Fox News misleadingly asked whether President Obama's new tax initiative which proposes to cut taxes on the middle class was “raising your taxes?” In reality, Obama's plan lowers middle class taxes and is funded by closing tax loopholes and increasing capital gain taxes on the top one percent of earners.
Obama Expected To Announce Tax Initiatives
NY Times: “Obama Will Seek To Raise Taxes On Wealthy To Finance Cuts For Middle Class.” The New York Times reported on January 17 that President Obama would announce a tax initiative in his State of the Union address to press Congress “to raise taxes and fees on the wealthiest taxpayers and the largest financial firms to finance an array of tax cuts for the middle class.” [The New York Times, 1/17/15]
Fox Graphic Suggests Obama Will Raise Taxes On All Americans
Fox's Graphic Asks, Is Obama “Raising Your Taxes?” On the January 20 edition of Fox News' On The Record, guest host Martha MacCallum admitted that Obama's tax proposal was designed “to tax the rich and banks” to move “money in this country to the middle class.” But, Fox News' on-screen graphic asked if Obama's proposal was “raising your taxes?”
[Fox News, On The Record with Greta van Susteren, 1/20/15]
Obama's Tax Proposal Actually Cuts Middle Class Taxes
White House Plan Would Provide Middle Class Tax Credits. Obama's tax proposal is intended to ensure “those at the top pay their fair share in taxes,” to “responsibly pay for investments” to help middle class families. The proposed tax code would provide a “new $500 second earner credit” for dual-income households, “expand child care tax benefits,” and “expand education tax benefits to improve college affordability” (emphasis original):
- Provide a new, simple tax credit to two-earner families. The President will propose a new $500 second earner credit to help cover the additional costs faced by families in which both spouses work -- benefiting 24 million couples.
- Streamline child care tax incentives to give middle-class families with young children a tax cut of up to $3,000 per child. The President's proposal would streamline and dramatically expand child care tax benefits, helping 5.1 million families cover child care costs for 6.7 million children. The proposal will complement major new investments in the President's Budget to improve child care quality, access, and affordability for working families.
- Simplify, consolidate, and expand education tax benefits to improve college affordability. The President's plan will consolidate six overlapping education provisions into just two, while improving the American Opportunity Tax Credit to provide more students up to $2,500 each year over five years as they work toward a college degree - cutting taxes for 8.5 million families and students and simplifying taxes for the more than 25 million families and students that claim education tax benefits. [WhiteHouse.gov, 1/17/15]
“99 Percent” Of Obama's Proposal Will Be Paid For By “The Richest 1 Percent”
Economic Policy Institute: White House Plan Will Be Paid For By Raising Capital Gains Taxes. The Economic Policy Institute (EPI) wrote that the president will pay for his tax breaks for the middle class by removing tax loopholes and increasing taxes on the wealthy. EPI explained that Obama will raise "$320 billion over 10 years" through initiatives that raise capital gains taxes and close loopholes on inherited income (emphasis added):
Critics have argued it is easy to propose a new program without paying for it. Well, last Saturday, the president said how he will pay for it: raise taxes. What is great about his tax proposal is it is a twofer. First, it would raise needed revenue -- $320 billion over 10 years -- to pay for the policies that would help low- and middle-income families. Second, it would make the tax code fairer and help reduce the growth in the share of income going to the top 1 percent by increasing taxes on capital income -- bringing taxes levied on income gained from wealth closer to income gained from working. The administration estimates that 99 percent of the impact of this proposal would affect the richest 1 percent and more than 80 percent would affect just the richest 0.1 percent.
In addition, the proposal removes a loophole -- the “stepped-up basis” loophole -- that allows the wealthiest taxpayers to escape paying tax on inherited assets. [Economic Policy Institute, Working Economics, 1/20/15]