FY 2014 Budget Request Snapshot (OMB Estimates)
- President's FY 2014 Budget - $3.77 trillion
- Total discretionary spending - $1.1 trillion
- Projected FY 2013 deficit - $973 billion
- Projected FY 2014 deficit - $744 billion
- Turns off the automatic, across the board spending cuts known as sequestration and replaces it with $1.8 trillion in alternative deficit reduction over 10 years - including:
- $583 billion in new revenue from capping itemized deductions for high-income taxpayers at 28% and implementing the "Buffett Rule"
- $400 billion in health savings that build on reforms of the Affordable Care Act
- $200 billion in savings from mandatory programs
- $230 billion from adopting a new formula known as the Chained Consumer Price Index (CPI) that more slowly increases benefits for Social Security and other programs for inflation.
- $200 billion in discretionary spending savings
- $200 billion from reduced interest payments
- Cuts funding for all or part of 215 programs and initiatives for $25 billion in savings in FY 2014.
FY 2014 Budget Request – Tax Priorities
Selected Individual Tax Provisions
- Individual Income Taxes:
- Assumes revenue generated by raising the top marginal tax rate on income above $450,000 for joint-filers ($400,000 for individuals) as part of the American Taxpayer Relief Act.
- Charitable and Other Deductions:
- Calls for a 28 percent cap on the value of all itemized deductions, including the charitable donations, on income above $200,000 per year ($250,000 for joint filers). The proposal would also reduce the value of other tax preferences for higher-income earners, including tax deferrals for income contributed to retirement plans.
- Buffett Rule:
- Proposes that joint-filing taxpayers with over $1 million in adjusted gross income should pay no less than a 30% effective tax rate. The minimum tax rate is phased-in linearly beginning at $1 million and is fully phased in at $2 million. The budget states that the Buffett Rule would be applied after charitable contributions are taken by the taxpayer. The charitable deduction would be the only tax deduction allowed for taxpayers subject to the Buffett Rule.
- Estate Tax:
- The budget proposes returning the federal estate tax to 2009 levels ($3.5 million individual exemption; 45% top rate) in 2013.
- Foundation Excise Tax:
- The budget proposal includes a provision calling for a single, 1.35% excise tax rate on investment income of private foundations at an estimated cost of $54 million over 10 years.
- 10 Percent Tax Credit for New Jobs and Wage Increases:
- Proposes temporary tax credit equal to 10% of up to $5 million in wages (maximum credit $500,000) for employers that add jobs or increase wages.
- Both for-profit and nonprofit employers are eligible, although the budget does not specify how nonprofit employers would claim the credit or whether it would be equal to those provided to for-profit employers.
- Charitable Tax Extenders:
- The budget makes no explicit mention of charitable tax provisions like the IRA charitable rollover and the enhanced deductions for the donation of food and land for conservation purposes that have been commonly included in the annual "tax extenders" package. However, with respect to extenders, the budget states that any of these provisions that are retained must be paid for going forward. The charitable extenders at scheduled to expire December 31, 2013.
selected ADDITIONAL REVENUE RAISERS
Beginning in 2015, the budget proposes changing the measure of inflation used by the federal government for most programs and for the Internal Revenue Code from the standard Consumer Price Index (CPI) to the alternative, chained CPI, which grows slightly more slowly. Unlike the standard CPI, the chained CPI fully accounts for a consumer’s ability to substitute between goods in response to changes in relative prices and also adjusts for
small sample bias. Chained CPI would raise an estimated $230 billion over 10 years.
Increased Tobacco / Cigarette Tax
The budget proposes increasing the federal tax on cigarettes by 94 cents per pack (from $1.01 to $1.95) to raise an estimated $78 billion in revenue.
Mandatory E-filing for the Form 990
The Administration proposes to phase in a requirement that all
tax-exempt organizations file their Form 990 information returns electronically and
requires the IRS to release those data in a machine-readable format in a
FY 2014 Budget Request – Non-defense discretionary spending priorities
Selected Departments and Agencies
- Department of Agriculture: $22.6 billion in discretionary funding (roughly equal to currently enacted levels)
- $7.1 billion in discretionary nutrition program support to support over 9.1 million people expected to participate in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) for low-income and nutritionally at-risk pregnant and post-partum women, infants, and children up to age
- $4 billion in investments for renewable and clean energy, and environmental improvements.
- Department of Education: $71.2 billion ($3.1 billion above 2012 enacted levels)
- $545 million for K-12 “Race to the Top Initiative"
- $260 million for a First in the World Fund to to spur the development, validation, and scaling-up of cutting-edge innovations to reduce college costs, improve productivity, and boost post-secondary attainment rates.
- $1.3 billion for 21st Century Community Learning Centers
- $300 million for Promise Neighborhoods ($240 million above enacted levels)
- Makes American Opportunity Tax Credit permanent.
- Sustains maximum Pell Grant awards at $5,645* (mandatory spending)
- Department of Treasury: $14.2 billion (7.7% increase above enacted levels)
- $12.9 billion for the IRS, including $400 million in program integrity initiatives
- $227 million for the Community Development Financial Institution (CDFI) Fund
- Department of Health and Human Services: $80.1 billion ($3.9 billion above 2012 enacted levels)
- $31 billion for the National Institutes of Health
- Invests in priorities such as the Affordable Care Act implementation, medical research,
mental health services, and Head Start. Savings are achieved through the elimination of the Preventive Health and Health Services Block Grant, and reductions in the Low Income Home Energy Assistance Program and the Community Services Block Grant.
- $350 million for Community Services Block Grants (CSBG) - proposes to use competition to target the funds to high-performing agencies that are most successful in meeting. important community needs ($300 million decrease from current levels).
- $2.8 billion for the Low Income Heating Assistance Program ($600 million below current enacted levels).
- Department of Housing and Urban Development: $47.6 ($4.2 billion above 2012 enacted levels)
- $3 billion for Community Development Block Grant Program
- $400 million to transform neighborhoods with distressed HUD-assisted housing and
concentrated poverty into opportunity-rich, mixed-income neighborhoods.
- $37.8 billion to preserve rental housing assistance to 4.7 million low-income Americans
Additional Spending Priorities
- Corporation for National and Community Service - $1.06 billion
- Social Innovation Fund - $49 million to provide seed money and scale up innovative programs that leverage private and foundation capital to meet major social challenges.
- Includes $4 million to improve nonprofit evaluation capacity by facilitating access to State and Federal Administrative data.
- George H.W. Bush Volunteer Generation Fund - $10 million to provide grants to States and nonprofit organizations to recruit and manage volunteers
- National Endowment for the Arts - $154 million