President Barack Obama touted a proposal this week to collect $580 billion in new taxes from the wealthy to reduce the nation’s escalating deficit.
But his budget plan proposes new taxes and fees totaling nearly twice that amount – and not all from the wealthy. In total, Obama proposes to raise $1.1 trillion over 10 years in new revenue from dozens and dozens of sources.
There’s $79 billion from raising the tax on inheritances. Another $158 billion from income earned overseas. And $78 billion from hefty new taxes on cigarettes, nearly $1 per pack.
Then there are the fees, on airline passengers, on those who fail to file certain information electronically, on banks that once took money from the federal government to survive.
“He wants to raise taxes by $1 trillion,” said Curtis Dubay, a senior tax-policy analyst at the conservative Heritage Foundation. “There’s absolutely no getting around that. Saying anything else is obfuscating the truth.”
Officials from the White House and the Office of Management and Budget didn’t respond to questions for this story.
In speeches, briefings and fact sheets this week, the Obama administration stressed only the major tax increases that would reduce the deficit: $580 billionover 10 years raised by requiring households with incomes over $2 million to pay at least 30 percent of their income in taxes and limiting tax deductions for the wealthiest 2 percent.
Beyond the publicized $580 billion, Obama’s plan would collect most of the rest of the new revenue by prohibiting individuals from accumulating more than $3 million in tax-deferred retirement accounts, implementing a new formula for inflation for tax provisions, raising the estate tax and increasing capital gains taxes.
There are also new taxes on energy companies, banks and brokerage firms that may be passed on to consumers in the form of higher utility bills, fees and gas pump prices.
Many of Obama’s tax proposals have been proposed before, only to go nowhere.
“There are definitely new taxes, but a lot have been around before,” said Steve Ellis, the vice president of Taxpayers for Common Sense, a nonpartisan budget-watchdog group. “Some have been there every year.”
The proposed new taxes and fees come after the White House and Congress recently raised taxes. Their New Year’s Day deal raised taxes on all working Americans by 2 percentage points by ending a temporary cut in the payroll tax, and on top earners by letting the President George W. Bush-era tax cuts expire on individuals who earn more than $250,000 a year and couples who make more than $300,000.
More tax increases appear unlikely to get past the Republican-led House of Representatives.
Isabel Sawhill, a senior fellow in economic studies at the center-left Brookings Institution, said some Republicans probably would support Obama’s budget call for new tax increases coupled with slower growth in spending on such programs as Social Security if not for the more conservative members of their party who oppose any tax increases.
“I don’t find it’s an unreasonable ask on the revenue,” she said. “Many Democrats think it’s way too low.”
Indeed, the Democratic-controlled Senate voted March 23 for a budget that calls for nearly $1 trillion in tax increases over the coming decade.
In his proposal, Obama urges new taxes to cut projected deficits and pay for new spending. For example, he proposes raising the cigarette tax from $1.01 to $1.95 per pack and using the money to finance a $75 billion preschool program for low- and moderate-income 4-year-olds.