The Obama 2015 Budget is finally here with the usual fanfare of a thud, dud, not gonna happen political reality. Earlier we received previews where the Obama administration finally dropped chained CPI from their proposals. The 2015 budget proposed is $3.9 trillion dollars.
There are actually many good proposals in this budget, unlike many past years. This time Obama isn't capitulating out of the box and it's about time. After six years they must finally be learning writing a Republican platform in a Democratic budget doesn't mean it would still get passed.
Obama is proposing to kill the carried interest loophole. This is a tax trick which allows hedge fund managers, private equity managers and others to pay a 20% income tax bracket, as if their money were capital gains from stocks. The tax trick which allows the super rich to treat income as investments is a huge reason some on Wall Street have gotten filthy rich.
There is another loophole on the table and that is by using corporate business entities by various individuals in order to shift their income into corporate profits and thus avoid paying taxes on that income.
Another huge income equality leveler is Obama's proposal to expand the earned income tax credit to 13.5 million low income wage earners who happen to not have children and make this expansion permanent. Obama also proposes making permanent a $2,500 college tax credit. Clearly this does not come close to covering college and if one has no money in the first place, not too useful. There is also $602 million for a program to subsidize employment for those currently on welfare.
There are actually a lot of good ideas and policies in this budget. Unfortunately the claim to replace lost pensions offered to most workers by simply saving through auto IRAs isn't that great and Roth IRAs are currently a better deal. Pensions usually had matching funds and were not just a glorified tax-exempt and tax defined individual retirement account.
The budget also proposes international tax changes to curtail multinationals paying no tax anywhere. Additionally there is change to stop companies increasing their foreign tax credit size by counting all foreign taxes owed, against corporate total income. There is also $56 billion in financial crisis responsibility fees for big banks.
One of the most important proposals is to raise the minimum wage to $10.10 an hour. From the fact sheet:
Over the past 30 years, modest minimum wage increases have not kept pace with the higher costs of basic necessities for working families. No one who works full time should have to raise his or her family in poverty. The Administration supports raising the minimum wages so that hard-working Americans can earn wages that allow them to support their families and make ends meet. The President knows this is important for workers and good for business. That is why the President is calling on the Congress to raise the Federal minimum wage in stages to $10.10 per hour and index it to inflation thereafter, while also raising the minimum wage for tipped workers for the first time in over 20 years.
The budget of course has the usual blather about flooding American labor markets through immigration reform, along with many programs designed to displace U.S.workers with foreign ones, particularly in the Science & Technology fields.
In a way, it doesn't matter as this budget is really a political document. Out of the box it is assumed almost none of this budget will be passed by Congress. The political argument would then be to elect Democrats so these proposals could then be passed by the House of Representatives.