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| Obama proposes tax rises to end budget caps | Obama proposes tax rises to end budget caps |
| (about 1 hour later) | |
| US President Barack Obama has sent a $4tn (£2.6tn) budget proposal to Congress with significant tax rises, primarily on firms and the wealthy. | US President Barack Obama has sent a $4tn (£2.6tn) budget proposal to Congress with significant tax rises, primarily on firms and the wealthy. |
| Mr Obama's plan would use new taxes to remove current budget caps and fund infrastructure projects. | Mr Obama's plan would use new taxes to remove current budget caps and fund infrastructure projects. |
| He spoke at the US homeland security department, which faces a funding shortage at the end of February. | He spoke at the US homeland security department, which faces a funding shortage at the end of February. |
| But analysts say it is unlikely the Republican-controlled Congress will approve the proposals. | But analysts say it is unlikely the Republican-controlled Congress will approve the proposals. |
| Mr Obama's spending plan is considered the opening gambit in an expected negotiation with Congress. | Mr Obama's spending plan is considered the opening gambit in an expected negotiation with Congress. |
| Republican budget officials are expected to put forward their own proposals in a few weeks time. | |
| The opposition party accuses Mr Obama of reverting to tax-and-spend policies without changing the biggest areas of government spending - social security and health programmes. | |
| Representative Paul Ryan, the Republican's top budget official, said Mr Obama was exploiting "envy economics" in his proposal. | |
| "This top down redistribution doesn't work," Mr Ryan told NBC. | |
| Among the new tax rises is a one-off 14% tax on US profits made overseas, as well as a 19% tax on any future profits as they are earned. | |
| No tax is currently due on foreign profits as long as they are not brought into the US. | |
| The $238bn (£158bn) raised would be used to fund infrastructure projects across the country. | |
| Research firm Audit Analytics calculated last April that US firms made $2.1tn-worth of profits abroad. | |
| Other tax proposals include: | |
| Mr Obama also called for an end to spending caps on the military and most domestic agencies first put in place in 2011. | |
| Calling the caps "mindless austerity", Mr Obama's budget eliminates such limits for the six years they are in place, representing a spending increase of $362bn. | |
| Mr Obama warned congressional Republicans on Monday that he would not accept lifting caps on national security spending without doing the same for domestic programmes. | |
| "I will not accept a budget that severs the vital links between our national security and our economic security," he said ."Those two things go hand in hand." | |
| The spending plan also includes proposals Mr Obama promised in his State of the Union speech last month, including free community college tuition. | |
| Apple and the US tax grab | |
| Kim Gittleson, BBC News | |
| To understand just how convoluted the world of US corporate tax has become, you only need to look to one company: Apple. | |
| The technology giant just announced on Monday that it will raise money via US debt markets in order to return money to shareholders - despite reporting the biggest quarterly corporate profit in history last week. | |
| That's because Apple keeps most of its profits overseas, in places like Ireland and Bermuda, where corporate tax rates are lower than the 35% imposed by the US government. | |
| The company's accountants have decided it is cheaper to raise money via so-called "iBond" sales than to take any of that money back into the US. | |
| No-one in the US - Republicans and Democrats - think this is a good thing, but President Obama's solution is not supported by Republicans, and even some Democrats. | |
| Democratic Senator Barbara Boxer and Republican Rand Paul recently proposed a separate plan for a tax repatriation holiday. That's when the US government agrees to let firms bring money back into the US at a one-time lower tax rate. | |
| While this is the method preferred by corporations, studies have shown that repatriation holidays have ultimately cost the US government money. |