WASHINGTON — The Obama administration is digging deep into the tax code to find ways to help pay for its ambitious plans to cut taxes for middle-income families and small businesses while also overhauling the nation's healthcare system.
The Treasury Department plans to raise $58 billion in taxes over the next 10 years -- targeting mainly securities dealers, life insurance firms and large estates -- and to close $210 billion in tax loopholes for multinational corporations.
The money will help offset the administration's proposal to cut taxes by $736 billion for middle-income families and $99 billion for small businesses during the same period, Treasury officials said Monday.
The additional $58 billion in revenue, highlighted along with dozens of other changes to the minutiae of the tax code, would help fill a gap in the administration's $634-billion fund to help pay for major healthcare changes. The shortfall developed after revenue projections fell short.
The difficulty of making projections during the economic crisis was highlighted Monday when the White House also raised its estimate for this year's budget deficit as the recession increased spending on government benefits and reduced the amount of taxes people paid. The Office of Management and Budget estimated that the deficit would reach $1.84 trillion, a 5% increase over the administration's estimate released in February.
Obama administration officials downplayed the new deficit figures and stressed the need to pass the budget proposals.
"We are taking the next step in creating fairness in our economy by ending loopholes that allow companies to avoid paying taxes while millions of hardworking families and small businesses pay their fair share," Treasury Secretary Timothy F. Geithner said in a statement.
But the higher deficit figures and additional proposed taxes, along with details of corporate tax breaks the Obama administration wants to ax, led to sharp criticism of the White House from some Republican lawmakers and business groups. It was a taste of the battle to come on Capitol Hill, where lawmakers and lobbyists have prevented some of the proposed changes in the past.
"The administration's displayed an insatiable appetite for spending and they need to get money wherever they can. So they use the tax code the way Willie Sutton used a gun," said Martin A. Regalia, vice president for economic and tax policy at the U.S. Chamber of Commerce, referring to the famous bank robber.
