WASHINGTON — President Obama’s $3.8 trillion fiscal 2013 budget would reduce the value of tax-exempt interest and other tax preferences to 28% for those with higher incomes, and would reinstate and expand the Build America Bond program with a 30% subsidy rate for two years and a 28% subsidy rate thereafter.
The tax preference cap proposal is identical to the one the president made in his jobs bill that failed to gain traction in Congress. It would apply to single taxpayers with income over $200,000 and to married taxpayers filing a joint return with income over $250,000. The administration projects the tax cap would reduce the deficit by $584 billion over 10 years.
The budget also urges Congress to enact an historic $476 billion six-year bill to reauthorize highway and transit programs and to create a national infrastructure bank.
In addition, the president proposes to adopt the recommendations the Treasury Department proposed in December to ease restrictions for Indian tribal government tax-exempt bond financing. The “essential governmental function” standard would be repealed for governmental bond financings and tribal governments would be able to issue tax-exempt private activity bonds for the same purposes as state and local governments under a special national volume cap.