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Two thirds of it will come from raising taxes on people making more than $250,000 a year, by letting the bush tax cuts expire, eliminating itemized deductions, and raising the capital gains tax. Again, just on people making $250,000 or more.
Non-profits that help people in need are worried that trimming tax deductions for charitable donations will impact their fund-raising. The proposal is part of a plan that would generate over $300 billion over 10 years to pay for improved health care. It would impact households earning $250,000 and above. The president and CEO of the Silicon Valley Community Foundation speaks bluntly.
"We ought to find the money from someplace else. We shouldn't stop, we shouldn't put universities at risk, hospitals at risk, museums at risk, homeless shelters at risk, food shelters at risk, so that we can do this good thing," says Emmett Carson, Ph.D., from the Silicon valley Community Foundation.
Donations from foundations and corporations are lower -- the result of the drop in the stock market and in profits. That makes donations from individuals, especially those with high incomes, vital.
"So right now, the target population for giving is individuals, and if there's not an incentive for them to be able to write that off, then we're going to see not a stabilization in individual giving," says Patricia Gardner, from the Silicon Valley Council of Nonprofits.
The president's proposal also would lower deductibility of mortgage interest. David Neighbors, a certified public accountant with Johanson & Yau in San Jose, calculates that the buyer of a $1 million house with an $800,000 loan at 5.25 percent would pay $42,000 a year in interest. Under the revision, the homeowner would lose $2,100 in federal deductions.
Some might argue that would be another blow for real estate.
"They're really having a tough time, and one would argue that we need to do everything we can to encourage, to stimulate, more folks to buy homes, so yes, I could see it being another blow to that industry," says Neighbors.
While taxpayers scramble to look at the Obama budget to learn of its implications on them, Congress will also have to get it scrutiny.
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