Obama Budget Shows Middle-Class Tax Pledge Was Fraud PART 1
Posted 04/23/2013 06:35 PM ET
Taxes: A new study shows President Obama's budget would significantly boost taxes on the middle class. Funny, we seem to recall him promising voters that only the rich would pay for his grandiose spending plans.
According to the analysis from the nonpartisan but liberal-leaning Tax Policy Center, Obama's budget would hit wealthy families hardest, with the top 20% of income earners shouldering almost 90% of the tax hike.
But families at every income level would end up paying more if Obama's budget were enacted, including those making less than $10,000 a year.
Among other things, the TPC explains, Obama wants to nearly double the federal cigarette tax, raising it to $1.95 a pack and indexing it for inflation, to pay for his universal preschool plan. That hike would be paid for almost entirely by lower-income families.
In addition, Obama wants to change the government's inflation gauge to what's called a "chained CPI," which would in effect lower the official inflation number.
Since tax brackets are indexed to the CPI, this would push middle-class families into higher tax brackets more quickly. The Tax Policy Center's Joseph Rosenberg called it a "backdoor" tax hike of $100 billion.
Then there's Obama's proposal to limit the tax break from deductions to 28%, which would raise taxes on families with incomes down to $183,250 — well below Obama's no-new-tax threshold of $250,000.
This will be a shock to those who thought Obama was being honest when he promised during his re-election campaign that he could spend more money and cut the deficit simply by asking the "wealthiest families to pay a little more" and closing some corporate loopholes.
The fact is, Obama long ago violated his no-new-middle-class-tax pledge, not that anyone noticed, since the press gave him a free pass.
Your remarks on the CPI are interesting. It is unlikely that paychecks will keep up with inflation as you assume. Inflation in this case is nature's way of reducing incomes to reality. Americans will take some hit to their standard of living which has only gotten out of line because of the dollar's reserve currency status. Otherwise currency fluctuations would have cured the US import blowout years ago. The US trade deficit 2001-2009 was over $6 trillion to OPEC and China when the US took a dive in the trade wars. Republican politics insist that there is a free lunch, but there isn't. Their attempts at a redistribution of wealth upwards belies their public positions and just tries to push the damage their policies caused downwards. "Enabling job creation" is seen to be nonsense, they just enable capital flight for their funders, like Mitt Romney's offshore accounts. The reserve currency will be absorbed into a basket of currencies and subject to more economic discipline.
The nCPI is interesting also because it now effectively removes indexing from SS. If dollar drop and inflation continues the next dozen years as it has the last dozen, a reasonable assumption, then most SS recipients will find that their 'standard of living' will drop below subsistence at some point. We note that simple inflation is of benefit to debtors, but very bad for ordinary savers as always. In 2000 the level of personal debt was high, but the government was on a path to solvency with credit to go around. You might find it illuminating to follow the path from 2001 to the present.
Note that Obama's government itself is tight more in continuity with Clinton rather than his predecessor . The spending is stimulus as is keeping government employment as high as it is.
"If you don't like the news, then make some of your own." No one said "If you don't like the news, then make up some of your own" though obviously that is done