The budget would also extend a provision in the stimulus bill to allow small businesses to write off up to $250,000 of qualified investments, a measure that the administration says will slash small business taxes by $1 billion during 2009 and 2010.
Ochsenschlager says the measures will likely have a significant impact on stimulating both small and big businesses, because they will be able to write off a huge chunk of their investments.
Obama also wants to eliminate the capital gains tax on new investments in small business, a move administration officials say would save small business owners $8 billion over the next decade.
At the same time, the White House is proposing to 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.
The administration is proposing to extend for one year the provision in the stimulus bill allowing small businesses to immediately expense up to $250,000 of qualified investments.
Obama's budget calls for increasing the child care tax break for middle-class families.
"The budget will nearly double the Child and Dependent Care Tax Credit for middle-class families making under $85,000 a year by increasing their credit rate from 20 percent to 35 percent of child care expenses," according to the White House. Nearly all eligible families making less than $115,000 a year would see a larger credit.
The budget also provides $10,000 for a four-year college education due to the American Opportunity Tax Credit, which it is proposing to make permanent.
The budget proposes to eliminate the Advanced Earned Income Tax Credit (AEITC), a federal income tax credit program for low to moderate income working individuals and families. Those who qualify for the program are able to get credit on each paycheck during the year.
The administration said it is cutting the program "because it is used by very few taxpayers and has a very high error rate." Only 514,000 taxpayers took advantage of the benefit, and more than half of them received $100 or less, the administration said.
Additionally, the error rate in the program is high and some 80 percent of AEITC recipients did not comply with at least one program requirement, according to the Government Accountability Office.
The administration is also proposing to provide more funding to the Internal Revenue Service (IRS) to go after companies, specifically international operations, that under-report their taxes.
The president wants to increase taxes on U.S. companies with international operations, as well as on oil and gas companies, and impose a "financial crisis responsibility fee" on large financial institutions, raising $90 billion over the next decade.
The fee would recoup $90 billion in expected losses from the government's controversial $700 billion financial bailout program, enacted in the fall of 2008 by President Bush and continued by the Obama administration.
"We want our money back and we're going to get it," Obama said when proposing the fee in a White House speech last month.
The final budget has to be approved by members of Congress before it is implemented. Republicans are already seizing on the tax issue.