Obama proposes tax increases for the nation's richest households. Learn the details.
President Obama’s 2013 budget proposes substantial tax increases on rich households and corporations, as well as tax cuts designed to create jobs and help low-income families, according to a recent analysis from the Tax Policy Center.
Nearly all – 98 percent - of households in the top 1 percent would face tax increases averaging almost $110,000, primarily because Obama would led the Bush-era tax cuts expire for them, said Roberton Williams in a Tax Policy Center blog posted yesterday.
By current policy measure, Obama would raise taxes for about one-third of American households in 2015. Most would incur a small increase, said Williams, “but most of the rich would end up paying a lot more.”
Among other provisions, Obama proposes raising the top two tax rates to 36 percent and 39.6 percent, and imposing higher tax rates on capital gains and dividends, according to the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution. Long-term capital gains would be taxed at a 20 percent rate and qualified dividends would be taxed at ordinary tax rates. The budget would also limit tax savings on itemized deductions to 28 percent.
The president’s plan would make permanent almost all of the tax cuts of 2001 through 2010 and would set the estate tax at its 2009 level, said Williams. Additionally, the alternative minimum tax would be indexed from its 2011 level.
Calls for increased taxation of America’s wealthiest citizens have come from many corners. Most notably, billionaire Warren Buffett has said its time that he and his peers paid their fair share of taxes, while Occupy Wall Street protestors claiming to represent the bottom 99 percent demonstrated through the summer and fall against growing inequality in the United States.
A large majority of Americans propose raising taxes on Americans with more than $1 million in income, according to a survey of 835 investors conducted by Millionaire in October. Nearly 70 percent of investors from a range of wealth levels said the policy would be an effective strategy from improving the economic situation.
Investors show notably less support for tax increases on households with more than $250,000 in income. Half of investors with a net worth of $100,000 to $500,000 – not including primary residence – say such a tax would help strengthen the economy, but only 45 percent of investors with $1 million or more support the idea.
In contrast to Obama’s proposal, a fiscal plan proposed by House Budget Committee Chairman Paul Ryan, a republican from Wisconsin, calls for big cuts in both individual and corporate tax rates, according to Williams.