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Budget Creates New Tax Breaks
Monday, February 07, 2005
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WASHINGTON — President Bush proposed new tax cuts Monday for health care, savings and charitable giving, while asking Congress to preserve temporary tax reductions already enacted.
The budget (search) blueprint submitted to lawmakers would reduce money flowing from taxpayers to the federal government by $1.4 trillion over a decade. It includes not only new tax cuts, but also proposals to simplify some tax laws and stem tax evasion.
The single biggest change — making the tax cuts (search) passed during Bush's first term permanent reductions — would cost $1.1 trillion. Those laws reduced taxes on wages, investment income and inheriteion over 10 years.
The proposals also include tax breaks to encourage wider use of health savings accounts (search), which allow individuals to save and invest money set aside for medical bills tax free. All the proposed health changes would cost $125 billion over 10 years.
Bush also wants to encourage charitable giving by letting people donate money withdrawn from an individual retirement account (search), without penalty. The new incentive would cost $3 billion over a decade.
Other tax changes aim to encourage businesses to move into communities that have lost their traditional industries, help teachers pay for classroom supplies, encourage telecommuting and increase affordable housing.
Among items that would increase money flowing into the U.S. Treasury, the president would clarify when siblings count as dependents for various tax benefits.
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