"Obama's Budget Would Lead to the Highest Federal Tax Rate in 4 Decades"

[applegrove]

Obama's Budget Would Lead to the Highest Federal Tax Rate in 4 Decades

by Derek Thompson at the Atlantic

http://www.theatlantic.com/business/archive/2013/04/obamas-budget-would-lead-to-the-highest-federal-tax-rate-in-4-decades/275235/

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The Tax Policy Center has a new estimate of tax rates under President Obama's budget in the next ten years. What won't surprise you is that taxes are going up -- way, way up -- on the richest percentile. What might surprise you is that taxes are also going up on just about everybody else, too, despite the president's campaign promise to not raise taxes on families making less than $200,000.

Politico and other publications are making a lot of hay about these higher middle-class taxes, which mostly come from cigarette taxes and a new inflation measure called chained-CPI. But when you dig into the numbers, it's not really a middle-class tax "hit" so much as a very light tap.

Families making between $50,000 and $75,000 would see an average federal tax hike of $63. That's a cheap dinner for four at Applebee's. Families making between $100K-$200K would pay an extra $150 per year. That's a cheap dinner for four at the Palm. That's not not money. It's definitely money! And in the aggregate, it adds up. But, c'mon, are we really going to make a big deal about an extra $12/month in federal taxes for couples making $180,000?

The real story here is that Obama's tax plan is both aggressive and progressive. [See update under the graph above.] Total effective tax rates, which hit a 30-year low of 17% in 2009, are on track to break 24% in 2023. That would be the highest share of the U.S. economy going to Washington since the 1970s. Most of that burden would fall on families making more than $400,000 a year, who saw both a tax rate increase in January and face a tax deduction cap in the new budget.

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[elleng]

1. 'it's not really a middle-class tax "hit" so much as a very light tap.'