Obama seeks cigarette-tax hike for preschool expansion

• Tobacco taxes last increased in 2009
• Proposed budget also would raise airline passenger fees
• GOP opposes raising income taxes on the wealthy

WASHINGTON — President Obama wants to increase cigarette taxes by 94 cents a pack to finance an expansion of preschool education for moderate- to low-income families.

Tobacco taxes were last increased in 2009, to $1.01 per pack of cigarettes and equivalent amounts for cigars and pipe tobacco. That increase was tied to an expansion of the Children's Health Insurance Program.

Obama unveiled the plan Wednesday along with the rest of his proposed $3.8 trillion budget for fiscal 2014.

He said his administration "will work with states to make high-quality preschool available to every child in America."

"And we're going to pay for it by raising taxes on tobacco products that harm our young people," he said. "It's the right thing to do.''

The administration also wants to impose:

— A $100 surcharge on commercial and general aviation flights to help pay for air traffic control services.

— A higher airline passenger fee to help offset the cost of airport security screenings conducted by the Transportation Security Administration.

— A $10 increase in the cost of a duck stamp to fund acquisition of migratory bird sanctuaries.

— Higher prescription drug co-pays for participants in the military's TRICARE health system to encourage the use of less expensive mail order supplies.

— A new fee for federal inspection of oil and gas leases on public lands.

— Higher Forest Service fees for livestock permits to graze on public lands.

These excise taxes and user fees aren't among the top big-ticket items in Obama's proposed budget, but they also aren't as controversial.

At least not yet.

Congressional Republicans have previously rejected several high-profile income tax increases proposed by Obama.

The Senate already has voted down the "Buffett Rule'' which would impose a 30% income tax on earnings above $1 million.

Obama also wants to limit the federal income tax deduction claimed by high-income families. And his budget proposes limiting to $3 million the amount of money high-income Americans can put into individual retirement accounts and other tax-sheltered retirement options.

Overall, the White House is proposing $580 billion in increased taxes for high-income households.

Republican leaders quickly signaled their opposition.

"The president got his tax hikes in January,'' House Speaker John Boehner, R-Ohio, told reporters Wednesday.

The administration does agree with congressional Republicans that changing the nation's corporate tax code should be revenue-neutral, although there's wide disagreement on the details. One of the most contentious disagreements involves the administration's proposal to end tax breaks for fossil fuels.

Congressional Republicans prefer to reform the entire tax code — including personal income taxes — on a revenue-neutral basis.

"If the president is willing to do tax reform for Wall Street, then he should be willing to do tax reform for Main Street,'' Republican Rep. Dave Camp, chairman of the tax-policy-writing House Ways and Means Committee, said in a statement. "Instead, the president chose to raise taxes again to fuel even more Washington spending.''

But the administration insists on reducing deficits in a "balanced" way, by combining spending cuts with new tax revenue.

Obama's corporate tax proposals includes measures aimed at spurring economic growth.

The White House wants to offer $2 billion for a new "manufacturing communities tax credit'' between 2014 and 2016 through targeting communities that have suffered significant job losses through the closing of a manufacturing plant or military base.

And the administration would replace the current federal empowerment zone program with new a "promise zones'' program awarded on a competitive basis to five urban or rural areas every year for four years.

New York's Liberty Zone program created for lower Manhattan following the 2001 terrorist attacks would be restructured to focus on transportation infrastructure damaged by Hurricane Sandy.

Other proposed corporate tax changes include revising the low-income housing tax credit to make it more attractive to investors in Real Estate Investment Trusts