Monday, February 13, 2012

President Obama Introduces FY 2013 Budget

President Obama introduced a $3.4 trillion budget for 2013. The budget projects a $1.33 trillion deficit for the year ending Sept 30, accounting for 8.5% of GDP. The budget included the so called “buffet rule,” including a 30% tax on incomes greater than $1 million. In addition, the budget raises the top individual income tax rate to 39.6%, taxes capital gains at 20%, and taxes dividends as income for top income brackets.

The budget includes a $61 billion bank tax, that ABA commented on today.

In all, the Obama administration says the budget will reduce deficits by $3 trillion via new taxes and $360 billion in savings that include changes to Medicare and Medicaid over the next 10 years.

The budget extends the 2.0% payroll tax cut through the end of 2012 as well as the 100% bonus depreciation provision. It also extends the Earned Income Tax Credit permanently.

The president’s budget predicts economic growth will reach 2.8% in 2012, accelerating to 3.0% in 2012, remain constant at 3.0% in 2013, and increase to 4.1% in 2015. The forecast predicts GDP growth will fall back down to 2.5% by 2020. This contrasts sharply with the CBO’s economic growth forecast, which has GDP growing 2.6% in 2013.

See the budget.

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