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If the White House wanted to attract attention to its final budget, it could not have picked a worse day to make it public. With official Washington obsessed with today’s New Hampshire primary, the 2017 budget barely caused a ripple.
In case there was any question about its fate on Capitol Hill, congressional Republicans had already taken the remarkable step of refusing to invite senior Administration officials to explain their fiscal plan to the House and Senate budget committees. But despite the snub and the bad timing, President Obama’s budget does include some interesting ideas—a few of which might attract bipartisan support sometime in the future.
Overall, the budget includes a wide range of revenue measures that would cut taxes modestly for low- and middle-income families, while boosting taxes for high-income individuals and businesses. On net, the plan would raise taxes by about $3 trillion over the next decade, with two-thirds of the new revenues coming from 2022 to 2026.
The budget would :
- Encourage retirement savings by requiring employers without retirement plans to automatically enroll their workers in IRAs, and create open multiple employer plans that would allow small business and the self-employed to participate in lower-cost pooled retirement accounts.
- Increase the maximum child care credit to $3,000.
- Expand the earned income tax credit for childless workers.
The tax increases are a mix of old ideas that never got traction and some new ones. The budget would:
- Impose a 7 basis point tax on large, highly leveraged financial institutions.
- Impose a $10-a-barrel tax on oil to help fund clean energy transportation projects, and eliminate $38 billion in tax preferences for fossil fuels.
- Crack down on high-income owners of pass-through firms who avoid payroll taxes on certain wage income or who duck the 3.8 percent Affordable Care Act surtax on investment income.
- End stepped-up basis that allows heirs to avoid tax on capital gains that decedents didn’t realize, or pay tax on, before they died.
- Cap the value of itemized deductions and other tax preferences at 28 percent.
- Impose a 30 percent “Buffett rule” minimum tax on millionaires.
- Increase taxes on businesses by $550 billion over 10 years. By far the biggest tax hike: A 19 percent minimum tax on foreign income that would raise $350 billion. U.S.-based multinationals would also have to pay a one-time 14 percent tax on unrepatriated foreign earnings. The budget would repeal last-in-first-out (LIFO) accounting for inventories and tighten like/kind exchange rules for real estate and other transactions.
The Administration fully understands that these ideas are unlikely to become law before Obama packs up and leaves the White House next January. But some, including the childless EITC and the retirement savings incentives, have bipartisan backing. Others, such as the proposed cuts in business tax preferences, could become law as part of a broader tax reform.
For now, though, Obama’s plan will be seen as little more than a wish-list that echoes ideas of the two Democrats who want to take his job. And how are things going in New Hampshire anyway?
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.