So if you’ve seen the news recently, you’ve heard the big news: Obama has released his new spending proposal. Here are some details:
Total Spending: $3.8 Trillion
-Replaces the AMT with a “Buffet Rule” tax, where people with incomes over $1,000,000 will pay a 30% minimum tax.
-increases the tax on dividends to the level of the individual’s income tax.
-Eliminates many other tax rates in the same way (by equating them to the income tax rate)
-Will overhaul the corporate tax framework
-Cuts $487 billion in defense spending
-$800 million in aid to transformation in the Middle East
-new spending to boost growth.
Over all, I think this is a step in the right direction. The tax system has needed an overhaul for years now, and this is at least a symbolic step towards that end, and it will take an important stride towards eliminating the deficit. I say symbolic because the chances that Republicans will vote for this budget is somewhere lower than the Great Barrier Reef. As usual, the debate is between “tax and spend” Democrats and “big business, anti-poor” Republicans. This means that the spending will most likely be tapered down, as will the tax code changes. Given that it is an election year, the Republican proposal will probably even more vastly different than it usually is.
What you probably won’t see in a Republican proposal:
-aid to the Middle East transformation
-cuts in Defense spending (at least not nearly that much)
-any sort of increase on dividend taxes
-you probably will see some changes in the tax code, but not the same ones Obama proposed.
-A Buffet Tax. Everyone has bemoaned the AMT, but Republicans haven’t been particularly helpful in offering alternatives, as they’d probably just like to see it trashed altogether, and not replaced.
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