|
 The proposal to expand one of the most popular U.S. government
poverty reduction programs, the Earned Income Tax Credit, would cost
$60 billion, a modest amount in a budget in which the president has
$1.014 trillion in spending to parcel out, the White House said.
Obama would pay for the tax credit expansion by closing tax
loopholes used typically by wealthy investors or employees of
professional service companies such as law, consulting or lobbying
firms.
The president's budget request is a scant two-tenths of a percent
higher than his 2014 budget of $1.012 trillion because both amounts
were set in a congressional budget deal in January.
Even so, Obama's budget recommendation stands little or no chance of
being approved as is by Congress, where Republicans, who control the
House of Representatives, disagree with the president's policy
priorities, such as spending government money on job training.
But the document will provide an agenda for Obama's fellow Democrats
in a congressional election year and help the president shift the
debate to poverty reduction and middle-class betterment and away
from deficit reduction, a theme that has dominated Washington budget
battles for the past three years.
Republicans issued their own salvo in the anti-poverty debate on
Monday as House of Representatives Budget Committee Chairman Paul
Ryan, a potential presidential contender in 2016, argued in a report
that the government, for all its massive spending on programs to aid
the poor, had barely made a dent in poverty over the past 50 years.
To pay for his proposals, Obama would close the "carried interest"
tax loophole, which benefits U.S. private equity and venture capital
executives.
The tax break allows those financiers — many of whom are among the
wealthiest people in the country — to treat such income as capital
gains, making it subject to a tax rate of only 20 percent, instead
of the nearly 40 percent top rate on ordinary income paid by the
highest earners.
[to top of second column] |
"GINGRICH" LOOPHOLE
The president's budget will also target a controversial loophole
certain self-employed individuals can use to avoid paying taxes for
the U.S. Social Security and Medicare programs.
The White House referred to that as the "Gingrich" loophole after
former Republican House Speaker Newt Gingrich. As a Republican
presidential hopeful in 2012, Gingrich was criticized for taking
that tax break after he publicly released his personal tax filings.
But the criticism can cut both ways: Republicans note that former
Democratic presidential hopeful John Edwards came under similar fire
for using the tax break after he released personal tax documents on
the campaign trail.
Obama will also try to use the budget to boost the middle class by
making contributions to workers' tax-protected retirement accounts
automatic. Currently, workers must elect to have such contributions
made to Individual Retirement Accounts, and the White House says the
switch will benefit about 13 million workers.
The president has said that despite the tight spending caps on his
budget, he will propose to spend $302 billion in highways, bridges
and transit projects, to be paid for in part by ending some business
tax breaks.
(Reporting by Mark Felsenthal and Jeff Mason;
editing by Peter
Cooney)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
