President Obama Alters Middle Class Tax Promise


Posted by John Kartch on Friday, August 10th, 2012, 12:27 PM PERMALINK


President Barack Obama has altered his 2008 “firm pledge” that no family making less than $250,000 per year would see “any form of tax increase.” Obama has now limited the pledge to merely “income taxes” – and only for “next year.”

On Sept. 12, 2008, speaking in Dover, New Hampshire, candidate Obama said:

“I can make a firm pledge.  Under my plan, no family making less than $250,000 a 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.

But this Wednesday, August 8, speaking in Grand Junction, Colorado, President Obama said:

“So if your family makes under $250,000 -- which, by the way, 98 percent of Americans do -- 97 percent of small businesses do, you will not see your income taxes increase by a single dime next year.  That’s my plan.” 

Why the abrupt shift? It may have something to do with the fact that President Obama has already broken his “firm pledge” to the American people on two occasions:

On Feb. 4, 2009, just sixteen days into his presidency, President Obama signed into law a 156 percent increase in the federal excise tax on tobacco – a hike of 62 cents per pack.  The median income of smokers was just over $36,000 at the time of the bill signing.

When the tax increase took effect on April 1, 2009, the Associated Press rightly called out Obama for the broken promise, in an article titled PROMISES, PROMISES:  Obama Tax Pledge Up In Smoke.

In the article, White House spokesman Reid Cherlin tried to pull a fast one on AP reporter Calvin Woodward.  Cherlin falsely claimed President Obama’s tax pledge applied only to “income or payroll taxes”.  Cherlin said: "The president's position throughout the campaign was that he would not raise income or payroll taxes on families making less than $250,000, and that's a promise he has kept." 

The AP noted the sudden shift from “any form of tax increase” to just “income or payroll taxes” and pointed out that Obama’s 2008 campaign used the $250,000 promise to defend against Republican allegations that Obama would raise taxes on electricity and home heating oil. From the AP article:

The Democratic campaign used such statements to counter Republican assertions that Obama would raise taxes in a multitude of direct and indirect ways, recalled Kathleen Hall Jamieson, director of the Annenberg Public Policy Center at the University of Pennsylvania.

"I think a reasonable person would have concluded that Senator Obama had made a 'no new taxes' pledge to every couple or family making less than $250,000," she said.

Jamieson noted GOP ads that claimed Obama would raise taxes on electricity and home heating oil. "They rebutted both with the $250,000 claim," she said of the Obama campaign, "so they did extend the rebuttal beyond income and payroll."

President Obama’s tax increases on families making less than $250,000 didn’t stop with tobacco. The “any form of tax increase” promise was broken a second time when President Obama signed the healthcare bill into law, which contains at least seven new or higher taxes that hit families making less than $250,000 per year.

On April 15, 2009, when the healthcare push was getting underway, White House spokesman Robert Gibbs was asked if Obama’s “firm pledge” applied to the health care bill. Gibbs replied:

 “The statement didn’t come with caveats.”  [Transcript] [Video]

But the President’s March 23, 2010 signature on Obamacare made possible the following new or higher taxes – none of which exempts families making less than $250,000:

1. The Obamacare Individual Mandate Tax:  Starting in 2014, anyone not buying “qualifying” health insurance – as defined by Obama-appointed bureaucrats -- must pay an income surtax according to the higher of the following:

 

 

1 Adult

2 Adults

3+ Adults

2014

1% AGI/$95

1% AGI/$190

1% AGI/$285

2015

2% AGI/$325

2% AGI/$650

2% AGI/$975

2016 +

2.5% AGI/$695

2.5% AGI/$1390

2.5% AGI/$2085

 

2. The Obamacare Medicine Cabinet Tax:  This tax took effect in January 2011 and prevents Americans from being able to use their health savings account (HSA),flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

3. The Obamacare Flexible Spending Account Cap – aka “Special Needs Kids Tax”: Starting in January 2013, Obamacare imposes a cap on FSAs of $2500 (now unlimited under federal law). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.  Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education

4. The Obamacare "Haircut" to the Medical Itemized Deduction from 7.5% to 10% of AGI: Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI).  Beginning in January 2013, this new Obamacare provision imposes a threshold of 10 percent of AGI. 

5. The Obamacare HSA Withdrawal Tax Hike: This provision, which took effect in January 2011, increases the tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

6. The Obamacare Tax on Indoor Tanning Services:  Since July of 2010, Americans using indoor tanning salons face a new 10 percent excise tax.

7. Obamacare Excise Tax on Comprehensive Health Insurance Plans: Starting in 2018, this provision imposes a new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family).  Higher thresholds exists for early retirees and those in high-risk professions.

On Wednesday, President Obama also added a curious time conditional to his revised promise, saying he would not raise income taxes “next year” on families making less than $250,000.

Taxpayers may be asking themselves what other tax increases await them if President Obama is given a second term.

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