Sunday, November 23rd, 2014

The Obameter

Repeal the Bush tax cuts for higher incomes


Repeal the Bush tax cuts for those making more than $250,000 (couples) or $200,000 (single)


Updates

Tax rates rise for incomes over $450,000

President Barack Obama campaigned in 2008 on a promise to raise taxes on the wealthy, saying families making more than $250,000 a year (and individuals making more than $200,000) should pay what they paid under President Bill Clinton: a top rate of 39.6 percent. Tax cuts passed under President George W. Bush cut that rate to 35 percent.

Battling with Republicans in Congress in 2010, Obama relented and agreed to a two-year extension of everyone's rates. But even then, he vowed that he wouldn't let the low rates stand for the wealthiest Americans indefinitely.

In late 2012, with the fiscal cliff crisis pressuring both sides to act, Obama came out of the ordeal with a compromise. A law passed just before 11 p.m. on Jan. 1, 2013, permanently raised rates on families making more than $450,000 and $400,000 for individuals. It's a higher income threshold than Obama sought, but it accomplishes his philosophical goal of asking the wealthy to pay more. We rate this a Compromise.

Sources:

Text of H.R. 8 (fiscal cliff bill), Jan. 1, 2013

House Republican Conference, summary of H.R. 8, Jan. 1, 2013

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

Obama says he won't agree to extending tax cuts for the wealthy

As far back as 2007, candidate Barack Obama said it was time to raise income taxes on high earners, whom he classified as couples making at least $250,000 and single people making $200,000.

Because of the way tax laws were passed during the George W. Bush administration, taxes were set to go up for all income levels back in 2010. President Obama, however, agreed to a compromise with Republicans in Congress, and they passed legislation to let the income tax rates continue unchanged for another two years.

At that time, we rated Obama's campaign promise on tax increases for high earners as Promise Broken.

The compromise is now set to expire at the end of 2012, and Obama has said repeatedly that he will not agree to another extension. He said he agreed to the 2010 extension only because the economic recovery wasn't robust enough at the time.

In a news conference shortly after his 2012 re-election, Obama said he was willing to negotiate on taxes, but only up to a point.  He said he would not "extend further a tax cut for folks who don't need it, which would cost close to a trillion dollars. And it's very difficult to see how you make up that trillion dollars -- if we're serious about deficit reduction -- just by closing loopholes and deductions. The math tends not to work.”

Obama also said the public supported him on raising income tax rates on high earners: " I think every voter out there understood that that was an important debate, and the majority of voters agreed with me. By the way, more voters agreed with me on this issue than voted for me.”

We can't know for certain how the final negotiations will work out on taxes. But Obama has said he will not approve the same tax rates for high earners. Because of the way the law is set up, he does not need legislation to make this happen. So we move the rating from Promise Broken back to In the Works.

Sources:

The White House, Remarks by the President at a press conference, Nov. 14, 2012

President Obama signs off on continuing tax cuts for high earners

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. 

In giving 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 an additional year of unemployment benefits for workers who qualified, and he won a one-year reduction of Social Security taxes that would put 2 percent of pay back into workers' paychecks.

Obama said he still opposed the tax cuts 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 was a major campaign promise of Obama's that he repeated again and again. The tax cuts for high earners 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

Tax deal signals Bush tax cuts will continue for those with higher incomes

President Barack Obama sacrificed one of his top campaign promises -- raising taxes on high earners -- in a compromise with Republicans to extend current tax rates for everyone for another two years.

Obama also got a major extension of unemployment insurance, an expansion of college tax credits that were part of the 2009 stimulus, a measure to allow businesses to expense all of their investments in 2011 and a payroll tax reduction in 2011 that will increase take-home pay for workers.

Still, the deal means that upper-income people will pay the same lower rates for at least two more years.

Obama said he still opposes continuing the current tax rates for higher earners, but that he has been unable to persuade a majority of the Senate to go along with his position. He said he will continue to argue against making the tax rates permanent.

Whether the deal makes it through Congress remains to be seen, and staff members are still working out details of the proposed legislation. But the announcement of a framework indicates clearly that Obama is not holding out for his promise. For now, we're moving this promise to Stalled.

Sources:

The White House, Statement by the President on Tax Cuts and Unemployment Benefits, Dec. 6, 2010

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

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

Obama budget forecasts tax increases for higher incomes

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 income levels, his plan increases rates on the two highest income tax brackets, raising the 33 percent bracket to 36 percent and the 35 percent bracket to 39.6 percent. Under Obama's plan, those tax cuts expire, as scheduled, in 2011.

When asked whether those tax increases would hinder economic growth during a recession, spokesman Robert Gibbs reiterated that taxes for the wealthy would not increase until 2011, almost two years from this writing.

President Obama "doesn't believe that the changes that are being made would hinder economic growth," Gibbs added. "I would point out that many of these rates for families that make above $250,000 a year revert to the rates that we saw throughout the '90s, when this economy enjoyed fairly robust economic growth."

To be clear, the proposal is now simply an outline of Obama's budget, and the budget still has to be approved by Congress, where Republicans are likely to oppose any effort to let 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

C-SPAN, Peter Orszag briefs reporters on the 2010 budget plan , Feb. 26, 2009

C-SPAN, White House Briefing with Press Secretary Robert Gibbs , Feb. 26, 2009