What Happened [with federal taxes] in 2009?
One third of the Recovery Act was made up of tax credits, the White House emphasizes.
"No one I've met is looking for a handout," Mr. Obama said in his address Saturday. "And that's not what these tax cuts are. Instead, they're targeted relief to help middle class families weather the storm, to jumpstart our economy, and to bring the fundamentals of the American Dream -- making an honest living, earning an education, owning a home, and raising a family -- back within reach for millions of Americans."
The credits included:
* An increase in the Earned Income Tax Credit
* An expansion of the Child Tax Credit
* For those who work, the Making Work Pay tax credit offered $400 per individual and $800 per couple
* For those who lost their job, there was a 65 percent tax credit to help cover the cost of health care. The first $2,400 in unemployment benefits went tax-free
* Up to $2,500 under the American Opportunity Credit for students and parents paying for college tuition
* $8,000 for first-time home buyers
* A deduction of state and local taxes paid on a new car
* Up to $1,500 for home improvements to increase energy efficiency
Even conservative advocacy group Americans for Tax Reform, which advocates for a single, national flat tax rate, found some praise for the Recovery Act -- specifically for provisions allowing small businesses to write off a wider range of business expenses.
More generally, "all tax relief has the minimum value of depriving the government of revenue," Americans for Tax Reform's tax policy director Ryan Ellis said....
What Tax Policies is Obama Advocating for the Future?
People may, in part, think their taxes went up last year because they are looking prospectively, conservatives say.
Mr. Obama has proposed letting the Bush tax cuts expire for individuals making more than $200,000 a year or couples making more than $250,000. That means by the end of this year, Washington is likely to, among other things:
* Allow the top two income tax brackets to rise [to the previous levels] going from 33 percent to 36 percent, and from 35 percent 39.6 percent
* Raise the capital gains tax rate from 15 percent to 20 percent for married filers with incomes above $250,000
* Raise the tax on dividend income from 15 percent to 20 percent for married filers with incomes above $250,000
Gerald Prante, a senior economist for the Tax Foundation, a non-profit, non-partisan tax research organization, said these tax increases would likely only directly impact about 2 to 3 percent of tax returns....
What About Health Care?
It's not just the wealthy, however, concerned about tax increases.
...Mr. Obama's health care reforms, which go into effect over the next few years, are often cited as the prime example of a policy that will lead to higher taxes. The president himself says it includes "the largest middle class tax cut for health care in history," referring to the tax credits lower-income people will get to purchase insurance. "One thing we have not done is raise income taxes on families making less than $250,000," he said Saturday.
While there were no middle class income taxes in the legislation, it still raises revenue from the middle class. For instance, the individual mandate, which requires all Americans to purchase health insurance starting in 2014, was fashioned as a "tax." Middle class earners will also be hit by the provision limiting medical expense deductions.
Republicans have protested that the health care reforms will include more than $500 billion in new "taxes." [NOTE: the federal direct subsidy paid to insurance companies that sell 'Medicare Advantage' plans, supplementary Medicare coverage, which was enacted under President Bush and added up to around $500 Billion cost to the federal budget over it's first decade, was *rescinded* by this health care legislation. This figure directly matches the claims of a "$500 B. in taxes"....]
Supporters of the legislation say that the costs imposed on the middle class will be balanced out by the benefits received, including subsidies. Families making more than $250,000 per year will be hit with a 3.8 percent tax on investment income.
"It's almost exclusively high income households" that will see tax increases because of the health care bill, said Gale of the Brookings Institution....
April 15, 2010 5:34 AM
What's Obama Doing to Your Taxes?
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