Tax Proposals in the 2011 Budget: What's In It for You?

President Obama's $3.834 trillion budget would cut taxes for a large portion of the American population, but at the same time, the proposals are designed to levy heavy taxes on large firms, banks and high-income individuals and families.

Here's a look at some of the Obama administration's tax proposals and how they would affect Americans:

Bush Era Tax Cuts

The budget overall includes more than $140 billion in tax cuts "designed to ease the burdens that middle class families face in caring for children, paying for college, and saving for retirement," according to the administration's budget "Greenbook."

The White House is seeking to make permanent the tax cuts introduced by the Bush administration in 2001 and 2003, for individuals making less than $200,000 per year and families earning under $250,000.

The Obama administration is also proposing to extend the "Making Work Pay Tax Credit" from 2009 for one more year. As part of that tax credit, individuals will receive $400 and couples filing jointly $800 on their tax returns. The administration estimates that under the program, $37 billion of tax relief was provided to 110 million families. The credit was funded through the $787 billion stimulus program signed into law last February.

Yet at the same time, those in the tax bracket above that limit -- higher than $200,000 for individuals and $250,000 for families -- will see an automatic decrease in their paychecks as the tax cuts for that income group expire at the end of this year. The tax rates will rise for individuals, from 33 percent to 36 percent and for couples, from 35 percent to 36 percent.

"I think he [Obama] has a really good chance for it becoming law because it doesn't require any action on the part of Congress," said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants.

The tax increase is expected to bring in about $678 billion for the government over the next 10 years.

"The sounds you hear are the sounds of hard choices being made," one senior administration official told reporters Monday. "There is going to be a reckoning. There is going to be a time when we as a country have to deal in a bipartisan way with bringing down our deficit."

Tax Incentives for Small Businesses

The budget specifically includes $100 billion for temporary initiatives to spur job growth, infrastructure and clean energy.

The White House is calling for $33 billion in tax cuts to be included in the new jobs bill. It would give companies a $5,000 tax credit for each new worker they add in 2010. Officials say this move would benefit a million Americans.

"We recognize that while we have made progress on jobs we have not made enough," said White House communications director Dan Pfeiffer. "There are still one in ten Americans looking for work. The president certainly doesn't find that acceptable."

The nation's unemployment rate currently sits at 10 percent. When the jobs report for January is released Friday morning, most analysts expect it to show that the country's employers shed another 50,000 jobs from their payrolls.

Additionally, businesses that increase wages or hours for their current workers in 2010 would be reimbursed for the extra Social Security payroll taxes they would pay.

Page
  • 1
  • |
  • 2
  • |
  • 3
Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...