The Obameter

Increase the capital gains and dividends taxes for higher-income taxpayers


Increase capital gains and dividends taxes from 15 to 20 percent for those making more than $250,000 (couples) or $200,000 (single)


Sources:

Obama campaign interviews with the Tax Policy Center

Subjects: Economy, Taxes

Updates:

Tax on capital gains, dividends goes up to 20 percent for families earning $450,000 or more

Updated: Wednesday, January 2nd, 2013 | By Louis Jacobson, Molly Moorhead

In passing a tax bill to forestall the "fiscal cliff” -- the overnight rise of a wide array of taxes combined with deep spending cuts -- lawmakers agreed to increase capital gains and dividends taxes for higher-income taxpayers.

During the 2008 presidential campaign, Barack Obama promised to increase capital gains and dividends taxes from 15 percent to 20 percent for those making more than $250,000 (for couples) or $200,000 (for individuals).

The fiscal cliff bill, passed by the House and Senate on Jan. 1, 2013, did raise taxes to 20 percent, but only for taxpayers earning $400,000 (for individuals) or $450,000 (for couples). Taxing capital gains at 20 percent returns taxation to the level under President Bill Clinton. Under Clinton, dividends were taxed as ordinary income, meaning rates as high as 39.6 percent.

Obama's most recent budget proposed returning dividend taxation to the rates for ordinary income, making the 20 percent rate a concession to Republicans. However, we're only rating Obama on his promise from the campaign, and during the campaign, he only promised a 20 percent rate for dividends.

Overall, then, the fiscal cliff bill executed most of what Obama had promised on capital gains and dividends, but it did so only above a higher income threshold than Obama had campaign on. We rate this a Compromise.

Sources:

Text of H.R. 8 ("fiscal cliff" bill)

House Republican Conference, summary of H.R. 8 ("fiscal cliff” bill), Jan. 1, 2013

Washington Post, "Wonkbook: Everything you need to know about the fiscal cliff deal," Jan. 1, 2013

Washington Post, "Five facts about the Biden-McConnell deal," Dec. 31, 2012

Forbes, "Tax Increases Looming in 2013: Who Pays, How Much and Will They Stick?," Nov. 10, 2012

No increase in capital gains taxes for high earners

Updated: Tuesday, December 21st, 2010 | By Angie Drobnic Holan

With 2010 coming to a close, President Obama brokered a major deal on taxes, agreeing to continue the current tax rates for high earners. He said repeatedly during the campaign that he intended to let them expire. The tax rates, passed during President George W. Bush's administration, were set to go up in 2011.

That would also have meant higher taxes on investment income such as capital gains and dividends. During the campaign, Obama said he wanted higher taxes for these types of income. The tax compromise Obama signed into law continued the current rates on capital gains for another two years.

We should note that although he gave in on his campaign promise, Obama got some other things in return. The current tax rates were extended for couples who make less than the $250,000 cut-off, and some tax cuts that were part of the 2009 economic stimulus law were also continued. Additionally, Obama won another year of unemployment benefits for workers who qualified, and he won a one-year reduction of Social Security taxes, putting 2 percent of pay back into workers' paychecks.

Obama said he still opposed keeping the same tax rates for the wealthy, even though he agreed to the extension.

"I'm as opposed to the high-end tax cuts today as I've been for years," Obama said in a press conference on Dec. 7, 2010. "In the long run, we simply can't afford them. And when they expire in two years, I will fight to end them, just as I suspect the Republican Party may fight to end the middle-class tax cuts that I've championed and that they've opposed."

There's a case to be made that Obama is not completely backing off his campaign promises. He agreed to only a two-year extension of the rates, not making them permanent.

However, this promise was part of a major campaign theme of Obama's to increase taxes on high earners. The tax rates are now scheduled to expire at the end of 2012, just as Obama completes his first term. At that time, we'll revisit this promise to see where it stands. For now we rate it Promise Broken.

Sources:

The White House, Fact Sheet on the Framework Agreement on Middle Class Tax Cuts and Unemployment Insurance, Dec. 7, 2010

Thomas, HR 4583

The White House, Press Conference by the President, Dec. 7, 2010

U.S. Senate Finance Committee, S.A.4753: The Reid-McConnell Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010

Obama budget asks for capital gains and dividends tax increases

Updated: Thursday, February 26th, 2009 | By Angie Drobnic Holan

President Obama's Office of Management and Budget unveiled a broad outline of its plans for the 2010 budget on Feb. 26, 2009, highlighting investments in health, energy and education.

To pay for some of those items, Obama proposed allowing the Bush tax cuts to expire as scheduled on people who make more than $200,000 and couples who make more than $250,000. For those same income levels, he also plans to raise capital gains and dividends taxes to 20 percent from their current level of 15 percent.

It's not clear from the budget documents released whether the tax increases would go into effect in 2010 or 2011. We'll be looking for more detail in the weeks ahead.

But tax increases for capital gains are clearly part of Obama's budget proposal, which still must be approved by Congress. And Republicans are likely to oppose any effort to let any of the Bush tax cuts expire. So for now, we rate this promise In the Works.

Sources:

Office of Budget and Management, Budget Documents for Fiscal Year 2010 , accessed Feb. 26, 2009

Office of Budget and Management, Summary Tables , Table S-6, page 123, accessed Feb. 26, 2009

CSPAN, Peter Orszag briefs reporters on the 2010 budget plan , accessed Feb. 26, 2009

Advertisement
How to contact us:

We want to hear your suggestions and comments.

For tips or comments on our Obameter and our GOP-Pledge-O-Meter promise databases, please e-mail the Obameter. If you are commenting on a specific promise, please include the wording of the promise.

For comments about our Truth-O-Meter or Flip-O-Meter items, please e-mail the Truth-O-Meter. We’re especially interested in seeing any chain e-mails you receive that you would like us to check out. If you send us a comment, we'll assume you don't mind us publishing it unless you tell us otherwise.

Browse The Truth-O-MeterTM:
Subscribe: