On CNBC today Joe Biden threatened to “reverse” the Trump tax cuts, a move that will impose massive tax increases on the middle class. Then he said he wouldn’t raise taxes on anyone making less than $400,000 — which is in direct conflict with his “reverse” statement.
So what happened the last time Biden promised not to raise middle class taxes?
As Vice President, Joe Biden broke his promise to the middle class that no one making less than $250,000 would see a single penny of their tax raised. Biden said his tax vow applied to “any tax.”
Biden made the promise during a nationally televised Vice Presidential debate on Oct. 3, 2008 using firm language:
“No one making less than $250,000 under Barack Obama’s plan will see one single penny of their tax raised whether it’s their capital gains tax, their income tax, investment tax, any tax.”
Once elected, Biden immediately pushed for tax increases on millions of middle class households. When Obamacare was signed into law with Biden’s support, it imposed a series of middle class tax hikes including the individual mandate tax, new taxes on households with health savings accounts and flexible spending accounts, and an income tax hike on Americans facing high medical bills. Biden also presided over a 156 percent increase in the federal excise tax on tobacco.
After breaking the pledge, the Obama-Biden administration was rightly called out by the Associated Press in an article titled “Promises, Promises: Obama Tax Pledge Up in Smoke.”
“Joe Biden lied to the American people when he said he and Obama would never raise ‘any tax’ on any American earning less than $250,000. This time around, taxpayers know what to expect,” said Grover Norquist, president of Americans for Tax Reform.
Biden frequently brags of being the key to securing Democrat congressional support for Obamacare, which imposed many direct tax increases on the middle class:
Individual Mandate Tax: Obamacare imposed a tax penalty of $695 for an individual and $2,085 for a family of four for failing to buy “qualifying” health insurance as defined by Obama-Biden rules.
The tax hit low and middle-income families hard: Three-fourths of households stuck paying the tax made less than $50,000 per year, a blatant violation of Biden’s pledge to the American people. (Thanks to the GOP congress and President Trump, this tax was zeroed out as part of the Tax Cuts and Jobs Act.)
Biden is now pushing to reimpose the individual mandate tax.
Medicine Cabinet Tax on health Savings Accounts and Flexible Spending Accounts: Because of Obamacare, the 20 million Americans with a Health Savings Account and the 30 to 35 million Americans with a Flexible Spending Account are no longer able to purchase over-the-counter medicines using these pre-tax account funds. Examples include cold, cough, and flu medicine, menstrual cramp relief medication, allergy medicines, and dozens of other common medicine cabinet health items.
Chronic Care Income Tax Hike: This income tax increase directly targeted middle class Americans who happen to face high medical and dental bills in a given year. This Obamacare tax hit 10 million households per year. Before Obamacare, Americans facing high medical expenses were allowed an income tax deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI). Obamacare imposed a threshold of 10 percent of AGI. Therefore, Biden not only made it more difficult to claim this deduction, he widened the net of taxable income.
Again, low and middle income households were hit hard by this tax. On average, affected taxpayers earned about $53,000 annually. ATR estimates the average income tax increase for the average affected household amounted to $200 – $400 per year. Thanks to President Trump and congressional Republicans, this tax hike was rolled back as part of the Tax Cuts and Jobs Act. Biden has threatened many times to repeal the TCJA.
Flexible Spending Account Tax: The 30 – 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face an Obamacare-imposed cap of $2,500.
Before Obamacare, the accounts were unlimited under federal law. But now, parents looking to save for medical costs or braces for the kids find themselves quickly hitting this new cap. This restricts the options for low and middle income families.
There is one group of flexible spending account households for whom this tax is particularly cruel and onerous: parents of special needs children. Families with special needs children often use FSAs to pay for special needs education. Tuition and book costs at special needs schools can run thousands of dollars per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obama-Biden tax increase limits the options available to these families.
If Biden repeals the TCJA, as he has said countless times, Americans will be stuck paying significantly higher taxes:
- A family of four earning the median income of $73,000 would see a $2,000 tax increase each year.
- A single parent (with one child) making $41,000 would see a $1,300 tax increase each year.
- Under Biden the USA would have the highest corporate income tax rate in the developed world, higher than China (25 percent), the United Kingdom (19 percent), Canada (26.8 percent), and Ireland (12.5 percent).
- Millions of low and middle-income households would be stuck paying the Obamacare individual mandate tax.
- Small employers will face tax increases due to the increase in marginal income tax rates and the repeal of the TCJA 20% deduction for small business income.
- Taxes would rise in every state and every congressional district.
- The Death Tax would ensnare more families and businesses.
- Utility bills would go up in all 50 states as a direct result of the corporate income tax increase.
- The AMT would snap back to hit millions of households.
- Millions of households would see their child tax credit cut in half.
- Millions of households would see their standard deduction cut in half, adding to their tax complexity as they are forced to itemize their deductions and deal with the shoebox full of receipts on top of the refrigerator.
Even left-leaning media outlets have acknowledged the fact that the Trump tax cuts have helped middle income households:
- New York Times: “Most people got a tax cut.”
- Washington Post: “Most Americans received a tax cut.”
- CNN’s Jake Tapper: “The facts are, most Americans got a tax cut.”
- CNN’s Tapper also stated: “In fact, estimates from both sides of the political spectrum show that the majority of people in the United States of America did receive a tax cut.”
- FactCheck.org: “Most people got some kind of tax cut in 2018 as a result of the law.”
- FactCheck.org also stated: “The vast majority (82 percent) of middle-income earners — those with income between about $49,000 and $86,000 — received a tax cut that averaged about $1,050.
Keep track of Biden’s tax hikes at www.ATR.org/HighTaxJoe