President Obama and Taxes: Claims vs. Reality

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By Andy Koenig, House Republican Conference
October 17, 2012

  • President Obama has repeatedly broken his pledge not to increase taxes on middle-class families.
  • The president’s healthcare takeover law alone included 12 permanent tax increases on middle-class families.
  • The president is currently demanding a small business tax increase that will hit nearly 1 million small business owners and destroy 710,000 jobs according to an Ernst and Young study.
  • Small business owners cite taxes as the most important problem they currently face and 74 percent say President Obama’s small business tax increase would significantly impact their business.
  • The president’s tax increase will do virtually nothing to balance the budget or reduce our debt.

President Obama’s Claims vs. Reality

Claim:“I told you I’d cut taxes for small businesses, and I have.”—President Obama, October 16, 2012.

Reality: In the same venue where he made this claim, the president reiterated his perpetual call for devastating tax increases on American small businesses. A report released by the accounting firm Ernst & Young found that the president’s proposed small business tax increase will cost 710,000 American jobs. In addition, the report found that wages would fall by 1.8 percent, reflecting a decline in workers’ living standards relative to what would have occurred otherwise.

If the president has relieved small businesses’ tax burden, it’s news to them. This month, small businesses cited taxes as the single most important problem they are facing today. Not surprisingly, 77 percent of small business owners report that they did not hire any new employees in the month of September. The president’s tax and regulatory regime is destroying small business, not helping it. A recent survey from the National Association of Manufacturers (NAM) and the National Federation of Independent Business (NFIB) revealed that 69 percent of small business owners and manufacturers say President Obama’s Executive Branch and regulatory policies have hurt American small businesses and manufacturers. In addition, 67 percent say there is too much uncertainty in the market today to expand, grow or hire new workers. Perhaps most shockingly, 55 percent of small business owners say they would not start a business today given what they know now and in the current environment.

Claim:  “Well, we’ve gone through a tough four years; there’s no doubt about it. But four years ago I told the American people and I told you I would cut taxes for middle-class families, and I did.”—President Obama, October 16, 2012.

Reality:President Obama has never proposed lowering income tax rates for middle-class families, as House Republicans have already voted for in the Path to Prosperity Budget. While Republicans have voted to provide permanent income tax relief for middle-class Americans, the president has broken his campaign promise and passed permanent tax increases on the middle-class. While the Democrats’ failed “stimulus” did include temporary tax credits for the middle-class, those provisions have largely expired. Even when they were in place, the temporary credits failed to give hardworking families any certainty about their tax liability from one year to the next. The only thing that the middle-class can be certain of now is that President Obama has broken the promise he made when he said in 2008, “I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase.” Sadly, the president’s healthcare takeover law contained 12 tax increases that will hit middle-class families, including the onerous individual mandate tax.

Claim: “We’ve got to reduce our deficit, but we’ve got to do it in a balanced way — asking the wealthy to pay a little bit more.”— President Obama, October 16, 2012.

Reality: While the president’s plan increases taxes on nearly one million small businesses, it does essentially nothing to reduce the deficit because the president plans to pump the new tax income into more wastefully Washington spending. Even with the president’s proposed tax hike, deficits would average $715 billion a year during a second Obama term, according the president’s own budget projections. With the president’s job-destroying tax increases, the White House still plans to increase the national debt by $4.1 trillion in his second term. The problem is that the president wants to take money from small businesses and families in order to keep his failed spending spree going. Our debt and deficits are fueled because Washington is wastefully spending too much money, not because we are taxing small businesses too little. President Obama’s tax hikes will not change the way he recklessly borrows and spends money, therefore, they will not reduce our debt.

Andy Koenig is a staffer with the House Republican Conference.