Budget would cut some taxes while raising others

By: By STEPHEN OHLEMACHER, Associated Press Writer
By: By STEPHEN OHLEMACHER, Associated Press Writer

WASHINGTON (AP) - President Barack Obama's budget proposal would extend tax cuts for most working families while raising those on Americans making more than $250,000 a year.

Oil and gas companies would face new taxes for offshore drilling.

The proposal would make permanent several new and expanded tax credits enacted in the economic recovery package this month. Among them, the $400 tax credit for workers. Couples could get up to $800 a year.

The budget would make permanent the expanded $2,500 tax credit for college expenses. An expansion of the $1,000 child tax credit to more low-income families also would be made permanent.

Tax cuts enacted under the Bush administration would expire in 2011. Couples making more than $250,000 would see the top tax rate return to 39.6 percent. Those families also would face new limits on the amount of deductions they could take, including deductions for charitable donations.

The budget would eliminate capital gains taxes on small businesses and make a research tax credit permanent. It would also expand a provision that allows money-losing companies to get refunds from taxes paid in previous years, when the companies were profitable.

The proposal targets oil and gas companies for several tax increases, including a new excise tax on companies that drill in the Gulf of Mexico.

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