Obama Is Raising Taxes—Not Cutting Them

The Obama budget included $3.61 in tax increases for every dollar of so-called tax cuts.


By Peter Roff, Thomas Jefferson Street blog

One of the more interesting things about blogging every day, as I do here for Thomas Jefferson Street, is the comments that people provide about what you write. It's a chance to get instant feedback.

On Monday, in my post dealing with Meghan McCain's advice to the Republican Party to be more moderate, I mentioned the close to 1 million, by some estimates, angry taxpayers who turned out for the April 15 Tax Day Tea Parties.

That produced a comment from a reader in New Jersey who asserted, "Voters aren't outraged over Obama high taxes, and aren't longing for Reagan's low taxes. In reality, taxes now are much lower than under Reagan, and Obama just lowered taxes for 95 percent of American taxpayers."

This was—it may come as little surprise—news to me, so I asked around to see if this was correct. It's not, at least according to what one Capitol Hill economist who walked me through the numbers said.

Federal revenue, as a share of the gross domestic product, is lower today (15.5 percent in Fiscal Year 2009) than under Reagan, but that is only because of the recession and the stimulus checks. "Revenue under Reagan bottomed out at 17.4 percent of GDP in FY '84," the economist told me, adding that "Obama hasn't cut taxes on anyone."

In fact, as I have written here before, the only tax change to go into effect thus far has been an increase in the federal excise tax on cigarettes, whose impact falls heaviest on lower-income folks and violates a campaign pledge Obama made.

With regard to the way the tax burden is distributed across income cohorts, it is increasingly concentrated on upper-income taxpayers. Federal statistics show that the top-earning 25 percent of income taxpayers paid 73 percent of all federal income taxes in 1980. By 1988, that percentage had increased to nearly 78 percent. By 2000, after the Clinton tax hike, it hit 84 percent. And by 2006, the last year for which the data has been compiled, the top 25 percent of income taxpayers shouldered just over 86 percent of the federal income tax burden.

And Obama doesn't plan to ease that burden—or so one might infer from the next $1.4 trillion over 10 years tax increase that was included as part of the budget he sent to Capitol Hill. To put it another way, the Obama budget included $3.61 in tax increases for every dollar of so-called tax cuts. This includes new taxes on energy at the pump and as it comes into the home, on many small businesses with 20 or more employees, and on seniors who depend on dividends as part of their retirement income.

The Obama budget, rather than cutting taxes for 95 percent of working Americans, proposed to increase taxes as a share of the economy in eight out of the next 10 years. And that would raise, not reduce, the tax burden as a share of the economy by more than 25 percent over the coming decade.

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