President Obama’s 2012 Budget Proposal

President Obama introduced a 2012 budget proposal on Monday, which includes the following provisions that would affect wealthier taxpayers:

• An increased top rate on ordinary income from 35% to 39.6% and on dividends and long term capital gains from 15% to 20%
• A limit on the value of itemized deductions for wealthier taxpayers, which faces opposition from charities and the housing industry
• A crack-down on short term GRATs
• A return of the estate tax to its 2009 state in 2013, which includes a $3.5 million estate tax exemption, a $1 million gift and GST tax exemption, and a 45% rate. However, the proposal does not get rid of the portability clause for married couples.

Under the proposal, the less wealthy taxpayers keep their Bush income tax cuts and the $2,500 American Opportunity college tax credit. Social Security recipients would also receive $250 due to the lack of a cost of living increase in Social Security payments for the past two years. However, the proposal still allows the one-year Social Security payroll tax cut to expire at the end of 2011.

See Janet Novack, Obama Budget Raises Taxes on Rich and Big Estates, Sends $250 Checks to Seniors, Forbes, Feb. 14, 2011.