As an incumbent, Obama faces some re-election obstacles and his biggest challenge is to 'get out the vote' of a substantially demoralized Democratic base. The raging 2008 enthusiasm for Obama is somewhere between lethargic and non-existent in 2012. Americans won't be voting in November based on which candidate they eagerly support but on which candidate they hate the least.
The Obama team has seized on the middle class tax cuts as the defining centerpiece of his re-election campaign. While the propaganda and hype may succeed in romancing establishment Democratic voters to the polls, it’s hardly going to pass the more critical muster of the significantly more astute independent voters and liberty activists. Several financial pundits have chirped in on the Obama middle class tax cut scheme.
Financial blogger Bruce Krasting exposed Obama's middle class tax cuts as a fraud.
Obama’s Middle Class Tax Scam
The President’s proposal appears to be “tax progressive” in that it benefits workers on the middle to lower end of incomes. The plan is clearly designed to get some votes in the key political states of Ohio and Pennsylvania. Who knows? Maybe some suckers will actually cast a vote for Obama as they think he’s standing up for those on the lower rungs of the income profile. Baloney!
What the President didn’t say in his speech yesterday is far more important than what he did say. He did not say word one about the 2% Social Security tax break that has been on the books the past few years. What this means is that the FICA tax break is going to expire. When it does, every worker’s paycheck is going to get hit by 2%.
In the 2012 Social Security Trust Fund report to Congress the Trustees estimated that total FICA (SS taxes) would amount to $733.4B in 2013. The 2% increase in FICA taxes in 2013 will increase workers tax load by $120B. Therefore the combined effect of extending the sub-250k tax cut and the increase in FICA comes to a paltry $30B.
Even worse is the way in which the increase in FICA taxes will be felt by workers making $60K or less. (The average annual wage in the US is $42,000). Households in the lower tax brackets will not get much benefit from extending the Bush tax cuts, but they will, on average, see their take home pay reduced by $1,200 a year.Government is very much like religion - the Lord giveth and the Lord taketh away. But government is in the permanent business of taking away the earnings and property of those who produce and never really gives much of anything because government is fundamentally a thieving crime syndicate. Another analysis discloses that Obama's tax cut is really a tax increase, based on figures provided by the Congressional Budget Office.
The President’s tax proposal is a half-assed compromise. It is not progressive. It does nothing for the economy ($30b is chump change). If workers earning an annual income close to the average understood how this tax proposal would work out for them, they would reject it. I find it interesting that Obama is selling his plan as a middle class tax cut that aids small businessmen when in fact it is a lower-income tax increase that has no beneficial consequences to the economy.
The President’s tax plan was just a show pony to get some votes.
Obama’s Middle Class ‘Tax Cut’ Would Raise Taxes by $1.3 Trillion Over Eight Years
In its analysis of his 2013 budget proposal, CBO estimated that the government would forgo $1.34 trillion in revenue from 2013 to 2022. For the period 2014 to 2022, that figure is $1.26 trillion.Government at all levels is a bad deal for the middle class because it never ever intends to cut taxes or spending.
In other words, had Obama’s original plan been enacted, the government would have taken $1.26 trillion less from Americans making less than $250,000 per year between 2014 and 2022 because current tax rates for those earners would have remained in place.
Now, however, Obama plans to allow those rates to rise in 2014 -- meaning that the government will not be giving up the $1.26 trillion estimated by the CBO. Instead, under Obama’s new proposal, the government will be collecting that money when rates rise in 2014.
This means that if Obama’s new proposal is enacted, middle-class Americans could see their taxes go up by $1.26 trillion between 2014 and 2022, contrary to the president’s claim that his proposal is a tax cut for the middle class.
The figures come from Table 3 of CBO’s March analysis of Obama’s 2013 budget. In that table, CBO breaks down the effect of Obama’s revenue proposals on the federal budget.