Washington Prepares for Fiscal 2014 White House Budget ReleasePresident Obama’s proposed budget for fiscal 2014 is to be released this week. The administration’s 10-year budget plan is expected to include $1.8 trillion in deficit reduction through a combination of spending cuts and tax increases. The president’s plan would also replace the across-the board budget cuts known as the sequestration that took effect last month. On the spending side, early reports reveal proposed cuts to entitlement programs such as Social Security and Medicare by reducing cost-of-living increases for Social Security recipients and lowering Medicare payments to hospitals, pharmaceutical companies, and other health-care providers.
The proposal also seeks to generate new revenue through a series of tax increases, including capping the value of investor deductions at 28%. The federal tax exemption on municipal bond interest is expected to be included in this cap proposal. The GFOA and other government membership organizations continue to vigorously oppose all federal proposals to cap or repeal the exemption, and continue joint efforts to educate congressional and White House leaders about the tremendous costs states, local governments, and individual taxpayers would face should such proposals be enacted. Joining the GFOA in this effort were 14 senators who sent a letter to the White House last week urging the President not to cap or eliminate the municipal tax exemption.
The President’s budget will also include a new “Rebuild America Partnership” program that would allow direct-pay America Fast Forward bonds to be used for any project that can currently be financed with tax-exempt private activity bonds. The AFF bonds would be subject to a 28% subsidy rate, under which the Treasury would pay state and local government issuers 28% of their interest costs. The president’s budget will also likely include a $3 million limit in 2013 dollars on tax-preferred retirement accounts, enough to finance a $250,000 a year income.
President Obama is submitting his budget proposal late this year, two months after its statutory deadline of the first Monday in February, and several weeks after both the House and Senate adopted their budget resolutions for the coming fiscal year. Treasury Secretary Jacob Lew will appear before both the House Ways and Means and Senate Finance Committees this week to discuss the tax provisions of the president’s fiscal 2014 proposal.
|
