IS OBAMA's PLAN TO TAX THE RICH A WISE MOVE FOR THE UPCOMING ELECTION?

Obama budget plan to tax the rich

Barack Obama's budgt sets ot a vision that will
frame political debate in an election year

 

US President Barack Obama has proposed to raise taxes on the wealthy in his 2013 budget, prompting an election year spending showdown with Republicans.

The proposal includes $1.5 trillion in new taxes, much from allowing Bush-era tax cuts to expire.

He will also call for a Buffett Plan tax hike on millionaires, and infrastructure projects.

Republicans said the budget, which must be agreed between the White House and Congress, would not curb the deficit.

Mr Obama unveiled the details in an address to students at a college in Virginia on Monday morning.

At its core is the idea that the wealthiest Americans should pay more in tax and that, in the short-term, a chunk of that extra revenue should be spent on job creation, manufacturing and upgrading the nation's schools.

"I think there is pretty broad agreement that the time for austerity is not today”

Jack Lew White House chief of staff

Republican leaders, who portray Mr Obama as a tax-and-spend liberal stoking class warfare, have pronounced the budget dead on arrival.

But in his budget message, Mr Obama said: "This is not about class warfare. This is about the nation's welfare."

"This is about making fair choices that benefit not just the people who have done fantastically well over the last few decades but that also benefit the middle class, those fighting to get into the middle class, and the economy as a whole," he added.

His plan to allow George W Bush-era tax cuts to expire would affect families making $250,000 or more per year.

The president would also put in place a rule named after billionaire Warren Buffett to tax households making more than $1m annually at a rate of at least 30%.

In a populist touch, over the next decade, the plan would levy a new $61bn tax on financial institutions, in an effort to recover the costs of the financial bailout. And it would raise a further $41bn by cutting tax breaks for oil, gas and coal companies.


Ducking responsibility

But Republicans are unhappy that the blueprint would entail a fourth year in a row of trillion-dollar-plus deficits.

"He's just going to duck the responsibility to tackle this country's fiscal problems," Republican Congressman Paul Ryan, who is chairman of the House Budget Committee, told the Associated Press news agency.

The spending plan, which would take effect on 1 October, projects a deficit for this year of $1.33 trillion, with the amount shrinking to $901bn by 2013 and $575bn in 2018.

Mr Obama has also proposed more than $100bn in investments for transportation projects, revamps for tens of thousands of schools and for the hiring of teachers and emergency service workers.

The plan would defer major spending cuts until the economy is on a more steady footing, a priority as Mr Obama seeks re-election in November.

"I think there is pretty broad agreement that the time for austerity is not today," new White House chief of staff Jack Lew told NBC's Meet the Press on Sunday.

**courtesy of BBC US&Canada**