President Barack Obama’s budget plan would raise taxes on big businesses in ways that would spread the impact more broadly than last year’s budget proposal.
Overall the fiscal 2011 budget plan would raise a total of about $468 billion from businesses over the next 10 years, compared to about $410 billion in last year’s budget proposal. That’s in addition to almost $1 trillion in planned increases on mainly high-income individuals.
Associated PressA mine operator inspects the teeth of a machine at the Horizon Coal Mine outside Helper, Utah in March.
The administration also plans a range of more modest tax cuts, many of them aimed at helping small businesses generate more jobs.
The outlook for Mr. Obama’s proposals in Congress is highly uncertain in an election year. Last year, the administration’s proposal to increase multinational companies’ taxes on their overseas earnings by about $210 billion foundered amid furious opposition from business leaders.
This year the White House has trimmed the size of its international tax increases to about $122 billion over the next 10 years, mainly by dropping or reducing proposals curbing companies’ ability to park their overseas earnings in offshore tax havens.
BBut there are substantial increases proposed in other levies. U.S. oil and gas and coal producers; producers of cellulosic ethanol made from paper byproducts; employers who pay unemployment taxes; owners of rental property; and companies that rely on independent contractors could all face higher tax burdens if the plan released Monday is adopted.
A look at how the Obama administration is counting on bringing in revenue and spending it in fiscal 2010.
Budget Stepping Stones
Learn more about the process through which the annual federal budget is authorized by Congress and signed by the president.
Multinationals also would face new restrictions on their ability to shave their tax bills by transferring valuable intellectual property to offshore subsidiaries.
The administration already had announced a $90 billion tax on big banks to help defray the costs of bailouts.
The administration plan will put lawmakers under pressure. Businesses will fight raising taxes in a still-sluggish economy. But Congress also faces demands to reduce swelling budget deficits.
Those pressures will be all the greater because Congress also must address the expiration of the Bush-era tax cuts at the end of 2010. Extending those tax cuts for lower- and middle-income people will create a further drain on the federal budget. So Congress could be looking to businesses as well as high-income individuals to make up some of the difference.
Businesses already were preparing their arguments against the new proposed tax increases.
Raising taxes on fossil fuel producers “would crush American natural gas and oil production and the related jobs, government revenues and American-made energy,” Jeff Eshelman, vice president of Independent Petroleum Association of America, said over the weekend. “It’s important to remember that 90% of all natural gas and oil wells drilled in this country are developed by smaller, independent businesses—not so-called ‘big oil.'”
High tech companies—which include some of the most important U.S. multinationals—also say that the changes to the administration’s international proposals aren’t enough. Multinationals are looking for tax breaks—preferably a cut in the U.S. corporate income tax rate—in exchange for accepting curbs on their ability to avoid taxes on overseas earnings. They point out that virtually all of their overseas rivals can avoid home-country taxes on their international earnings.
“While they have softened the impact of some of their old proposals, [the proposals] still hurt our competitiveness and should be part of a corporate tax reform effort designed to help us compete in the international arena,” said Ralph Hellmann, senior vice president of t