WASHINGTON -- President Barack Obama on Tuesday morning released a Fiscal Year 2015 budget proposal that contains a variety of new tax provisions to pay for a modest increase in government spending.
The plan includes the usual targets, eliminating tax preferences for the fossil fuel industry, raising the tax on carried interest income and implementing the so-called Buffett rule, which sets a minimum tax threshold for households earning more than $1 million. But there are also some quirky provisions tucked into the text. And for people who like cigarettes with their booze, the America envisioned in this document is not an inviting one.
The president's budget plan calls for an increase in tobacco taxes, indexed for inflation. This increase would result in an estimated $78.217 billion increase in revenue between 2015 and 2024. The money would pay for a $76 billion initiative to provide pre-school education for every "low-and-moderate-income four-year-old child."
The Obama budget also calls for a repeal of the "excise tax credit for distilled spirits with flavor and wine additives." It estimates that this repeal would raise more than $1.09 billion between 2015 and 2024, but it's possible that consumers would be hit with a price increase as distillers pass on the cost.
According to the Joint Committee on Taxation, the tax credit "reduces the distilled spirits tax rate for the alcohol content of a final product that is derived from the alcohol if wine or flavor is added to the product," meaning makers of distilled spirits currently get a tax break if they add flavors to their drinks. The administration argues the tax break favors foreign distributors, because they don't face the same flavor quotient restrictions as domestic ones. In other words, they can produce heavily flavored booze and sell it cheaper than domestic companies can.
When the president proposed repealing the tax credit in last year's budget, Esquire Magazine looked into what the repeal would mean. That piece can be found here.
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