5 things to know about President Obama’s proposed budget
Highlights* of proposals in the $4 trillion budget for 2016 that President Barack Obama sends to Congress on Monday:
- A six-year, $478 billion public works program for highway, bridge and transit upgrades. About $238 billion would come from a one-time 14 percent mandatory tax on the up to $2 trillion in estimated U.S. corporate earnings that have accumulated overseas. That rate is significantly lower than the current top corporate rate of 35 percent. The top corporate rate for U.S. earnings would drop to 28 percent; foreign profits would be taxed at 19 percent, with companies getting a credit for foreign taxes paid. The remaining $240 billion would come from the federal Highway Trust Fund, which is financed with a gasoline tax.
- Increasing the capital gains rate on couples making more than $500,000 per year, from 23.8 percent to 28 percent. Obama wants to require estates to pay capital gains taxes on securities at the time they are inherited. He is trying to impose a 0.07 percent fee on the roughly 100 U.S. financial companies with assets of more than $50 billion.
- Obama would take the $320 billion that those tax increases would generate over 10 years and funnel them into low- and middle-class tax breaks. His ideas: a credit of up to $500 for two-income families, a boost in the child care tax credit to up to $3,000 per child under age 5, and overhauling breaks that help pay for college.
- Easing painful, automatic cuts to the Pentagon and domestic agencies with a 7 percent increase in annual appropriations. For 2016, he wants a $38 billion increase for the Pentagon.
- The projected budget deficit would be $474 billion, slightly higher than the $467 billion forecast by the Congressional Budget Office for 2016. For the budget year that ended Sept. 30, the actual deficit was $483 billion. That was a marked improvement from the $1 trillion-plus deficits during Obama's first years in office, when the country was struggling to emerge from a deep recession.
*Source: Associated Press reporting.