President Obama called for $1.4 trillion in fresh revenue from individuals earning at the top income scale in a White House fiscal budget plan released yesterday. One of a number of proposals announced in the plan was an income tax rate increase to 39.6 percent for wealthy Americans.
President Obama Pushes for Greater Tax Contributions
As a part of his fiscal 2013 budget plan, President Obama proposed that wealthy Americans begin contributing more of their income by paying higher taxes on wages and investments, while limiting breaks from retirement savings and health insurance.
In his plan, Obama recommended an individual income tax rate increase of 39.6 percent in 2013, up from 35 percent. Also, he wanted the capital gains tax to jump to the top rate of 20 percent, up from 15 percent. A 30 percent minimum tax for individuals with annual incomes of at least $1 million was also proposed by the President—an option that would replace the alternative minimum tax.
As a result of the new plan, some taxpayers would pay 43.3 percent in federal taxes on their dividends alone next year, which is almost triple what they pay now.
Income Tax Rate Proposals Scrutinized
The income tax rate proposals in the budget plan were immediately rejected by business groups and congressional Republicans.
“Whether this occurs in Congress this year or this is the tax platform for this year’s election, it’s disconcerting for business,” Caroline Harris, chief tax counsel at the U.S. Chamber of Commerce told Bloomberg News.
Opposition also surfaced against a proposal in the budget plan that called for a tax on profits-based compensation to private equity managers at ordinary income rates instead of a preferential 15 percent rate.
“The president has decided to play the age-old Washington game of picking winners and losers and handing out favors to industries he thinks will help him politically, making the code less fair and more complex for average Americans,” said Representative Dave Camp, head of the House Ways and Means Committee.
On the whole, critics suggest that tax changes aren’t being developed to better the nation’s financial woes, but are instead a ploy to better President Obama’s chances of re-election.