Despite GOP Fearmongering, Many Making Over $250,000 Will See Little-To-No Tax Increase Under Obama’s Plan
"Despite GOP Fearmongering, Many Making Over $250,000 Will See Little-To-No Tax Increase Under Obama’s Plan"
Republicans are dead set against President Obama’s plan to raise $1.6 trillion in new revenue through tax increases on Americans making over $250,000. Their argument generally boils down to warnings that the drag of the added tax burden on “job creators” will be so severe it will damage the entire economy. But as a new report by The New York Times detailed yesterday, even a significant minority of those making over the $250,000 threshold would see no increase under Obama’s tax plan, and for the rest the added burden would be minor in comparison to the size of their incomes:
A close look at the president’s plan shows that a large majority of families making up to $300,000 — as well as hundreds of thousands of families with even larger incomes — would not pay taxes at a higher marginal rate. […]
While the president has said that he wants to raise tax rates for the top 2 percent, only about 1 percent of taxpayers will face higher marginal rates, according to an analysis by the Tax Policy Center, a widely respected research group.
The restoration of the other provisions temporarily suspended by the Bush tax cuts, including limits on deductions and higher taxes on investment income, still would raise taxes for only about 32 percent of families with income from $250,000 to $300,000, according to an analysis by Citizens for Tax Justice. About 77 percent of families with income of $300,000 to $350,000 would face an increase.
That $1.6 trillion in revenue can be raised by applying a relatively small tax burden on a very narrowly defined set of Americans is an indication of how extreme and concentrated income inequality has become in America. It also reveals why multiple studies, the latest from the International Monetary Fund, have concluded that Obama’s preferred set of tax increases will have a negligible effect on economic growth — the income being hit is largely separate from the low and middle-income Americans who provide the bulk of the demand driving the economy.
It’s also evidence of White House policymakers’ desire to strictly adhere to the president’s promise that taxes would not go up on Americans under the $250,000 a year threshold. The cut-off was inflation adjusted to remain consistent with dollars in 2009, when Obama made the promise. And due to the complexities of the tax system, carve-outs aimed at protecting those under the threshold sometimes bleed over to benefit those above the threshold as well. And admittedly, these numbers do not include tax hikes passed under the Affordable Care Act, some of which will fall on the wealthier families spared by the President’s tax plan specifically.