Pethokoukis

Obama’s $40,000 middle-class tax hike

I recently wrote about a new paper from AEI’s Aspen Gorry and Matt Jensen that looks at the real annual cost of servicing the debt for households at various income levels  — including a potentially higher tax burden — under the most recent Obama budget:

As the table below illustrates, a household making between $100,000 and $200,000 a year could find its tax liability higher by roughly $2,400 every year. Over ten years, that works out to $24,000.

And when you add in the debt already accrued the past four years under President Obama, that’s another $1,600 a year. So now we are now talking about $4,000 a year, $40,000 over ten years.

My friends at the Center for American Progress take issue with this study. A recent blog post, “How Romney Uses Bad Math To Falsely Claim Obama Will Raise Middle Class Taxes,” made two main points (although neither point actually disputes the study’s math):

1. Although the new Obama budget would indeed create a $2,400 annual tax liability, that is less than the $3,700 annual tax liability created under current policy going forward. So with the Obama plan, taxpayers are $1,300 to the better than they would be otherwise.

2. Obama shouldn’t bear responsibility for most of the debt accrued during the past four years since “tax cuts, wars, and a recession” weren’t Obama’s policies.

My response:

1. If a car is headed toward a cliff at 80 miles per hour, is slowing down to 60 really a great improvement? Obama’s budget is still greatly adding to America’s future tax burden from current levels and leaving the budget on an unsustainable pace as this White House chart shows:

The fact that the burden is less than one in some theoretical baseline should be of little comfort.

2. CAP also gives Obama a pass on the debt accumulated during his term, as if he were powerless to alter that fiscal reality through spending cut or policies that would have boosted growth and thus tax revenue. A good chunk of this blog has been devoted toward disputing that notion.

 

8 thoughts on “Obama’s $40,000 middle-class tax hike

  1. “2. Obama shouldn’t bear responsibility for most of the debt accrued during the past four years since “tax cuts, wars, and a recession” weren’t Obama’s policies.”

    That’s damn right, Jim. And all of the facile rubbish you post will never erase the stain of the damage the GOP and its stooges caused by looting the American people.

  2. 2. Obama shouldn’t bear responsibility for most of the debt accrued during the past four years since “tax cuts, wars, and a recession” weren’t Obama’s policies.

    This is really quite a stupid statement and I am actually surprised the CAP made it.

    As demonstrated by this study, tax rates have little effect on overall government revenues. There is a short-term jump/decline when the hike/cut is first passed, but then revenues return to their normal place (about 18% of GDP). So, to say that tax cuts are responsible for the debt is quite stupid. Spending is responsible, not revenues.

    Furthermore, I know of no president who would make “recession” a policy point. George Bush didn’t do it. Bill Clinton didn’t do it. Politicians may pass policies that are harmful economically (CRA, Fannie Mae, Freddie Mac, DOMA, ARA, Obamacare, and tariffs all come readily to mind), but their goal is not to cause a recession. The government does deserve blame for every penny of debt accumulated because of the recession because it was the action they chose to take.

    Finally, this is the second main reason why I cannot vote for President Obama (I voted for him his first term). Aside from the serious moral issues I have with his style of management and solutions to problems, the man refuses to take responsibility for his actions. It is always someone else’s fault: the Republicans, Bankers, Wall Street, the 1%, China, George Bush, Congress, the Tea Party, Mexico, etc. If he was any sort of leader, he would take responsibility rather than passing the buck. As Harry Truman said “the buck stops here.” It’s about time for the President to start acting like a president and take responsibility. The President clearly thinks he has the ability to shift the economy. What he should do is this: he should come on tv, look at the camera and say “My fellow Americans: I realize that, despite gains over the past 4 years, things are still tough. I apologize. I did not do everything I could have done to rectify the economic situation. If you are willing to give me another 4 years, I will redouble my efforts and get us going again.” I think, if he would do that, he could win back much of the voters who flocked to Romney after the debate. I know a lot of people (including his supporters) who are pissed because Obama takes all the credit but none of the responsibility. That is what a leader should do: take responsibility.

    So, the tl;dr version: CAP made stupid comments.

    • “2. Obama shouldn’t bear responsibility for most of the debt accrued during the past four years since “tax cuts, wars, and a recession” weren’t Obama’s policies.”

      I seem to recall Obama invading Libya, initiating a surge in Afghanistan, extending the Bush tax cuts, payroll taxes, and bragging about his small business tax cuts during the ass-kicking he received last week by Romney.

  3. Pelosi and Reid ran things well before and after the crash.
    If obama wants to blame anyone, he needs to look to his party. He was in the senate and never opposed a spending bill. Never tried to stop all the bad legislation. It was his job to oversight, yet he claims he was shocked at the cliff.
    Your job was to watch then, and still you don’t do your job.

    Juandos: Who did they rob? I know i wasn’t me, as my gun is still loaded and there are no dead bodies.
    Before you go on your 2 wars rant. Obama ended one and deficit hasn’t dropped a penny. How is that possible if the wars were not paid for?

    I would be satisfied with obama telling us what law he thinks the president must abide by. It looks like he wants to set a record and break them all.

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