On Monday, the Congressional Progressive Caucus (CPC) released its budget proposal, which would allow the expiration of a much larger portion of the Bush tax cuts than would expire under President Obama’s plan.
The CPC budget plan, which Citizens for Tax Justice and other organizations helped prepare, would also
— end the tax preference for capital gains and stock dividends,
— enact the higher income tax rates for millionaires that were proposed by Congresswoman Jan Schakowsky,
— enact the President’s proposal to limit the value of tax deductions and exclusions to 28 cents for each dollar deducted or excluded,
— end the rule allowing corporations to “defer” U.S. taxes on their offshore profits,
— close tax loopholes for oil and gas companies,
— enact a financial crisis responsibility fee (a bank tax).
These are just some of the reforms included in the CPC budget plan that make sense as tax policy and as ways to address the budget deficit.
Ending the tax preference for capital gains and stock dividends and simply taxing all income at the same rates is key to tax reform. (See a related post.) Ending “deferral” in the corporate income tax is a major reform necessary to end the tax incentives for U.S. corporations to shift jobs and profits overseas.
While President Obama’s budget plan would allow only the top two income tax rates to revert to their pre-Bush levels, the CPC budget would eventually allow some other rates to return to their pre-Bush levels.
There are currently six income tax brackets, and President Obama’s plan would allow the top two rates (the 35 and 33 percent rates) to return to their pre-Bush levels. The CPC budget would go further because it would (eventually) also allow the 28 and 25 percent rates to return to their pre-Bush levels, in 2017 and 2019, respectively.
This is more responsible than President Obama’s approach, which would extend 78 percent of the Bush tax cuts. Despite being more fair and responsible than extending all the Bush tax cuts, Obama’s approach would still manage to give significant tax cuts to the richest one percent and richest five percent.