Tax changes planned for U.S 2015 budget

Tax changes planned for U.S 2015 budgetbigstock-Tax-form-concept resized

U.S President Barack Obama has proposed plans for making tax credits more accessible to poorer people and reducing the number of tax breaks available for richer people in the annual budget plans.

He announced his ideas at an event at Powell Elementary School as part of the Fiscal Year 2015 budget in Washington, DC. Other plans for reforming the $3.9tn (£2.34tn) U.S budget include $300bn of infrastructure improvements, to be funded by changes to business taxes, as well as a rise in the federal minimum wage to $10.10 an hour from $7.25.

The President’s proposed changes aim to cut the budget deficit by $651bn over the next ten years. Although they may not officially be written into U.S legislation, they demonstrate the position that Obama and his Democratic Party are taking ahead of the midterm elections in November.

At a news conference in Washington Mr Obama said that “As a country, we’ve got to make a decision if we’re going to protect tax breaks for the wealthiest Americans or we’re going to make smart investments necessary to create jobs and grow our economy and expand opportunities for every American.”

The expansion of tax credits is targeted at low-income working Americans between the ages of 21 and 67 as well as workers without children. If it were to pass Congress, the White House have said that the plans would lower taxes for 13.5 million low-income workers.

The cost of funding these tax credits is expected to be $60bn over 10 years and in order to balance it out, Mr Obama has proposed closing two tax breaks available for wealthy U.S residents. Specifically this includes the “carried interest” deduction, which limits the amount of taxes wealthy hedge fund and private-equity fund managers pay.