President Barack Obama’s budget will propose an ambitious six-year, $478 billion public works program of highway, bridge and transit upgrades, half of it financed with a one-time mandatory tax on profits that U.S. companies have amassed overseas, White House officials said.
The proposal, one of the main components of the $4 trillion spending plan for the 2016 budget year that Obama will send to Congress on Monday, attempts to tap into bipartisan support for spending on badly needed infrastructure repairs and construction.
The tax on accumulated foreign profits, to be paid once, would be set at 14 percent, significantly lower than the current top corporate rate of 35 percent.
It would be part of a broader administration plan to overhaul corporate taxes by ending certain tax breaks and lowering rates, a challenging task that Obama and Republican congressional leaders insist they are poised to tackle this year.
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Obama would take the $320 billion that those tax increases would generate over 10 years and funnel them into middle-class tax breaks. His ideas: a credit of up to $500 for two-income families, a boost in the child care tax credit to up to $3,000 per child under age 5, and overhauling breaks that help pay for college.
Altogether, the White House calculates that Obama’s tax increases and spending cuts would cut the deficit by about $1.8 trillion over the next decade, according to people briefed on the basics of the plan. The tax increases, especially the increase on capital gains, bring in far more over the longer term, helping the White House claim it would stabilize the debt in relation to the size of the economy for 25 years.
For 2016, the Obama budget promises a $474 billion deficit, about equal to this year. The deficit would remain under $500 billion through 2018, but would rise to $687 billion by 2025 — though such deficits would remain manageable when measured against the size of the economy.
