The plan also calls for the end of last-in, first-out accounting.
- The plan also makes a provision for a contractor to require the use of certified Taxpayer Identification Numbers (TIN) and allow certain withholding from contractors providing services as well as a stronger enforcement regime around independent contractor classification.
- Democrats and Republicans are both calling for comprehensive tax relief; however, nothing in the administration’s proposal seems likely to break the existing impasse.