Augusta – Yesterday President Obama submitted a budget that was both bold and responsible. The administration outlines key goals within the budget that the American people have long waited for. And – in an impressive change from the past – this budget actually pays for the initiatives it proposes. This budget allocates expenditures for health care reform, climate change and education. It cuts taxes for people and small business earning less than $250,000 a year (95% and 98% percent of people and businesses, respectively). It achieves all this while reducing the federal deficit by $2 trillion dollars over the next ten years.
How does the administration do this?
They close hundreds of billion of dollars in corporate loopholes by targeting the carried interest deductions that have kept hedge fund managers from paying taxes on their full earnings and by no longer allowing companies to shelter profits offshore. They raise the top income tax margin to the levels during the Clinton administration. They use revenue from a cap and trade system designed to combat global warming to give a tax break to 95 percent of Americans. They raise the capital gains tax, though not to levels as high as under the Clinton Administration.
As a result of these increased taxes on the wealthiest Americans, we will reduce our deficit over 5 years to approximately 3% of GDP, which will keep the deficit from outpacing GDP. We will address the catastrophic effects of global warming, make our schools competitive once more and curb the growing costs of health care.
“This budget represents a shift from overspending and mismanagement to fiscal restraint; from short term gain to long term investments; and from a government that works for 5% of Americans to one that works for 95% of Americans,” says Nicole Witherbee, federal budget analyst at the Maine Center for Economic Policy.
Since 98% of Maine businesses and an even larger share of Maine people are earning less than a quarter of a million a year, our state will, as a whole, experience tax reductions while seeing the benefits of lower health care costs, more effective schools, and more stable energy sources.