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Angie Drobnic Holan
By Angie Drobnic Holan August 6, 2010

Sarah Palin said Democrats have no plan to extend some of the Bush tax cuts

Sarah Palin disagreed with the Pants on Fire rating we gave her for the statement, "Democrats are poised now to cause this largest tax increase in U.S. history." So she let us have it, via a note on her Facebook page.

"Yesterday, fact-checked my statement about the coming $3.8 trillion Obama tax hike – the largest tax increase in history. They did such a bad job of it, however, that I feel compelled to fact-check the fact-checkers," she began.

Palin, the former governor of Alaska, made several points in her rebuttal, the primary one being that the Democrats haven't put forward a plan stating how they intend to address the expiring Bush tax cuts. Palin's comments on Fox News Sunday gave the impression that Democrats want to see them all expire.

In fact, Democrats have repeatedly stated they only intend to let lower tax rates expire for individuals making more than $200,000 or couples making more than $250,000. And that's nowhere near the largest tax increase in history, as we noted in our rating.

But Palin doesn't see it that way.

"Unfortunately for PolitiFact, no such proposal exists. ... Plan? What plan? There is no plan. All we have is smoke and mirrors based on an old Obama campaign pledge that if elected, he would exempt families making less than $250,000 a year from 'any form of tax increases.' ...

"To prevent PolitiFact from making similar mistakes in future, it would be helpful if the White House and the Democratic Congressional leadership finally mustered the courage to table their plans to let the 2001 and 2003 tax cuts expire. Mr. President, publish your proposals, and we'll duke it out. You can argue in favor of a multi-trillion dollar tax hike in an age of economic uncertainty and mass unemployment, and we'll argue for fiscal sanity combined with serious spending cuts. I for one look forward to such a debate."

We're not trying to antagonize Gov. Palin, but President Barack Obama has indeed published his proposals in some detail -- at least twice, in the annual budget documents that the White House releases.

The president's 2011 budget, for example, says on page 39, "Allow the Bush Tax Cuts for Households Earning More Than $250,000 to Expire."

"In the last Administration, those at the very top enjoyed large tax breaks and income gains while almost everyone else struggled and real income for the middle class declined. Our Nation cannot afford to continue these tax cuts, which is why the President supports allowing those tax cuts that affect families earning more than $250,000 a year to expire and committing these resources to reducing the deficit instead. This step will have no effect on the 98 percent of all households who make less than $250,000."

Lest you think that's too general and vague, there are detailed estimates in the budget summary tables, starting on page 164, for provisions such as, "Upper-income tax provisions devoted to deficit reduction: Expand the 28-percent rate and reinstate the 36-percent and 39.6-percent rates for those taxpayers with income over $250,000 (married) and $200,000 (single) ... Reinstate the personal exemption phaseout and limitation on itemized deductions for those taxpayers with income over $250,000 (married) and $200,000 (single) ... Impose 20-percent tax rate on capital gains and dividends for those taxpayers with income over $250,000 (married) and $200,000 (single)."

In Congress, key Democratic leaders have indicated they are using the plan outlined in the federal budget as the framework for their legislation. The Senate Finance Committee held a hearing on dealing with the expiring tax cuts. Sen. Max Baucus, D-Mont., the committee's chair, said in a July 14, 2010, statement, "I support extending the middle-class tax cuts permanently, as soon as possible, so working families can keep more of their hard-earned money."

The committee released a budget analysis from the Joint Committee on Taxation, "Estimated Effects on Economic Growth and Distribution." That document showed estimates for the cost to make the Bush tax cuts permanent for those who are now taxed at rates of 10 percent, 25 percent, 28 percent, "and part of the 33%." That 33 percent tax bracket, by the way, includes taxpayers who make slightly below and slightly above the benchmarks Obama described.

And then there's also the U.S. Treasury Department's "General Explanations of the Administration's Fiscal Year 2011 Revenue Proposals," known by policy wonks as "the green book." It outlines in even more detail how the Obama administration plans to increase taxes for high-earners and keep the current rates for everyone else.

"It is very much an official statement of policy. It's what they propose to do," said Roberton Williams, a senior fellow with the nonpartisan Tax Policy Center. "Obviously, Congress will do or won't do what it will. But I have heard no one on the Hill saying we should let everything expire."

News coverage from other publications from The Wall Street Journal to our fellow fact-checkers at have also noted the Democratic proposals and ideas on these issues.

"The Democrats' plan seems to me to be quite explicit: keep the tax cuts for those under $250,000 and let those for the rich expire," said Norman Ornstein, resident scholar at the conservative American Enterprise Institute, and a longtime watcher of Congress. "Does that mean never, ever taxing the under-$250 (thousand) populace? No. But it is a straightforward policy plan."

Palin does make a good point that there is not pending legislation to make some parts of the Bush tax cuts permanent. Certainly, lots of unexpected and surprising things can happen when Congress actually begins to take up legislation. It's possible that Congress could become entirely gridlocked. If no legislation passes, the Bush tax cuts will indeed expire for all incomes.

And, she's also right that on the campaign trail Obama promised not to raise "any" taxes on a family making less than $250,000. We rated that Promise Broken after Obama signed laws increasing taxes on cigarettes and indoor tanning. There is also the controversial tax penalty in the new health care law that will tax those who don't have insurance, starting in 2014. Yet Obama also promised to extend the Bush tax cuts for lower incomes and let the Bush tax cuts expire for higher incomes. Those two promises are both rated In the Works. (See all of Obama's tax promises.)

But Palin was distorting the facts when she said, "All we have is smoke and mirrors based on an old Obama campaign pledge." There is much more than that in the public record from both President Obama and Democrats in Congress. Frankly, we anticipated criticism when we published our  report on Palin, but we were not anticipating the criticism that the Democrats are hiding their intentions on tax rates for people of lower incomes, or the claim that Obama has not published fairly detailed outlines of what he intends for the tax code. There is a plan, and you can see it on pages 39 and 164-165 of the budget. We rate Palin's statement False.

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Our Sources

The White House, The President's Budget for the Fiscal Year 2011, accessed Aug. 5, 2010

Department of the Treasury, General Explanations of the Administration's Fiscal Year 2011 Revenue Proposals, February 2010

Senate Finance Committee, The Future of Individual Tax Rates: Effects on Economic Growth and Distribution, July 14, 2010

Senate Finance Committee, JCT Estimated Budget Effects of Adjustments for Certain Current Policies As Outlined in the Statutory Pay-As-You-Go Act of 2010, July 22, 2010

The Tax Policy Center, Tax Proposals in the 2011 Budget, accessed Aug. 5, 2010

Interview with Roberton Williams of the Tax Policy Center, Aug. 5, 2010

Interview with Norman Ornstein of the American Enterprise Institute, Aug. 5, 2010

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Sarah Palin said Democrats have no plan to extend some of the Bush tax cuts

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