Topics: Barack Obama

Report: Obama tax plan hits middle class in several ways

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Politics,Beltway Confidential,Sean Higgins,Taxes,Barack Obama

 

Throughout the election, President Obama insisted that while he wanted taxes to go up, he would only raised them on the rich. This  was variously described as the “1 percent” or families making less than $250,000 a year. But Obama always insisted that those earning less would not be touched. This has been a consistent theme for Obama going back to the 2008 election.

When Republican candidate Mitt Romney made that claim that Obama would raise taxes on the middle (to the tune of $4,000 annually) Politifact rated this claim as “pants on fire” false.

Well, that was then, this is now. First, Obama allowed his earlier payroll tax cut to expire, causing taxes to go up on every working American. And now, as Politico reports, Obama’s recently-released budget finds new ways to sock it to the middle class:

President Barack Obama rarely misses a chance to call on upper-income Americans to pay more taxes.

But his annual budget is doing more to target middle-class taxpayers than any of his previous proposals, calling for caps on deductions, changes in the way some tax benefits are calculated and a big hike in cigarette taxes — all proposals that would make middle-class Americans pay more.

Obama’s budget is still being picked apart on Capitol Hill, but his openness to an even wider range of tax increases will frame the coming fiscal debates.

“It’s a new paradigm,” said Bob Williams, a senior fellow at the nonpartisan Tax Policy Center. “This is the first budget he’s presented that has proposed raising taxes on people below the $250,000 thresholds he’s maintained over the past five years.”

Here’s how Obama’s budget does that:

Three proposals in the budget would hit the middle class in ways the president has not previously suggested.

The president’s proposal to change the way inflation is calculated means that benefits like the earned income tax credit would grow at a slower pace. His proposed deduction cap would hit people with taxable income as low as $183,000. And, policy experts say the budget plan to raise taxes on cigarettes is regressive.

Granted, these are not income tax  rate increases, which is what most people think of regarding federal tax hikes. The administration’s goal here is to increase revenue without it being too obvious for taxpayers. In a sense,  it is a tacit admission that all of the class warfare rhetoric about getting the rich to “pay their fare share” was just that. Even at confiscatory rates, you cannot tax the rich enough to pay for the kind of government the White House wants. Which means everyone else is going to pay more.

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