Obama Unveils FY 2012 Budget; Renews Call To End Bush-Era Tax Cuts For Higher Income Individuals

Posted on 03-23-2011 by Joseph D. DiMauro

President Obama released the third proposed federal budget of his term, for fiscal year (FY) 2012, on February 14. The FY 2012 budget renews many of the president’s earlier tax policies, such as ending the Bush-era tax cuts for higher income individuals, making permanent the American Opportunity Tax Credit, eliminating some energy tax incentives, and reforming some international tax provisions. Overall, President Obama proposed $3.73 trillion in federal spending and $1.1 trillion in deficit reductions. The president’s FY 2012 budget now faces many Congressional hearings, at which lawmakers are expected to challenge many of the proposals, especially in the GOP-controlled House.

Income tax rates for Individuals:

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) set in motion a gradual reduction in the individual income tax rates, which was accelerated by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). EGTRRA’s reduced individual income tax rates were scheduled to expire after 2010. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (2010 Tax Relief Act) extended them for all tax payers for two years, through December 31, 2012. President Obama’s FY 2012 budget reflects a permanent extension of the current individual rate reductions, except for higher income taxpayers (single individuals with incomes above $200,000 and married couples filing a joint return with incomes above $250,000).