Obama’s federal budget proposal is in, and it brings back some some of the same tax increases that were rejected less than 2 months ago.
It’s almost as if the ink on the 2011 Tax Deal [1] isn’t even dry yet, and Obama is ready to change it back again in his new budget.
Let’s take a quick look at the Obama budget tax increases in the new 2010 budget proposal.
Federal Budget Tax Changes
Here are the highlights of many of the tax impacts included in Obama’s federal budget proposal:
- Let the 2001 Bush tax cuts [2] expire at the end of 2012 for those making more than $200,000 ($250,000 for married couples).
- Send a $250 check to retirees and government employees not included in the 2011 Payroll Tax Cut [3].
- Limit itemized deductions [4] for people in the highest tax brackets [5] to 28%.
- Extend tuition tax credits [6] for college expenses.
- Expand tax credits for child care.
- Make the Earned Income Tax Credit [7] permanent for families with 3 or more children.
- Bring the estate tax back to 2009 limits (with a $3.5 million exemption and 45% top rate).
- Prevent the alternative minimum tax [8], or AMT, from expanding for three years.
- Eliminate capital gains [9] on some small business stock.
- Eliminate required minimum withdrawals for IRAs with less than $50,000 for retirees over age 70 ½.
- Change the new 1099 reporting rule [10] in the the health care bill [10] requiring 1099s for services only, no longer requiring 1099s for the purchase of goods.
In your spare time, you can read all 216 pages in Obama’s 2012 budget [11].
Federal Budget Next Steps
Obama’s federal budget proposal will now go through countless committees and subcommittees, hearings and votes. Of course, when it is finally resolved, as we’ve seen before, it probably won’t look anything like the proposal.
My Next Steps
Am I the only one who finds it really difficult to do long term tax planning with all the back and forth on our tax code every few months?
Will Obama’s budget bring back the same tax increases that were eliminated just two months ago?