Nonpartisan Analysis: Obama Budget Hikes Taxes on "Earners at Nearly Every Income Level"

Posted: Apr 23, 2013 4:39 PM

Let's begin with the unambiguous promise that undergirded Barack Obama's "fairness" philosophy over two presidential campaigns:

"I can make this firm pledge. Under my plan, no family making less than $250,000 per year will see any form of tax increase. Not your income tax. Not your payroll tax. Not your capital gains taxes. Not any of your taxes."

Obama has already violated this vow on numerous occasions, especially through Obamacare and its central mandate tax.  According to a new nonpartisan analysis, the president's FY 2014 budget would drive another stake through the heart of his "firm pledge" to middle class voters:

President Obama’s budget would raise taxes mainly on people earning more than $200,000 a year, although earners at nearly every income level would face a somewhat higher tax burden, according to a new nonpartisan analysis. The study by the Tax Policy Center finds that in 2015, 86 percent of the increase in taxes would be borne by people earning $200,000 or more a year. That would largely be a result of dramatically scaling back tax breaks that disproportionately benefit the wealthy and establishing a minimum level of taxation for people who earn $1 million a year. But the study also finds that some Americans of more modest backgrounds would face more taxes...The increase in taxes on middle-class earners is notable because both political parties have said that they do not want to raise taxes on people earning less than $200,000 a year. The president’s budget was released this month but is not expected to be taken up by Congress anytime soon. “We knew the president wanted to raise additional revenue focused on high-income folks,” said Donald Marron, director of the Tax Policy Center. “The old idea of not raising taxes on people earning below $200,000 and $250,000 seems to have gone away.”

Now that Obama has been re-elected, he no longer has to worry about the prospect of facing voters.  This affords him the luxury of enjoying the post-election "flexibility" he's touted in the past -- and on which he's followed through.  In addition to an abstruse shift in tax formulas affecting personal exemptions and the standard deduction, the bulk of Obama's proposed lower-income tax increase comes in the form of new tobacco taxes, which we've discussed previously.  This is a sharply regressive tax that disproportionately affects the poor.  The administration claims the tax's receipts would simultaneously discourage people from smoking and provide a viable long-term funding mechanism for a federal universal pre-K program.  Policy analysts on both sides of the spectrum have concluded that the math won't work.  This new levy comes in addition to Obama's 2009 cigarette tax.  His overall FY '14 tax hike package is layered on top of $1.6 trillion in previous tax increases he's already imposed.  Obama's budget calls for approximately $1.1 trillion in new taxes, nearly double the amount that the White House has stated publicly.  Obama's desired tax hikes on the lower and middle class appear to be a baby step toward the fiscal scenario articulated by former DNC Chairman Howard Dean: Significantly higher taxes for everyone, to partially keep pace with runaway Washington spending.

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