How Will Wealthy Fare Under Obama Budget?

Humberto Sanchez, from Congress Daily, reads over a copy of President Obama's first budget for fiscal 2010 at the U.S .General Printing Office in Washington, Thursday, Feb. 26, 2009. (AP Photo/Pablo Martinez Monsivais)

Mike O'Toole is what President Obama calls "wealthy." The long-time owner of a gondola business makes more than $250,000 a year. He will pay thousands more in taxes if the president's budget passes, CBS News correspondent Ben Tracy reports.

"I still got to do what I got to do. If I have got to fight a little harder somewhere, than I have got to fight a little harder somewhere," O'Toole said.

After an eight-year break under George W. Bush, high-income earners may now pay for it. The president's budget boosts tax rates for the wealthiest Americans from 35 percent to 39.6 percent.

And they face yet another tax increase, because they wouldn't be allowed to deduct as much of their home's mortgage interest.

Currently, for every $1,000 paid in mortgage interest, high-income taxpayers can deduct $350 off their taxes. Under Mr. Obama's budget, that would drop to a $280 deduction.

The president would also cut the deduction those in the top tax-brackets get for giving to charity.

If they donate $10,000, they can now deduct $3,500 off their taxes. Under Mr. Obama's plan, that would drop to $2,800. That's a $700 tax increase.

At the Midnight Mission shelter in Los Angeles, due to increased need, 15,000 more meals are being served every month. Donations were already down $200,000 last year. They're worried higher taxes will make things worse.

So with all the new money flowing into Washington, what does the president plan to spend it on?

A big chunk is designated for health care but other plans include $1 billion for FDA food-safety inspections and a nearly $4 billion boost for the EPA's clean-water program.

Mike O'Toole is hoping his tax increase will be offset by Mr. Obama's tax breaks for small business.

"Until I see this whole entire package, it is a lot of rhetoric, and he is darn good at that," O'Toole said.

Like many higher income earners, he will pay more if he has to, but he doesn't want to be taken for a ride.