ROBERT SIEGEL, host:
We're go take a closer look now at some of the tax loopholes that President Obama wants to close over the objection of congressional Republicans. There are plenty of loopholes to choose from in the tax code.
But as NPR's Scott Horsley reports, the White House has focused on some fairly narrow provisions.
SCOTT HORSLEY: Loopholes and tax breaks cost the federal government more than $1 trillion a year in loss revenue. In his White House news conference yesterday, President Obama went after only a tiny fraction of that.
President BARACK OBAMA: The tax cuts I'm proposing we get rid of are tax breaks for millionaires and billionaires, tax breaks for oil companies and hedge fund managers and corporate jet owners.
HORSLEY: Corporate jets were a favorite target. Mr. Obama mentioned them half a dozen times during his news conference. He might have thought he could balance the budget just by grounding a few high-flying Gulfstreams, but the president's actual proposal is not so lofty. It would make companies take two extra years to write off their jets.
Dan Hubbard, of the National Business Aviation Association, says that would generate two or $3 billion over the next 10 years.
Mr. DAN HUBBARD (Vice President of Communications, National Business Aviation Association): About one one-hundredth of 1 percent toward what is a trillion-dollar deficit. We're disappointed that he came to the table with this kind of proposal which just smacks of cynical politics.
HORSLEY: Indeed, the president's main message yesterday seemed to be aimed at reassuring most Americans that it's someone else's taxes that might be going up.
Pres. OBAMA: The revenue we're talking about isn't coming out of the pockets of middle-class families that are struggling. It's coming out of folks who are doing extraordinarily well.
HORSLEY: Folks like hedge fund managers who'd pay more under the president's plan.
Eric Toder, of Tax Policy Center, explains these managers now have their income taxed at the lower capital gains rate of just 15 percent.
Mr. ERIC TODER (Tax Policy Center): They basically get a share in the gains and losses of the hedge fund. Now, the argument that's often made is this is really indistinguishable from compensation. So why should this be taxed at 15 percent when, you know, if you're a salesman on commission, you're getting taxed at rates up to 35 percent?
HORSLEY: Closing the hedge fund loophole would bring in about $20 billion over the next decade, and ending tax breaks for oil and gas companies would raise another 40 billion.
Mr. Obama did not talk about one of the more arcane tax proposals on the table, even though it's worth about 20 times as much as closing the corporate jet loophole. This proposal would restrict the way that businesses can account for their inventory.
Toder says, in some cases, that would result in higher profits on paper and higher taxes as a result.
Mr. TODER: I think you should just view this overall as a small increase in the tax on the corporate sector and certainly one you can make an argument for.
HORSLEY: The biggest item on the president's wish list would raise some $290 billion over the next 10 years by limiting the value of itemized deductions for taxpayers in the top two income brackets. This is what Mr. Obama was talking about when he refers to taxes on millionaires and billionaires, though in reality it could affect people with taxable income as low as $175,000.
Pres. OBAMA: It would be nice if we could keep every tax break there is, but we've got to make some tough choices here if we want to reduce our deficit.
HORSLEY: The Tax Policy Center's Toder thinks Mr. Obama is right to focus on closing loopholes rather than trying to raise taxes across the board, but the biggest loopholes, such as the mortgage interest deduction or the tax break for health insurance you get through work, remain untouched.
Mr. TODER: I think, at some point, we'll need to get to a broader reform of the tax system where we look at all of the preferences and the rates together, but, I guess, this is not the time.
HORSLEY: Democrats close to the deficit talks say the president does not have a specific revenue target in mind. He's looking for just enough taxes and spending cuts that can win a majority in Congress.
Scott Horsley, NPR News, the White House.
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