Howard Gleckman has written an interesting blog post about why so many Americans are unaware that President Obama has signed tax cuts into law benefiting approximately 97% of American households:
Michael Cooper over at The New York Times stopped off at the Pig Pickin and Politickin rally in North Carolina the other day to ask folks about the Obama tax cuts. Their response, not surprisingly, was “What Obama tax cuts?”
This despite the fact that about one-third of the much-reviled 2009 stimulus—or almost $300 billion–came in the form of tax reductions. According to Tax Policy Center estimates, 96.9 percent of households enjoyed a tax cut that averaged almost $1,200. Just one measure—Obama’s Making Work Pay tax credit—put more than $116 billion into people’s pockets in 2009 and 2010.
Yet, a Times poll found that fewer than 10 percent of those surveyed had any clue. Remarkably, fully one-third thought their taxes went up—even though the actual number was about zero.
How could so many people have missed it? After all, $1,200 ain’t nothing. In large part, it was due to the design of Obama’s tax plan. Earlier stimulus tax cuts often came in the form of ostentatious checks from the Treasury.
In 2008, for example, President Bush proposed a tax reduction only half the size of Obama’s (about $145 billion). But it was delivered to households in the form of rebate checks—generally $600 per adult and $300 per child.
However, conventional economic wisdom argues that increased withholding over time is more effective stimulus than a single big check. The theory is that people will bank a one-time rebate but spend the extra bucks they get in their weekly pay.
Obama listened to the economists. His signature Making Work Pay credit was built into the withholding tables. Other stimulus tax cuts, such as his expansion of the Earned Income Credit, didn’t show up for most recipients until they filed their tax returns last spring.
That people simply failed to notice that they got a tax cut makes some sense, but it doesn’t explain why a majority of Americans from both parties think of the President as a tax and spender. Being one of those Americans, I think I know why:
1. President Obama has repeatedly promised to raise taxes on households with more than $250,000 of annual income.
2. President Obama has either signed into law or publicly supported the following tax increases:
- Raise the top income tax rates from their current 33 percent and 35 percent rates to 36 percent and 39.6 percent in 2011
- Limit itemized deductions for people paying high rates
- Increase capital gains and dividend taxes by 33 percent for people paying high income tax rates
- Impose a value-added tax (VAT) on all goods and services
- Raise the Social Security tax by lifting the cap
- Raise a variety of business taxes by $353 billion over 10 years, including repeal of LIFO rules, restoring Superfund taxes, seven tax increases on energy companies, and more
- Tax employer-provided health benefits
- Implement a cap-and-trade system for emissions permits, the functional equivalent of a massive new tax
- Tax drivers on their mileage
- Change rules to raise gift taxes
- Restore the estate tax at 45 percent
- Raise cigarette tax by 62 cents a pack
- Raise taxes on beer, wine, liquor, and soda
- Eliminate health savings accounts and flexible savings accounts
- Tax employer-provided cellphones
- Tax AIG employee bonuses
- Raise taxes on overseas corporate earnings
3. President Obama, in less than two years, has increased the federal deficit by more than $1 trillion dollars.
Americans are much smarter than the ivory tower elites think they are. First, they understand that present circumstances are such that it is politically unpalatable for Mr. Obama to raise taxes the way he would like to raise them. They know that once those circumstances change, the President will become the big government, big tax-and-spend Democrat he has always aspired to be.
Second, Americans know that record increases in deficits mean that the taxes of ordinary Americans must increase at some point in the future. It may be their children who pay the tab, but the tab will be paid and there simply aren’t enough rich folks in American to pick it up in its entirety.
The upshot is this: It is misleading to suggest that President Obama is a tax cutter merely because he has thus far been unable, due to economic circumstances and Republican opposition, to get the tax increases he favors enacted into law. And it is similarly misleading to suggest that he is a tax cutter when he cuts the taxes of one class of Americans at the expense of another class of Americans.