President Barack Obama said he will push again for corporate tax increases that Congress failed to enact in the past because “I continue to believe I’m right.”
“What’s different is that everybody says now they’re really serious about the deficit,” Obama said at a news conference today in Washington. Obama said his budget seeks to end corporate tax breaks that “aren’t contributing to our long-term economic growth.”
On corporate taxes, Obama said that “if we are going to get serious about deficit reduction and debt reduction, then we’ve got to look at all the sources of deficit and debt.” He said he wouldn’t sign a bill that lowers corporate taxes while preserving loopholes.
“We shouldn’t provide special treatment to the oil industry when they’ve been making huge profits,” he said.
In his budget released yesterday, Obama renewed his call to raise taxes paid by U.S.-based multinational corporations and oil and gas companies. He had previously said he was in favor of efforts to overhaul the entire corporate tax code.
Obama and Treasury Secretary Timothy Geithner in the past few months have held a series of meetings with corporate executives, who have pushed for reducing taxes on global profits rather than increasing them.
In the $3.7 trillion budget plan, Obama revived dozens of proposals that Congress has rejected, including $129 billion in higher taxes on the overseas profits of U.S. companies. He also proposed changing the tax treatment of oil, gas and coal companies, which would raise about $46 billion.
The proposal also would bring back pre-2001 tax rates on income and capital gains for individuals earning more than $200,000 annually and married couples making more than $250,000. The estate tax would return to 2009 levels with a $3.5 million per-person exemption and a 45 percent top rate. Under a law Obama signed in December, lower rates expire at the end of 2012.
Under the budget’s assumptions, federal revenue as a percent of the economy would increase from 14.9 percent in 2010 to 20 percent in 2021. Part of that increase stems from projected economic growth, not from policy changes.
Obama proposed an array of other tax incentives. They include the elimination of capital gains on some small business stock and one to revive the Build America Bonds program, which expired at the end of 2010.
The budget also proposes converting a deduction for energy-efficient buildings into a credit. Obama wants to extend a provision expiring at the end of 2011 that allows certain energy tax credits to be converted into grants.
Income Tax Deferrals
Instead, many in the business community are focusing on renewed proposals to place limits on multinational companies’ ability to defer income taxes on profits they earn outside the U.S. These plans have drawn criticism from corporations such as Microsoft Corp. and Cisco Systems Inc.
The budget also revives a proposal that Congress require executives of investment partnerships including private-equity firms to pay ordinary tax rates on the profits they receive as compensation. This pay, known as carried interest, currently can qualify for lower capital gains tax rates. The proposal would raise $14.8 billion over 10 years.
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