President Obama on Tuesday released a budget proposal that would raise taxes and fees and rely on optimistic economic projections to increase revenue by $3.15 trillion over the next decade -- bringing federal revenue to record levels.
Among the new tax hikes, the Obama budget would restrict itemized deductions for higher income earners and dust off the “Buffett Rule” — an old proposal named after billionaire investor Warren Buffett that would effectively place a surtax on millionaires who don’t pay at least 30 percent of their income in taxes.
The new round of tax hikes would come on top of the $1 trillion in higher taxes from Obama's health care law and the $600 billion in higher taxes from the January 2013 “fiscal cliff” deal that phased out the Bush-era tax cuts on higher income earners.
In addition, the White House Office of Management and Budget made more optimistic economic assumptions than the Congressional Budget Office for fiscal years 2015 through 2024, which also helped revenue projections.
Overall, the OMB sees revenue at $3.15 trillion higher for the next decade than what the CBO projected, bringing revenue as a percentage of the economy to 19.9 percent, which would tie the record set in 2000.
The revenue increases in Obama’s budget account for the entire proposed deficit reduction, as overall spending actually rises by $171 billion relative to the CBO baseline.