Obama Budget Includes Tax Increases and Tax Preparer Regulation
The Obama administration released its fiscal year 2017 budget containing a number of tax increases on high-income taxpayers, oil and foreign income, along with tax breaks for the middle class and small businesses, plus a provision giving the Treasury Department the explicit authority to regulate all paid tax preparers.
Among the changes proposed for reforming the international tax system, the budget plan would impose a 19-percent minimum tax on foreign income, impose a 14 percent one-time tax on previously untaxed foreign income, and limit the ability of domestic entities to expatriate.
The budget plan would also restrict deductions for excessive interest of members of financial reporting groups, provide tax incentives for locating jobs and business activity in the U.S. and remove tax deductions for shipping jobs overseas, limit shifting of income through intangible property transfers, and restrict the use of hybrid arrangements that create stateless income.
“We have seen a sustained economic recovery since President Obama took office seven years ago in the midst of the worst financial crisis since the Great Depression,” said Treasury Secretary Jacob J. Lew in a statement. “Nonetheless, we have much more work to do to ensure that the benefits of our growth are shared by all Americans. Today’s budget and Treasury’s Greenbook strive to address these and other pressing challenges our country faces through a series of tax proposals aimed at reforming the tax code, investing in infrastructure and protecting working families. These proposals would create the conditions for sustained economic growth while upholding the basic American belief that everyone who works hard should get a fair shot at success.”
The budget blueprint is not likely to go far in the Republican-dominated Congress, however. “President Obama will leave office having never proposed a budget that balances—ever,” said Speaker of the House Paul Ryan, R-Wis. “This isn’t even a budget so much as it is a progressive manual for growing the federal government at the expense of hardworking Americans. The president’s oil tax alone would raise the average cost of gasoline by 24 cents per gallon, while hurting jobs and a major sector of our economy. Americans deserve better. We need to tackle our fiscal problems before they tackle us. House Republicans are working on a balanced budget that grows our economy in order to secure a Confident America.” Read more on Accounting Today.