- The Washington Times - Tuesday, February 2, 2010

While President Obama is proposing to cut some taxes for companies that hire workers, his proposed budget for fiscal 2011 would raise a host of other taxes on businesses and wealthy individuals.

The budget proposal released Monday would extend Mr. Obama’s signature “Making Work Pay” tax credit - $400 for individuals, $800 for a couple filing jointly - through 2011. But it would also impose nearly $1 trillion in higher taxes on couples making more than $250,000 and individuals making more than $200,000 by not renewing tax cuts enacted under President George W. Bush. Mr. Obama would extend Bush-era tax cuts for families and individuals making less than those amounts.

Mr. Obama revived numerous proposals for business tax increases that didn’t fare well in Congress last year, including a scaled-down plan to increase taxes on U.S. companies with major overseas operations, and higher taxes on oil and gas companies.

Congressional Democrats praised most of the new budget’s initiatives, but their lukewarm response to some of the tax increases suggests a tough fight ahead. Mr. Obama’s proposal to increase taxes on international businesses would be better addressed as part of a package overhauling the entire tax system, said Senate Finance Committee Chairman Max Baucus, Montana Democrat.

Rep. Dave Camp of Michigan, the top Republican on the tax-writing House Ways and Means Committee, said, “This budget features too many new taxes, too much new spending and too much new debt.”

The budget incorporates a $33 billion tax cut that Mr. Obama wants Congress to include in a new jobs bill. It would give companies a $5,000 tax credit for each new worker they hire in 2010.

The tax increases on wealthy families would fulfill a campaign pledge by Mr. Obama, who has blamed his predecessor’s across-the-board tax cuts and Medicare prescription drug program for swelling the government’s debt by $7.5 trillion.

The Making Work Pay tax credit provides families with up to $800 a year and individuals up to $400 a year through small increases in their weekly pay. Extending the tax credit through 2011 would save them $61 billion.

Some of Mr. Obama’s other tax proposals would:

c Raise the top two income tax rates for individuals, from 33 percent and 35 percent, to 36 percent and 39.6 percent, respectively. Unless Congress intervenes, those rates will rise next Jan. 1 when Mr. Bush’s tax cuts expire. The government would reap $365 billion over the next decade.

c Limit the itemized tax deductions high earners can claim for charitable donations, mortgage interest and state and local taxes, raising about $210 billion for the next decade.

c Increase the top capital gains tax rate from 15 percent to 20 percent for families making more than $250,000 a year and individuals making more than $200,000. The proposal would raise about $105 billion.

c Impose a “financial crisis responsibility fee” on large financial institutions, raising $90 billion over the next decade.

c Levy a total of about $39 billion in tax increases on oil, gas and coal companies over the next decade.

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