President Barack Obama presented his budget for fiscal 2010, including about $318 billion in tax increases mainly targeted at the wealthy.
The budget combines $634 billion in tax increases and spending cuts to help cover the cost of an ambitious program to provide health care coverage to the uninsured and other new programs in areas such as renewable energy. Obama also plans to end some tax loopholes enjoyed by companies with foreign subsidiaries.
“We’ve targeted almost $50 billion in savings by cracking down on overpayments of benefits and tax loopholes — that is, money going to businesses and people to which they are simply not entitled,” he said.
The tax increases would reduce the amount of write-offs that upper-income taxpayers could take for mortgage interest and charitable deductions, according to The Wall Street Journal. Taxpayers in the 33 percent and 35 percent tax brackets can currently claim deductions at those same rates, but under the Obama plan they would only be able to claim the deductions at a 28 percent rate. In addition, older upper-income taxpayers would have to pay larger premiums to participate in the Medicare prescription drug plan.
Obama's budget also proposes to expand retirement savings by including automatic individual retirement accounts and an expanded Saver’s Credit for retirement savings contributions. The budget proposal would require employers who do not offer a retirement plan to enroll employees automatically in a direct-deposit IRA program. Employees would have the option to not participate in the savings arrangement. The budget also calls for an expanded Saver’s Credit that would provide families with income of up to $65,000 per year with a refundable credit of 50 percent of the first $1,000 of retirement contributions.
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