On April 10, the Treasury Department released its “General Explanations of the Administration’s Fiscal Year 2014 Revenue Proposals,” known as the “Green Book.”
In releasing the Green Book, Treasury Secretary Jacob J. Lew highlighted key components of the Treasury Department’s Fiscal Year 2014 Budget that he indicated will help support the Obama Administration’s comprehensive efforts to strengthen economic growth, create new jobs and make government more efficient and accountable.
Lew said, “The President’s Budget is based on the conviction that an agreement to put our nation on a sound fiscal course is within our reach and that we can achieve that goal while making targeted investments to strengthen the economic recovery, create jobs and lay the foundation for long-term growth.”
The key components of the tax proposals in the President’s 2014 budget and which are discussed in the Green Book include:
- Jumpstart Growth by:
- Providing a 10-percent tax credit for new jobs and payroll increases focused on small business through 2013.
- Providing tax credits to support domestic clean energy manufacturing.
- Designating 20 ‘Promise Zones’ to promote job creation and investment in economically distressed areas that have demonstrated potential for future growth and diversification into new industries.
- Promote Investment in Infrastructure by:
- Creating a new permanent America Fast Forward Bond program to help facilitate and reduce the cost of financing new projects for State and local governments.
- Providing a larger federal subsidy rate for America Fast Forward Bonds for School Construction.
- Exempting from the application of the Foreign Investment in Real Property Tax Act (FIRPTA) gains of foreign pension funds from the disposition of U.S. real property interests.
- Provide Permanent Tax Relief for Middle-Class Families by:
- Making the American Opportunity Tax Credit permanent, providing a partially refundable tax credit of up to $2,500 per year to help finance up to four years of college.
- Permanently expanding the Earned Income Tax Credit to support larger families and married couples.
- Permanently increasing the amount of Child Tax Credit available to low-income families.
- Increasing the Child and Dependent Care Tax Credit available to many working families.
- Improving retirement security by providing for automatic enrollment in IRAs.
- Ask the Most Fortunate to Contribute to Balanced, Credible Deficit Reduction by:
- Implementing the Buffett Rule by imposing a new “Fair Share Tax” on high-income taxpayers.Limiting tax expenditures for the affluent by capping itemized deductions and certain other deductions and income exclusions at 28 percent.
- Restoring the estate, gift, and generation skipping transfer taxes to 2009 levels.
- Taxing carried interest profits as ordinary income.
- Eliminating a special depreciation benefit for corporate jets.
- Level the Playing Field for American Business through Revenue-Neutral Business Tax Reform by:
- Expand Manufacturing and Support Insourcing Jobs in America
- Establishing tax incentives for locating jobs and business activity in the United States and prohibiting tax deductions for shipping jobs overseas.
- Providing a new manufacturing communities tax credit to encourage investments and job creation.
- Enhancing the research and experimentation credit and making it permanent.
- Tax Relief to Help Small Business Grow and Hire by:
- Extend increased expensing for small business.
- Permanently eliminating the capital gains tax on certain small business investments.
- Doubling the amount of expensed start-up expenditures.
- Expanding and simplifying the Small Business Health Care Tax Credit.
- Excluding certain assets of small taxpayers from the uniform capitalization (UNICAP) rules.
- Reduce Incentives to Shift Income and Assets Overseas by:
- Closing loopholes and ending abuses—like transfer pricing abuses that shift intangible income and assets overseas—to produce $157 billion in savings over the next 10 years.
We will watch with interest as the tax proposals advance through the budget process. The President’s 2014 plan is likely to have some rough sledding from both sides. President Obama called his plan a compromise combining tax increases, which Republicans dislike, with changes to Social Security, which Democrats dislike.
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