President Obama has submitted his Administration’s fiscal year 2017 budget to the US Congress. The proposal would raise $955 billion over ten years by closing certain loopholes for wealthy taxpayers. For example, it would:
- Raise the top tax rate on capital gains (currently 20 percent) to equal the rate under President Reagan (28 percent) and close certain tax loopholes on individual investments;
- Limit the value of certain deductions to 28 percent;
- Close the “carried interest” loophole, among other tax breaks;
- Implement the “Buffet Rule,” ensuring that the wealthiest Americans pay at least 30 percent in income taxes even after they’ve availed themselves of the numerous tax loopholes available to them.
These reforms would make taxation on the wealthy more in line with the taxation of income earned by lower- and middle-income Americans.
The president also proposed measures to require corporations to pay their fair share. In combination these measures would increase corporate tax revenues from $298 billion in 2016 to nearly $419 billion in 2017. These measures include:
- A new fee for large financial institutions – roughly 100 firms with assets of more than $50 billion – that would discourage excessive risk-taking and raise $111 billion over ten years in new revenue.
- Requiring companies to pay taxes on income earned abroad, which would prevent U.S. companies from “inverting,” a maneuver where American corporations arrange to be purchased by smaller overseas corporations to avoid paying U.S. taxes.
