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CommentWhen the Treasury Department unveiled the Obama administration’s tax proposals this afternoon, it was largely recycling ideas from last year--and getting the same response from the few groups whose oxen would be gored.
The new revenue plan is chock-full of familiar proposals: ending the Bush tax cuts for families earning more than $250,000 a year; revoking oil and gas tax breaks; patching the alternative minimum tax; and continuing an expansion of the Earned Income Tax Credit for low-income working parents.
Meanwhile, Treasury officials offered no new details about the one big idea they have been talking about lately: reforming the corporate-tax code.
President Obama had indicated earlier today that his planned revenue streams would be only slightly altered from years past.
House Majority Leader Eric Cantor, R-Va., shot back just as he did when the Bush tax cuts were debated on the House floor in December.
“President Obama's budget doubles down on the bad habits of the past four years by calling for more taxes, spending, and borrowing of money that we simply do not have,” he said. Cantor then turned to GOP plans to cut spending and essentially ignored the president’s proposals.
The administration also resurrected its idea to eliminate tax breaks for the oil and gas industry. The White House says that the move would raise about $46 billion over 10 years and that the money would be used to fund clean-energy projects. Like clockwork, the American Petroleum Institute quickly warned that the idea would cost “thousands of jobs” and damage the economy.
“It’s no surprise the administration is proposing yet again to raise taxes on the U.S. oil and natural-gas industry,’’ the lobbying group said in a statement fired off about 11 a.m., shortly after Obama's fiscal 2012 budget was officially released. “But it’s still a bad idea and comes at one of the worst times in our economic history.”
The administration did inch ahead on plans to overhaul the corporate-tax code. Lawmakers and administration officials are in near-unanimous agreement about the value of lowering top rates and eliminating loopholes and the president has been signaling that message for months, but officials didn’t get any more specific today.
“Tax reform is often a multiyear process,’’ a Treasury official said, during a briefing for reporters. “What the president has focused on in the context of competitiveness, is looking at the corporate-tax system first."
Other provisions in the plan include expanding the Earned Income Tax and Child and Dependent Care tax credits for larger families and a provision extending credits for college-loan forgiveness. It is precisely these extensions that Republicans battled last year and are likely to dismiss in the coming weeks.
The budget plan would also permanently extend relief from the alternative minimum tax, which was originally aimed at millionaires but now threatens to hit middle-class taxpayers with big surcharges. To offset the lost revenue, Obama is once again proposing to cap the cash value of deductions at 28 percent--an idea that didn’t go anywhere in 2010 and faces tougher sledding this year.
Many of the ambitious elements on the spending side are offset by tax measures that Republicans say are clear non-starters. Among the most hotly despised are the $46 billion that would be raised by cutting oil and gas credits and a new Financial Crisis Responsibility fee on the financial services industry that is estimated to raise $30 billion between 2012 and 2021 to pay back costs from the Troubled Asset Relief Program.
“This budget fails to preserve the pro-growth policies needed to expand our economy, create jobs and reduce the deficit,” Sen. Orrin Hatch, R-Utah., shot back. “Keeping pace with its liberal tax- and-spend agenda, the Obama administration hits almost every sector of our economy with a tax hike -- energy taxes, taxes on hiring, higher income taxes.”
The tax proposals are also stoking reflexive opposition in the business community, which Obama has worked so diligently to woo. Several business leaders balked at plans to reform the U.S. international tax system by closing loopholes. The administration estimates such reform would raise upward of $129 billion in the next 10 years. But business leaders claim the revenue value isn’t worth the jobs it might deter.
“We were encouraged when the President in his State of the Union address highlighted that worldwide American companies face some of the highest tax burdens in the world,” said National Foreign Trade Council President William Reinsch. “We thought that maybe his exclusion of ‘companies shipping jobs overseas’ symbolized an ideological shift toward more business-friendly international tax policies, but his budget proposal released today is just more of the same.”
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