What is income, and how should it be counted? When it comes to capital gains, the White House and the TPC disagree on the answer. The President wants to tax accrued, but unrealized, capital gains at death, ending an enormous tax break. The TPC, in its distributional analysis of Obama’s plan, excludes those accrued gains when it  measures a household’s cash income. As a result, TPC defines a small number of households with modest incomes but large amounts of unrealized gains as middle-income. And figures they’d pay higher taxes under Obama’s tax plan. The White House would include all those unrealized gains in a single year’s income. That would kick those households up the income ladder and allow Obama to claim only upper-income households would pay more tax. TPC’s Len Burman elaborates here. Another look at who is middle class, and at what point should they lose a tax preference? TPC’s Kim Rueben lays out the numbers and the lessons from the President’s quickly-withdrawn plan to end tax-preferred Sec. 529 college savings plans. A large share of taxpayers—even those making more than $200,000 a year—are convinced they are middle-class. Obama’s wanted a simpler system of  subsidies that might help  more low- and middle-income households go to college. But he ditched his plan to curb 529s before ever making  that case. Critics zeroed in on a savings plan that is barely used by families earning less than $100,000 a year. Under Obama’s plan, “small businesses” are defined and get a boost. Businesses with gross receipts of less than $25 million—or 99 percent of all business—could use cash accounting, versus accrual accounting, when filing their taxes. The White House intends to simplify tax filing for businesses and improve compliance. Small businesses would also be able to write off investment spending of up to $1 million when filing taxes. Also benefiting under the Obama proposal: The IRS. The President’s budget gives the IRS about an 18 percent increase compared to the current fiscal year. He increases its allocation to $12.9 billion in fiscal year 2016. That will be an especially tough sell on Capitol Hill. Apple, however, would feel a bite. The President’s budget includes a one-time 14 percent tax on US-based multinational companies’ un-repatriated foreign profits. Companies like Apple, Pfizer and Microsoft could face tax bills in the neighborhood of $10 billion. Future foreign earnings would be subject to a new 19 percent minimum tax. Would the bite be worth it if there were no gas tax hike? The President’s proposed one-time tax on old foreign earnings would raise an estimated $238 billion  that the White House would use to pay for infrastructure improvements. It also says the plan would keep the Federal Highway Trust Fund solvent for six years without resorting to an increase in the gasoline tax. The White House does not say how it would fund the trust fund after that six years is up. On the Hill Today: Treasury and Revenues. Treasury Secretary Jack Lew presents the President’s budget to the House Ways and Means Committee today, and OMB Director Shaun Donovan will present the fiscal plan  to the Senate Budget Committee. The Senate Finance Committee will review IRS Service Operations with IRS Commissioner John Koskinen. Delve into the President’s budget and its revenue plans yourself, right here. Interested in subscribing to The Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here for free access. If you’d like to tell us about a new research paper or have any comments about our new feature, write us at [email protected].