Mike Pence, the Republican vice presidential nominee, says Americans are paying higher taxes under President Barack Obama.
"We’ve suffered through an administration that’s been raising taxes, raising regulations, growing government, borrowing and spending, and trying to bail our way back to a growing economy," Pence, the Indiana governor, said during an Aug. 4 rally in Norfolk.
That’s a long list of charges, and we want to look at the first one - that the White House has been "raising taxes."
Marc Lotter, Pence’s campaign spokesman, backed the governor’s statement by sending us a list of tax hikes enacted under Obama.
The list, compiled by the conservative Americans for Tax Reform, contains a levy that Obama imposed on tobacco products as well as a series of taxes that were raised to fund the president’s health care reforms.
We also contacted Roberton Williams, a fellow at the nonpartisan Urban-Brookings Tax Policy Center. He told us that for the most part, there haven’t been many major tax changes during Obama’s term. That said, he pointed out two changes to tax laws under Obama.
The first, as we’ve mentioned, were levies to pay for health care reforms in the Affordable Care Act, also known as Obamacare. Among them is the individual mandate penalty for not having health insurance; a 10 percent tax on tanning services; and a 3.8 percent surtax on investment income for high earners.
Williams also cited the 2012 American Taxpayer Relief Act, which extended most of a series of income tax cuts enacted under President George W. Bush.
The Bush-era tax cuts had been set to expire in 2012. Obama signed a law that extended the cuts for all taxpayers except individuals making $400,000 a year or more and married filers earning $450,000 or more. Williams said only about 1 percent of taxpayers fit into those high-income categories.
"It was a really small share of people that got hit with higher taxes," he told us. "It was really a tax cut for everybody else. … If Congress had done nothing, everybody’s taxes would have gone up."
Has the average federal tax burden on households increased under Obama? For that answer, we turned to a report issued in June by the nonpartisan Congressional Budget Office. It computed an average rate by factoring in individual and corporate taxes as well as payroll levies and excise taxes.
The CBO figures are available only through 2013, but you still can get an idea of the trajectory of tax rates through most of Obama’s tenure. They show that in 2009, when Obama took office, the average household federal tax rate was 17.3 percent and in 2013, the rate was 20.1 percent - a nearly 3 percentage point increase.
But Williams noted that 2009 is a low point to begin the comparison, in part because Obama enacted a federal tax cut that year as part of a stimulus package to combat the Great Recession.
The average tax burden was 18.1 percent in 2008, the last year of the Bush administration. But that’s also a questionable year to start a comparison, Williams said, because the rate was lowered artificially by temporary tax cuts Bush approved to jump-start the economy.
So we went back to 2007, when the average federal tax rate was 19.9 percent, or just under where it was in 2013. If you go back to 2006, the overall tax rate was 20.4, or slightly above where it was in 2013.
The CBO figures show that in 2013, the average rate paid by people in the bottom 80 percent of taxpayers was lower than it was for those in the same income level in 2006 or 2007. The average rate for those in the top 20 percent, however, rose during that time.
The Tax Policy Center last month released its own tallies of the average federal tax rate. The center calculates its figures differently than the CBO. For example, the center counts estate taxes in its tax rate figures, while the budget office doesn’t. The CBO includes the value of Medicare and Medicaid benefits in its income computations, while the Tax Policy Center doesn’t.
One drawback to the Tax Policy Center’s figures is that they go back only to 2011. That year, the average federal tax rate came to 16.8 percent. By 2016, the average federal tax rate was 19.8 percent. That’s a 3 percentage point jump, but there’s a couple of things to keep in mind:
Some of the temporary tax measures meant to stimulate the economy expired during that time. Chief among them is a temporary drop in the payroll tax from 6.2 percent to 4.2 percent, an Obama-era measure that ended in 2012.
Beyond policy decisions, changes in the economy also affect the average tax rate. The average tax rate has gone up as incomes have risen in the past five years and people have moved into higher tax brackets, Williams said.
Pence said that the Obama administration has been "raising taxes."
Obama certainly raised some levies, including income taxes on people earning more than $400,000 a year. Although most folks don’t fall into that category, Obama’s health care reforms come with a series of new taxes that do affect lower earners.
But Pence’s statement leaves a lot out of the story. Obama also has extended permanently tax cuts that were set to expire. He also enacted a series of temporary tax cuts aimed at jump-starting the economy.
Figures from the CBO and the Tax Policy Center show that average tax rates have risen under Obama, but part of the reason is that Obama also allowed some special tax cuts enacted during the recession to expire. If you go back to CBO figures before the recession and compare them with figures after it ended, the average household tax rate was about the same in 2006 as it was in 2013.
So on balance, we rate Pence’s claim Half True.