“President Obama is the first president in history to openly campaign for re-election on a platform of higher taxes. He has already raised taxes on millions of Americans, but he won’t stop there. He wants to raise taxes on millions more by taxing small businesses and job creators.”
_ Gail Gitcho, communications director for Romney’s campaign, in a statement, April 10, 2012
We are dubious about the first part of this claim — Harry Truman, after all, vetoed a big tax cut in the midst of his reelection campaign in 1948 — and we have already demonstrated how claims about the tax burden on “small businesses” are overstated. But a reader drew our attention to the central point of this statement — that Obama “has already raised taxes on millions of Americans.”
There is no question that Obama has proposed higher taxes on the wealthy, including ending the Bush tax cuts for people making above a certain income and imposing the so-called “Buffett Rule” on millionaires. But are “millions of Americans” already suffering under a tax yoke imposed by Obama?
When we asked the Romney campaign for evidence to back up the claim, we received a list of “19 tax increases,” many of which were contained in Obama’s health-care law. But virtually all of these taxes have not yet taken effect (more on that later) — and the key ones target people making more than $200,000 (singles) or $250,000 (married filers).
The one, non-health-care-related, broad-based tax on Romney’s list is a 61-cent-per-pack increase in the federal excise tax on cigarettes. Obama signed this into law shortly after taking office in order to fund an expansion of the children’s health insurance program. About 45 million people in the United States smoke cigarettes, according to the Centers for Disease Control, and the percentage of smokers is higher among those living below the poverty level.
Assuming one smokes a pack a day, that would amount to $223 in increased cigarette taxes a year. (The Tax Foundation calculates the tax increase as $415 per household.) And perhaps some would argue that that amounts to higher taxes on “millions of Americans.”
But let’s look at the other side of the ledger — the tax cuts that have taken place under Obama. There were tax cuts in the stimulus bill, there was an extension of the Bush tax cuts at the end of 2010, and for two years straight there has been a payroll tax holiday, which affects everyone earning a paycheck. When those figures are added up, the cigarette tax, for many people, is peanuts.
Here are some of the numbers crunched by the nonpartisan Tax Policy Center.
The current payroll tax holiday amounts to an average tax reduction of $1,000 a year for taxpayers in the $50,000 to $75,000 income range. Even people making $10,000 to $20,000 get a $260 tax break, enough to cover the cost of the cigarette tax. Millionaires get a $2,700 tax cut.
The 2010 tax deal also cut taxes for virtually everyone, with a tax cut of $554 for people making $10,000 to $20,000 and a $139,000 tax cut for millionaires. (The numbers for the top end are much smaller if you assume the Bush tax cuts were going to be extended anyway.) The entire package reduced revenues by $800 billion, much of it over two years.
The 2009 stimulus also cut taxes for about 90 percent of taxpayers, for an average of $617. (The savings are much higher for upper-middle-class Americans if you include a fix for the alternative minimum tax, but that happens every year.)
Certainly, Obama has long wanted to eliminate the Bush tax cuts for higher-income Americans, which would affect about 2 percent of taxpayers. But he failed on that score — and in fact extended them. But, in any case, just about every one of the more than 100 million taxpayers, no matter how little they made, has ended up with at least $1,000 in tax cuts under Obama in the past three years.
Of course, this is just a very rough accounting. Eric Fehrnstrom, a Romney senior adviser, also said it is a mistake to offset the temporary payroll tax cut against a permanent increase in the cigarette tax.
“It is also a fact the cigarette tax increase hits consumption, but the tax cuts you cite are on income and so only benefit the employed,” he said. “So, of those 45 million smokers, how many are unemployed? They have only gotten a tax increase (and a mighty regressive one at that).”
This brings us to the health-care law. There are certainly a number of new taxes in it, but many have not been implemented yet. (There is a tax on tanning salons that went into effect in 2010, which added a $1 tax for every $10 session, but the IRS has collected much less money than expected.)
The big money provisions would impose higher Medicare taxes and a 3.8 percent surcharge on investment income on wealthier Americans, which would bring in about half of the $400 billion in revenue in the health-care law. These taxes could affect as many as 3 million taxpayers. But we don’t think this counts as “raised” yet, though some might say it is suspicious that the tax hikes take effect only next year, after the election.
In any case, Romney pledges to halt the health-care law as soon as he takes the oath of office, so if Romney has his way, none of these taxes will ever be implemented.
“I don’t think you can ignore a half trillion in additional tax increases, signed into law by Obama, merely because their effective date is after the election,” Fehrnstrom said.
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The Romney campaign is straining to suggest Obama has imposed taxes on “millions of Americans” without considering the impact of all of the tax cuts that Obama has signed into law. The health-care law will one day impose taxes, largely on wealthier Americans, but those taxes have not taken effect.
In the end, the Romney campaign can’t just look at one side of the ledger. If you are going to talk about tax increases in this presidency, you also have to acknowledge Obama’s tax cuts.
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Read The Fact Checker: the Truth Behind the Rhetoric, at www.washingtonpost.com/blogs/fact-checker