Jeb Bush: Obama caused 'massive' tax increase on middle class

After six years with a Democrat in the White House, middle-class Americans face a bigger tax bill than they did before, former Florida Gov. Jeb Bush said in a speech launching his 2016 presidential campaign.

"The party now in the White House is planning a no-suspense primary, for a no-change election," he said in his June 15 remarks in Miami. "They are responsible for the slowest economic recovery ever, the biggest debt increases ever, a massive tax increase on the middle class, the relentless buildup of the regulatory state, and the swift, mindless drawdown of a military that was generations in the making."

The claim that President Barack Obama and the Democrats have significantly raised taxes is bound to come up frequently in the 2016 election, so we decided to take a whack at it now.

When we asked Bush’s campaign specifically what tax increases he was talking about, they pointed to the Affordable Care Act.

It's a claim we heard before, and one that is flawed. Bush is correct that the Affordable Care Act raises taxes. But pinpointing the middle class as the recipient of "a massive tax increase" is misleading. It's the upper-class that is feeling the brunt of the impact. And health care subsidies, in some cases, may be offsetting tax increases.

A note: The term "middle class" is hard to define, but for the purposes of this article, we are roughly looking at a generous threshold that comprises households making up to $250,000 a year.

Health care taxes

Let's get the big number out of the way. The health care law is expected bring in more than $1 trillion in new taxes over 10 years, according to a 2013 Joint Committee on Taxation report. The revenue is coming in through 21 new or increased taxes. 

Of those 21, 12 could affect households making less than $250,000 a year, according to the Tax Foundation.

We’ve looked at this list of 12 before. Some primarily target the middle class, others could hit certain people within the middle class, and others are debatable. Bush’s campaign specifically sent us a list of the conservative Americans for Tax Reform’s "top-five" Obamacare middle class tax increases. The five Bush cited are all included in our larger list of 12.

A couple of the taxes are obvious, direct taxes on individuals -- such as a tax on indoor tanning services and the penalty for not complying with the individual mandate to have insurance. These only apply to select individuals.

Many more are applied to companies, such as the excise tax on certain medical device manufacturers or the so-called "Cadillac tax" on high-cost health insurance plans. Many economists anticipate that companies will pass these taxes along to consumers in the form of higher premiums or more expensive products.

In any case, none of these taxes affects every single member of the middle class. It’s possible there are individuals who will incur most of these additional costs, while others face a couple.

Whether or not these taxes are -- as Bush put it -- "massive" increases on the middle class depends on individual circumstances, said Kyle Pomerleau, a Tax Foundation economist.

"I would say that the tax increase in total was large and that some of it definitely hits the middle class in some way," he said. "The degree to which individuals are impacted depends on their situation."

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For some perspective, total federal revenues are estimated to be about $40 trillion over 10 years. Tax revenue from the health care law, about $1 trillion, accounts for about 2.5 percent. Looking at the revenue just from the 12 that might affect middle-class taxpayers (as well as those in other income brackets), it’s about 1.25 percent of overall tax revenue.  

"Almost certainly, yes, taxes have gone up for lower- and middle-income people," said Roberton Williams, a fellow with the Urban-Brookings Tax Policy Center. "But have they gone up a lot? Probably not."

"If I were pulling words out of the air, ‘massive’ is not the word I would pull," Williams said.

Many of these taxes tend to affect more people at the upper-end of middle class, because people with lower incomes are less likely to opt for the taxed services -- such as optional medical procedures or flexible savings accounts, Williams said

Conversesly, some middle-income households might even see tax benefits of the Affordable Care Act -- namely, insurance premium subsidies -- outweigh any tax increases, he added.

Premium tax credits will save taxpayers about $19 billion in 2015, while the five taxes cited by Bush and the Americans for Tax Reform list are worth much less, said Laurel Lucia, health care program manager at University of California Berkeley’s Center for Labor Research and Education. In total, those five taxes are worth about $11 billion per year, she said, citing congressional research.

"I certainly agree Obamacare has increased taxes on the middle class," said University of California Los Angeles law professor Eric Zold. "But it is not clear that the middle class as a group are not better off by the combination of Obamacare costs and benefits."

Other tax policies

It's worth noting, of course, that the health care law isn’t the only policy that has impacted taxes in the last few years.

Some changes have had a positive impact on the wallets of the middle class. Some changes have had a negative impact. 

Soon after taking office, Obama signed a bill raising the sales tax on cigarettes and other tobacco products to support the State Children's Health Insurance Program. Less than 20 percent of the population smokes, though polling shows that the percentage of the population that smokes decreases as income increases.

In terms of tax cuts, Obama extended the Bush-era tax cuts for people making below $250,000, as well as an array of beneficial measures for small businesses. Additionally, he signed off on several stimulus tax measures to assist with the 2008 economic recovery -- such as a temporarily reduced payroll tax and an increased earned income tax credit. Some are still around, but others have phased out.

It's fair to say that under Obama, for the most part, taxes have decreased for lower-income people and increased for upper-income people, Williams said. And it's a mixed bag for the middle class.

Our ruling

Bush said, "The party in the White House" is responsible for "a massive tax increase on the middle class."

Bush pointed to the Affordable Care Act, which certainly does involve tax increases -- some of which affect the middle class, though not exclusively. It’s not accurate to call the tax increases for the middle class "massive." Some individuals might see their tax bill go up, while others see the tax benefits of the health care law outweigh the costs, and some might experience a change so small they don’t notice it.

Looking only at the health care law also ignores other pieces of tax policy that have affected the bottom line for the middle class. 

We rate this claim Mostly False.