President Obama proposes $1.5 trillion in new taxes as part of deficit reduction plan; calls for comprehensive tax reform

Washington National Tax Services

President Barack Obama on September 19 proposed a new tax on individuals with income above $1 million on top of his previous proposal to let current tax rates expire at the end of 2012 for individuals with income above $200,000 ($250,000 for joint filers). According to Administration officials, tax increases on upper-income individuals along with other revenue-raising proposals, including those detailed last week in the President's "American Jobs Act," would account for $1.5 trillion out of more than $3 trillion in deficit reduction measures in the President's plan.

President Obama said today that he would veto any bill that included Medicare cuts but no tax increases. Proposed changes in Medicare and Medicaid programs and other mandatory spending reductions would provide $580 billion in deficit savings under the President's plan. Other projected deficit reduction savings are attributed to $1.1 trillion in reduced military spending in Iraq and Afghanistan and $430 billion in reduced interest payments on the federal debt.

President Obama called for consideration of his proposals by the Joint Select Committee on Deficit Reduction, the panel established by the recent Budget Control Act of 2011. The Deficit Reduction Committee is charged with recommending at least $1.2 trillion in deficit reductions by November 23. President Obama urged the panel to adopt the more than $3 trillion in deficit reductions projected by White House staff under his plan.

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