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US budget same 'old pantomime': Gartman

U.S. President Barack Obama's $4-trillion budget proposals, which include a major overhaul of the corporate tax system, are dividing opinion among investors and political experts, who question whether U.S. businesses can stomach reforms.

Obama's 2016 budget plan, revealed Monday, included tax hikes for corporations and wealthy Americans in order to support the country's middle class.

But influential investor Dennis Gartman told CNBC the budget was "dead on arrival" in Congress. "It's an old pantomime game that goes on every time," the founder and author of The Gartman Letter said Tuesday.

Among the more controversial proposals in the budget is a one-time 14 percent tax on an estimated $2 trillion in earnings it believes U.S. firms have amassed overseas and a 19 percent tax on future foreign earnings.

President Barack Obama at the Department of Homeland Security on February 2, 2015
Getty Images
President Barack Obama at the Department of Homeland Security on February 2, 2015

"This transition tax would mean that companies have to pay U.S. tax right now on the $2 trillion they already have overseas, rather than being able to delay paying any U.S. tax indefinitely," a White House official told media on Sunday.

Gartman said the proposed tax on overseas profits was one of the few aspects of the budget that he agreed with.

"I suspect that the president's proposal is really not a bad one, all things being equal," he told CNBC Europe's "Squawk Box" Tuesday. "I'm far to the right of the president, but I understand where proposals have to be made and this is actually not a bad one… So this seems to be an interesting middle ground for what is a very left-wing president."

White House officials said the budget would reduce the deficit by around $1.8 trillion over the next 10 years, through healthcare, tax and immigration reform.

'Ground hog day proposal'

Republican backing for the measures is unlikely, however, with House Speaker John Boehner calling it a "ground hog day proposal" and arguing that the plans were nothing new. Obama challenged Republicans to come up with something better if they didn't like his budget.

As it stands, there is expected to be a protracted battle over the budget this year, as Congress has to approve the budget before it could go into effect.

Political posturing between Democrats and Republicans is a "Washingtonian Kabuki dance," Gartman said, although he added that he believed both sides would reach some sort of consensus and middle ground.

Read MoreWhy this Obama budget may matter

Jared Bernstein, former chief economist and economic advisor to Vice President Joe Biden, told CNBC that the current corporate tax system was "dysfunctional"and needed to change.

"If we want to repair a pretty broken corporate tax code it's going to end up looking something like this…you have to do something about these earnings that are sitting overseas," he told CNBC Monday.

"So I don't think there is a good defence (against reforms) other than getting to work, rolling up your sleeves and sitting down and starting to negotiate."

Bernstein added that several multi-nationals wanted to repatriate in some context and that it made sense to do so in the context that Obama had proposed.

Middle-income Americans

Ahead of a presidential election in 2016, the budget is designed to appeal to middle-income Americans -- a section of U.S. society that the Democrats want to woo ahead of the election.

Taxing the rich in order to pay for programs to help the middle-class is not expected to go down well with the country's wealthiest, however.

American Enterprise Institute scholar and CNBC contributor James Pethokoukis said that not only was the 14 percent rate too high, but the whole proposal was problematic.

"This is a move away from a territorial tax system under which you don't tax earnings earned outside a domestic country.That's how most countries do it so we're really doing something outside mainstream corporate tax policy," he told CNBC.

"Let's not forget that some of the corporate tax burden is borne by workers so when you raise corporate taxes you're also raising taxes on American workers."

Investor Gartman also opposed the notion that wealthy Americans were not paying their fair share of income tax.

"The average American really pays very little in the way of income tax. The top 5 percent of the U.S. pays the abundant majority of income taxes and the top 1 percent pay way more than their fair share," he added.

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld