Most of the tax increases would be delayed until 2011, when the economy will presumably be improved. Several of the tax cuts would be permanent extensions of those enacted in the economic recovery package this month.
Among them, a new tax credit that provides up to $400 a year for individuals and $800 for couples, and an expanded $2,500 tax credit for college expenses.
The budget outline released Thursday lacked many details about the tax provisions. But the policies represent a clear ideological break from the Bush administration.
Tax cuts enacted under Bush for families making more than $250,000 would be allowed to expire in 2011, increasing the top income tax rate from 35 percent to 39.6 percent. The top capital gains tax rate would be increased from 15 percent to 20 percent.
Republicans and business groups said the tax package would delay an economic recovery that has yet to happen, while Democrats hailed the proposal as a break from the policies that caused the recession in the first place.
"This is a budget about a new era of responsibility," House Speaker Nancy Pelosi said. "This is about accountability, fiscal discipline, cutting waste, fraud and abuse."
Marty Regalia, the chief economist at the U.S. Chamber of Commerce, called Obama's tax proposals "the biggest return to the welfare state that we've seen in decades."
Couples making more than $250,000 would face new limits on the amount of deductions they could take on their taxable income, including deductions for mortgage interest, charitable donations and state and local taxes. The change would raise about $180 billion over 10 years.
Charities, already hit hard by the recession, rely on those deductions as an incentive for people to donate, while the mortgage deduction is popular among homeowners.
"Over the long term it's going to have a negative impact on the high-end housing market," said Bruce Wein, head of law firm DLA Piper's tax practice.
The provision received a cool reception in Congress. Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, said it raises concerns and "will require more study."
Among the other tax provisions:
-The Alternative Minimum Tax would be indexed to inflation,
providing a long-term fix that would spare more than 20 million
taxpayers from being hit with significant tax increases. The tax
was enacted 40 years ago to make sure wealthy taxpayers pay at
least some tax.
-A tax provision that allows money-losing companies to get refunds from taxes paid in previous years - when the companies were profitable - would be expanded, costing $9.3 billion over 10 years.
-Capital gains taxes on small businesses would be eliminated, saving them $7 billion over 10 years.
-Oil and gas companies would face a series of tax increases, including an excise tax for drilling in the Gulf of Mexico and elimination of the manufacturing tax credit for oil and gas companies. In all, new taxes on oil and gas companies would raise and additional $31 billion over 10 years.
American Petroleum Institute President Jack Gerard said the new taxes could "reduce our nation's energy security by discouraging new investment in domestic oil and natural gas production and refining capacity."
-The government would go after more tax dollars from U.S. companies that do business overseas, raising an additional $210 billion over 10 years. The administration offered few details on how the provisions would work, but Obama talked often during the presidential campaign about ending tax breaks for companies that send jobs overseas.
Business groups warn that U.S. companies are already taxed in the countries where they do business.
-An accounting rule that enables companies managing large inventories to lower their tax liabilities would be repealed, generating an additional $61 billion over 10 years.
-A new provision would modify some aviation taxes or replace them with user fees, generating an additional $77 billion over 10 years. The Transportation Department declined to provide details, but members of Congress and aviation industry lobbyists said it appears to be an attempt to pay for modernization of the air traffic control system in part by charging each plane a fee to use the system.
The airline industry has advocated charging all planes the same fee whether they're a large commercial airliner or a small, private plane. That's been opposed business and private aircraft operators.
-Hedge fund and other private-equity managers would have their profits taxed as income instead of capital gains, raising an additional $24 billion over 10 years.
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