Despite President Barack Obama’s promises that he would never, ever, ever, raise taxes on people making less than $250,000 year, a new analysis from the Tax Policy Center -- citing a new tobacco tax that will hit some low-income families harder than the rest -- indicates he's breaking that oath.
Upon closer examination of the budget, it's revealed Obama raises taxes on middle and low-income families again, and again, and again.
“President Barack Obama's budget proposal would lead to significant tax increases on upper-income Americans,” the Wall Street Journal reported, “and also to moderate increases on some lower-income Americans.”
Those “moderate increases” on lower income Americans, however, become major increases on all wages earners when you look more deeply into who will actually be paying for a slew of new taxes proposed in the budget. The Tax Policy Center’s analysis only looks at direct taxes, failing to take into account the full economic impact of many of Obama’s tax change proposals.
Already reeling from the two percent payroll tax increase, with the result of savings rates plummeting, wage earners will see significant backdoor tax increases, making it more difficult to pay monthly expenses and save for things like, say, retirement.
For one thing, the government will change how it calculates the inflation rate. And you can be sure any time the government changes its statistical methods, it’s for the benefit of the government and no one else.
“Because tax brackets and other tax items are indexed to inflation,” Grover Norquist, head of Americans for Tax Reform, said, “slowing down their growth is an income taxincrease. This is a tax increase for all Americans who pay income tax, including middle class Americans.”
It’s also a tax increase for people who get Social Security income and veterans disability benefits.
Making it even more difficult for low-income Americans, the budget puts caps on the amount of private charity that can be deducted for tax purposes. The result will be less private aid for families who need it most.
“Private sources of support are important to most low-income families -- 75.4 percent of respondents received private supports in the year prior to the interview,” theNational Poverty Center wrote. “Low income households are most likely to receive this help from families and friends or from a nonprofit charity.”
Rich people can probably live without the charitable deductions, but let’s not lose sight of the people who ultimately benefit from charitable giving: poor people, artists, and academics.
We've government money earmarked to fund NPR, for example, but yet private money will now get penalized for giving too much to NPR, thereby making NPR even more dependent on government funding.
As well as capping charitable deductions, the budget proposes to cap mortgage interest deductions.
“No matter what tax bracket you are in,” Norquist said, “under this Obama provision you can’t benefit any more than if you were in the 28 percent bracket. There are three tax brackets higher than this: 33 percent, 35 percent, and 39.6 percent.”
In addition, Obama proposes tax increases on energy and financial products, which will ultimately end up charged to you at the pump, on your utility bill, or in your bank account.
About 40 percent of the revenue generated by new tax increases will come out of the pockets of middle or lower income families, while at the same time federal spending will grow $2.1 trillion over 10 years, including getting rid of sequester cuts recently forced on the government by an outraged citizenry.
Over 10 years the deficit would still grow by $5.3 trillion under Obama’s budget, growing to 100 percent of economic output by 2020, according to Forbes’ Peter Ferrara. By contrast, if we just did nothing, the deficit would grow substantially, but according to the Congressional Budget Office, would be only 77 percent of GDP by 2023.
And much of that deficit increase will be the result of the tax hike -- with no spending cuts -- Obama insisted on having in January.
“The deficits projected in CBO’s current baseline are significantly larger than the ones in CBO’s baseline of August 2012,” the CBO said. “At that time, CBO projected deficits totaling $2.3 trillion for the 2013–2022 period; in the current baseline, the total deficit for that period has risen by $4.6 trillion.
“That increase stems chiefly from the enactment of the American Taxpayer Relief Act of 2012 (P.L. 112-240), which made changes to tax and spending laws that will boost deficits by a total of $4.0 trillion (excluding debt-service costs) between 2013 and 2022, according to estimates by CBO and the staff of the Joint Committee on Taxation.”
So in others words, the American Taxpayer Relief Act of 2012 raised taxes on everyone while increasing the projected deficit by $4.6 trillion. If you loved that taxpayer “relief,” you will certainly love Obama’s budget. It includes a tax increase for every home.