President Barack Obama and his aides are considering a temporary cut in the Social Security payroll tax — this time on the employers’ side. The potential new tax break would be on top of a $111 billion cut in workers’ payroll taxes that took effect in January.
It's a reminder that despite Republicans’ portrayal of him as someone determined to raise taxes, Obama has a solid record as a tax cutter since taking office.
The lame-duck deal with congressional Republicans which he agreed to and signed into law last December cuts taxes by $374 billion this year and by nearly $900 billion over 10 years.
And some of the provisions in that law benefit the wealthy — like extending until the end of 2012 the low tax rates on dividends and capital gains signed into law by George W. Bush.
Of course, it wasn’t Obama’s preference to extend the current income tax rates, with a 35 percent top rate, on upper-income people. He had to agree to do that in order to get any deal at all in December.
Other provisions in that tax deal benefit people who live from paycheck to paycheck — for example, an increase in the size of the child tax credit for low-income workers.
Stimulus included tax cut
The 2009 stimulus, which Republicans love to deride, was in fact a significant tax cutting bill. There were more than $300 billion in tax breaks, preferences, and credits in that legislation — including the Making Work Pay Credit which was essentially a big tax cut for workers earning less than $75,000 and couples making less than $150,000 a year.
And even though Obama’s fiscal year 2012 budget proposal, unveiled last February, won’t be enacted into law, it stands as an official statement of what he wants to do: increase taxes for those making above $250,000, and enact major tax cuts for many people below that level.
The nonpartisan Tax Policy Center said in its analysis, “Relative to current law, the entire package of (Obama FY 2012) proposals would reduce taxes in 2013 for about three-quarters of all households and raise taxes for about 6 percent … On average, taxes would drop an average of nearly $1,700 in 2013.”
Obama has come some distance from where he started in his first budget blueprint in 2009, when he proposed a new $80 billion-a-year greenhouse gas permit system that would operate like a tax. That idea died in the Senate last year.
'Taxes have been lowered' “In practice, taxes have been lowered during the president’s term, and part of that has been at his behest, because the 2009 stimulus tax cuts were something he wanted,” said Roberton Williams, a tax expert at the nonpartisan Urban Institute in Washington.
Last December’s tax bill “was a compromise deal, but in any case, he wanted to cut taxes below what they would have been this year, he just would have been cutting them for 98 percent of the population, instead of 100 percent of the population,” Williams said.
Republicans, of course, will be quick to remind voters that Obama has signed some significant tax increases, especially those contained in last year’s health care overhaul. Most notably among them: a $210 billion increase over seven years in Medicare taxes on high-income people.
But with the exception of relatively trivial items like the tax on indoor tanning (worth $200 million this year — practically pocket change considering the $3.7 trillion federal budget), and small revenue raisers like a tax on pharmaceutical firms (which will net $2 billion this year), most increases in the overhaul will not take effect until 2013 at the earliest.
The penalty on people who choose to go without insurance doesn’t take effect until 2014. And the tax on high-cost “Cadillac" health plans isn’t scheduled to take effect until 2018.
Mostly — but not always — Obama has been true to his stated belief: try to raise taxes on upper-income people and cut taxes for the middle class and those below.
While that doesn’t fit the view of most budget hawks — including those on the president’s own deficit reduction commission — that almost everyone will need to pay higher taxes in order to avert a debt crisis, it is his record.