President Obama’s tax proposal, as part of his federal budget released on Monday, keeps up his campaign drumbeat of taxing the wealthy and sets a benchmark for the Democratic Party on any future tax reform packages.
Echoing a theme first introduced in September, the president would like to let the Bush-era tax cuts expire for households that earn more than $250,000 a year. It would eliminate what the administration calls “unfair” tax breaks for millionaires, and would try to enforce the so-called Buffett Rule, which would ensure that any household making more than $1 million a year pays at least 30 percent of its income in taxes: a move that in all practicality would require Congress to overhaul not just the individual tax rates but also the rates on capital gains and carried interest. Both are currently taxed at 15 percent and offer great breaks and financial boons for the wealthy—just look at Republican candidate Mitt Romney’s tax return for evidence.
More than anything, though, the president’s tax ideas are political statements in line with his campaign themes of boosting the middle class and economic fairness, an idea borrowed, polished, and gussied up from the Occupy Wall Street movement.
Though the administration says such individual tax reform measures would cut the deficit by $1.5 trillion over the next decade, it does not tackle the long-term issues of a major overhaul of the tax code: an idea that both parties support in theory. Still, the president’s mantra of tax hikes for the wealthy does lay down a marker about the way the administration views the current tax system and previews its stance on the huge number of expiring tax provisions at the end of 2012 when the president hopes he’ll still be in power.