Free «Tax in America» Essay Sample
The economic policy conducted by the administration of Barack Obama represents the combination of tax increases for the wealthiest citizens and investment in important public services including education, infrastructure, reforms in the healthcare sphere, research studies. Obama’s initiatives are designed to enhance the U.S. economy and boost the future prospects. As an ardent supporter of using governmental regulation to resist crony capitalism, raise tax revenue in order to stimulate and stabilize the nation’s economic growth, the President Obama, in his annual proposal, has called to expand the tax credit for poor Americans and reduce tax breaks for the rich ones.
In May 2014, the president Obama released the budget for the next fiscal year, where he proposed to expand tax credits that will benefit working citizens with low incomes and workers aged 21 to 67, and make it affordable to millions of childless taxpayers (“Barack Obama Calls for Tax Changes in 2015 Budget”). The expansion will help to decrease taxes for almost 14 million low-income Americans. Overall, Obama proposed to increase revenue by more than one and half trillion over the next ten years. According to Lundeen and Pomerleau, new revenue will come in the form of new fees, large tax changes, and numerous minor tax changes. Major changes relate to the individual taxpayers. Moreover, the budget proposed by the President introduces a variety of vital programs. Obama proposed to expand the child tax credit and earned income tax credit as the largest tax benefits for every American family. The budget aims at remodeling the retirement plans and creating an auto-enrollment of the Individual Retirement Account. In order to ensure implementation of these expansions, the 2015 budget will raise taxes for people with high incomes through various changes to tax expenses, including limiting the value of itemized deductions (Lundeen and Pomerleau). The refundable Earned Income Credit (EIC) and Child Tax Credit (CTC) are aimed primarily at working American families. The credits’ size will depend on the family’s annual income, the number of children, and marital status.
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The proposal made by Obama will nearly double the present earned income tax credit for workers without children from almost five hundred dollars to one thousand making the credit affordable for citizens who work forty hours a week and get $7.50 per hour (over fifteen thousand dollars). In addition, the initiatives will lower the minimum age to get the credit from 25 to 21 years and cost approximately sixty billion over the next ten years. Expansion of the child tax credit will cost the country almost nine billion (Lundeen and Pomerleau).
The budget offered by the President reintroduces some tax proposals that help to increase considerable tax revenues owing to the high-income citizens. Moreover, the main governmental financial document limits the value of itemized deductions for those, who get high incomes, increasing nearly six hundred billion dollars in new revenue. The important change allows taxpayers to take itemized deduction against the income tax rate of 28%, rather than in the tax bracket, where they, in reality, fall. In this case, the value of itemized deductions is reduced, and taxes paid by high-income taxpayers are boosted. In 2011, Obama offered the tax plan “Buffet Rule.” As the minimum tax of thirty percent imposed on wealthy citizens, it will help to increase tax revenues to over fifty billion dollars in the ten years. According to Lundeen and Pomerleau, the budget will increase the rate of the estate tax from forty to forty-five percent, diminish the exclusion, and bring over one hundred billion dollars over the next ten years.
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Overall, the budget offered by the U.S. President will help to increase taxes on business structures through various, necessary changes to accounting rules, elimination of tax expenses, changing provisions of the international tax system. Small enterprises can get some treatment to reduce the double taxation in the Tax Code. However, nowadays, corporations may face significant tax increases. Barack Obama promises the U.S. nation a “balanced approach” to raise taxes and cut expenditure to lower debt and deficit. The tax increase part of proposed approach has been already achieved. Now, the U.S. Congress has to force to follow this approach through curtailment of expenses (Dubay). The Obama administration lowers taxes for every working citizen, and continues to keep taxes for the middle-class American families minor. Nowadays, the President is striving to simplify the Tax Code, asking billionaires and millionaires to pay a fair share. By cutting taxes for every U.S. worker in his first term, the typical middle-class families managed to save over three thousand dollars in taxes (Organizing for Action).
The President’ plan is to cut the overall income taxes. It will help to decrease revenues to below level that prevailed under the Reagan’s tenure (less than eighteen percent of Gross Domestic Product) (Johnston). The plan offered by Obama is the net tax reduction. The President claims that tax relief for the American families from the middle-class is much larger in comparison with revenues increased by tax changes for other families. By reducing unnecessary costs and lowering the budget deficit, Barack Obama will pay for the tax changes (Organizing for Action).
Under the proposed tax plan, the middle-class family will soon feel the reduction of their income taxes (Montgomery). Tax credits will help to reduce the amount of taxes paid by Americans. It is often argued that the middle-class families will get over one thousand dollars in tax relief. Tax payments will be lowered to twenty percent if compared with the tax policy under the presidency of Reagan. According to the United States Senate Committee on Finance, the tax plan offered by the U.S. president will ensure three times more tax breaks for every middle-class family in America. Individuals, who earn more than two hundred fifty thousand dollars will pay either lower or the same income taxes than they paid in the distant nineties. For the wealthiest two percent of the U.S. families, the Obama administration is planning to reverse the tax reduction received over the last eight years.