ANALYSIS: Obama budget is $1.5 trillion tax hike over 10 years...

Obama's FY2012 Budget: Taxes, Taxes, and More Taxes

From Ryan Ellis
Monday, February 14, 2011 12:00 PM
52 comments

President Obama released his budget this morning. Rather than focusing on Washington’s over-spending problem, the budget calls for higher taxes on families and small businesses to pay for even more government spending. Under the Obama budget, tax revenues will grow from 14.4% of GDP in 2011 to 20% of GDP in 2021. By comparison, the historical average is only 18% of GDP.

Tax hike lowlights include:

•Raising the top marginal income tax rate (at which a majority of small business profits face taxation) from 35% to 39.6%. This is a $709 billion/10 year tax hike

•Raising the capital gains and dividends rate from 15% to 20%

•Raising the death tax rate from 35% to 45% and lowering the death tax exemption amount from $5 million ($10 million for couples) to $3.5 million. This is a $98 billion/ten year tax hike

•Capping the value of itemized deductions at the 28% bracket rate. This will effectively cut tax deductions for mortgage interest, charitable contributions, property taxes, state and local income or sales taxes, out-of-pocket medical expenses, and unreimbursed employee business expenses. A new means-tested phaseout of itemized deductions limits them even more. This is a $321 billion/ten year tax hike

•New bank taxes totaling $33 billion over ten years

•New international corporate tax hikes totaling $129 billion over ten years

•New life insurance company taxes totaling $14 billion over ten years

•Massive new taxes on energy, including LIFO repeal, Superfund, domestic energy manufacturing, and many others totaling $120 billion over ten years

•Increasing unemployment payroll taxes by $15 billion over ten years

•Taxing management capital gains in an investment partnership (“carried interestâ€