March 5th, 2009 13:10 EST
Obama`s New Tax Plan Receives Opposition from Both Parties
President Barack Obama`s answer to the question of how he will afford his unprecedented spending plans encountered heated opposition on Tuesday. The president proposes to increase taxes on the nation`s highest-earning taxpayers and to businesses guilty of producing harmful greenhouse gases. The majority of Congressional Republicans as well as some within Obama`s own party lines quickly criticized Obama`s proposal.
Democratic Representative Charles Rangel from New York, a chairman on the House`s Ways and Means Committee, denounced that the plan would have a negative impact on how the wealthiest Americans approach donating to charitable causes and organizations. Under Obama`s plan, the highest-paid Americans will be limited in, how many itemized deductions they may use as tax-deductible write-offs, and deductions due to mortgage interest.
Republicans assert Obama`s point to charge fees to corporations that pollute the ozone will in fact lead to a surreptitious tax hike for every American that is predicted to surpass the $400 tax break the administration has OK-ed as an annual additional income tax refund for eligible taxpayers until 2010.
Rep. Dave Camp from Michigan, the senior Republican on the Ways and Means Committee, sided with his party`s general opinion of the President`s ideas.
The president`s budget increases taxes on every American, and does so during a recession, he said.
Timothy Geithner, the Treasury Secretary, spoke in defense of the Chief Executive`s proposal and affirmed that taxes will stay reduced for most Americans. He further enunciated that any tax increases would only occur when the economy is safely into recovery , hopefully by 2011 at the latest. According to Geithner, Obama`s tax plan will still slash income taxes for 95 percent of households and 97 percent of small businesses. Tax hikes on couples earning $250,000 or more are to ensure that the tax system is more balanced: a nonexistent feat since Bush was sworn into office back in 2000.
Geithner reflected the previous statement when he said: this budget targets tax relief to families that have lost ground the past eight years.
Another Democratic proponent for the proposal, Rep. John Lewis from Georgia, swore: (the plan) is making the tax code more far.
On Tuesday, the Treasury Secretary and White House Budget Director Peter Orsazag were required to testify individually at joint congressional hearings to allow legislators their first chance to openly question or even scrutinize cabinet members on Obama`s agenda. And besides a few dissenters in each respective party, representatives from both parties stuck to their party`s consensus.
As a disclaimer to members on the Congressional panel, Geithner admitted that consumers might be paying higher energy bills due to Obama`s position on penalizing corporate polluters, many of whom provide utilities through burning fossil fuels. President Obama`s plan calls for corporation developing hazardous carbon dioxide waste byproduct to bid on carbon pollution permits. The ultimate objective of this is to cut the noxious gas levels mainly responsible for global warming while helping to raise the estimated $646 billion over the next decade.
Now if people don`t change how they use energy, then they will face higher costs for energy, Geithner told representatives at the Congressional hearing.
Most of the $646 billion coming from the pollution fees is projected to finance the administration`s tax credit, which amounts to a maximum of $400 for individuals and $800 for couples annually. The administration also detailed that funds for clean-fuel technologies in the areas of wind and solar energy will be enacted in the latest proposal.
Geithner also informed Congressional leaders that Obama`s administration is preparing to release a series of new proposals in the next four months that will impose stricter guidelines on international companies to start paying U.S. taxes: many of which they were able to avoid paying in the past during George W. Bush`s presidency.
Included in the plan revealed on Tuesday, the administration plans to initiate a bill to limit U.S. corporations` ability to protect foreign profits from taxation, and to limit affluent Americans` ability to utilize tax havens to evade further taxation.
The budget proposal Obama put forward last week offered an outlet to provide another $210 billion from international enforcement " and other tax reform policies , but included few details in raising the necessary moneys. When he was asked about the details concerning the budget proposal, Geithner added that they would be finely wrought and available at their discretion in the coming months.