The budget has almost no chance of passing so long as the House of Representatives remains under Republican control, but it does open a much-needed dialogue about simplifying the tax code.
The primary aim of Obama’s proposal is to shun any talk of a flat tax and advocate for higher rates among the wealthy.
For example, the budget proposes to tax dividends at ordinary income tax rates instead of the lower capital gains rate, which is set at 15 percent of earnings.
Moreover, the budget seeks to eliminate “inefficient and unfair tax breaks for millionaires while making all tax breaks at least as good for the middle class as for the wealthy.”
Obama also is pushing for an end to the Bush tax cuts and subsidies for oil companies, and wants to impose a “Buffett Rule,” named after wealthy financier Warren Buffett, which would ensure that millionaires pay at least as much in taxes as middle-class families.
“In the budget, I reiterate my opposition to permanently extending the Bush tax cuts for families making more than $250,000 a year and my opposition to a more generous estate tax than we had in 2009 benefiting only the very largest estates,” Obama said in a statement. “These policies were unfair and unaffordable when they were passed, and they remain so today. I will push for their expiration in the coming year. I also propose to eliminate special tax breaks for oil and gas companies … And I support tax reform that observes the ‘Buffett Rule’ that no household making more than $1 million annually should pay a smaller share of its income taxes than middle-class families pay.”
In order to dig deeper, to see what, if any, redeeming proposals exist in the president’s budget, the Sparks Tribune turned to three local business experts for their views on the matter.
Randi Thompson, state director of the National Federation of Independent Business
“Overall, the president’s proposals seem to further complicate an already complicated tax code. Many small-business owners file their taxes as an individual, so when (Obama) threatens to raise taxes on people making over $250,000, that catches many businesses that may bring in $250,000, but sure don’t make that much after expenses.
“(Obama’s) proposal that ‘would reduce the value of itemized deductions and other tax preferences to 28 percent for married taxpayers filing a joint return with income over $250,000 (at 2009 levels) and single taxpayers with income over $200,000’ is not good for small business. It takes money to run a business. But not all the money that comes in is profit.
“And I agree with the sentiment that the ad hoc incentives for manufacturing are favoring one form of business over another. This approach to selective tax breaks is inconsistent with the goal of simplifying the tax system and making it neutral with respect to economic decision-making.”
Tray Abney, director of government relations for The Chamber
“I fail to understand how submitting a budget that increases the deficit will actually decrease the deficit in the long run. I fail to understand how increasing taxes on job providers will increase the ability of those job providers to, you know, provide jobs. I fail to understand how increasing taxes on oil and gas companies will make energy more affordable so that we can grow our economy.
“Instead of offering incentives for specific industries, why are we not simplifying the entire tax code and incentivizing job growth for every industry? This is just more of the same from a president who does not understand how the free enterprise system works.
“This budget is dead on arrival …”
Dave Asher, founder of the Reno-Sparks Local Business Co-Op and Green Business Chamber of Commerce
“Overall, (the budget) appears to close loopholes and tax breaks for the very wealthy. I don’t oppose wealth … I do appose special treatment for the wealthy. I don’t feel they are the job creators. They are the ones that profit from reducing wages and sending jobs overseas.
“Small business is the job creator and the extension of the payroll tax cut and unemployment insurance benefits for the rest of 2012 benefits them.
“The budget would also provide tax incentives for manufacturers who create jobs in the United States and doubles the deduction for advanced manufacturing. It also ends tax deductions for shipping jobs overseas and establishes a Manufacturing Communities Tax Credit to encourage investment in communities affected by job losses. This is all good for business. Why in the heck is there a tax credit for shipping jobs overseas?
“So overall, closing tax loopholes for the 1 percent, giving credits to businesses that create jobs in manufacturing, spending on infrastructure and education, and removing subsidies for fossil fuel (producers) are all good things. Putting people to work rather than funding unemployment is very good. I am not in favor of more government and more taxes. I do favor government getting the job done that it is supposed to do and making it easier for the business sector to thrive and create jobs.”