Affordable Care Act Does Not Raise Taxes On Most Americans – And Provides Tax Relief For Millions

Affordable Care Act “Will Provide More Tax Relief Than Tax Burden” For Middle Class. According to the Washington Post fact checker Glenn Kessler: “The health law, if it works as the nonpartisan government analysts expect, will provide more tax relief than tax burden for middle-income Americans.” [WashingtonPost.com, 7/6/12]

FactCheck.org: “A Large Majority Of Americans Would Not See Any Direct Tax Increase From The Health Care Law.” According to FactCheck.org: “It’s certainly true that the health care law would raise taxes on some Americans, particularly those with higher incomes. The law includes a Medicare payroll tax of 0.9 percent on income over $200,000 for individuals or $250,000 for couples, and a 3.8 percent tax on investment income for those earning that much. The Joint Committee on Taxation estimated that the biggest chunk of revenue — $210.2 billion — comes from those taxes. There are other taxes in the health care law — including an excise tax on the manufacturers of certain medical devices and on indoor tanning services. The health care law included $437.8 billion in tax revenue over 10 years, according to the Joint Committee on Taxation‘s calculations. Republicans tend to add in fees on individuals who don’t obtain health insurance (which the Supreme Court now agrees can be considered taxes) and businesses that don’t provide it to bump that up to about $500 billion. Some taxes, such as those on medical devices, may or may not be passed on to consumers in the form of higher prices, but a large majority of Americans would not see any direct tax increase from the health care law.” [FactCheck.org, 6/28/12]

• Individual Penalty Payments “Tiny” Compared To President Obama’s Previous Tax Cuts. According to FactCheck.org, the increased revenue from penalty payments by individuals who do not obtain health insurance represents “a tiny future increase compared with the tax cuts Obama has already delivered, including an estimated $120 billion in 2012 alone from the 2 percentage point cut in payroll taxes.” [FactCheck.org, 5/17/12]

Affordable Care Act Includes Tax Credits For Millions Of Americans. According to Families USA: “We found that an estimated 28.6 million Americans will be eligible for the tax credits in 2014, and that the total value of the tax credits that year will be $110.1 billion. The new tax credits will provide much-needed assistance to insured individuals and families who struggle harder each year to pay rising premiums, as well as to uninsured individuals and families who need help purchasing coverage that otherwise would be completely out of reach financially. Most of the families who will be eligible for the tax credits will be employed, many for small businesses, and will have incomes between two and four times poverty (between $44,100 and $88,200 for a family of four based on 2010 poverty guidelines).” [FamiliesUSA.org, September 2010]

President Obama Cut Taxes For Up To 95 Percent Of Working Families

Recovery Act Included $288 Billion In Tax Cuts. From PolitiFact: “”Nearly a third of the cost of the stimulus, $288 billion, comes via tax breaks to individuals and businesses. The tax cuts include a refundable credit of up to $400 per individual and $800 for married couples; a temporary increase of the earned income tax credit for disadvantaged families; and an extension of a program that allows businesses to recover the costs of capital expenditures faster than usual. The tax cuts aren’t so much spending as money the government won’t get — so it can stay in the economy. Of that $288 billion, the stimulus has resulted in $119 billion worth of tax breaks so far.” [PolitiFact.com, 2/17/10]

Obama Has Cut Taxes For Up To “95 Percent Of Working Families.” According to FactCheck.org: “Obama has lowered taxes for all workers through a 2 percentage point reduction in the Social Security payroll tax that started in 2011 and is scheduled to continue through the end of 2012. The cut is equal to $1,000 this year for a worker making $50,000 a year — or as much as $2,202 to any worker earning at least the maximum taxable level of wages or salary ($110,100 for 2012). Obama had previously signed a tax cut that benefited nearly all working families and was in effect from 2009 through 2010. The ‘Making Work Pay’ tax credit was part of the stimulus bill he signed shortly after taking office. That credit was worth a maximum of $400 per person, or $800 for couples during those years. It phased out at higher income levels, and so its benefit went entirely to individuals making less than $95,000 a year, or couples making less than $190,000. The White House figures it went to ‘95 percent of working families.’ And even allowing for those who are retired or unemployed, it benefited more than 75 percent of all individuals and families, working or not, according to the nonpartisan Tax Policy Center.” [FactCheck.org, 5/17/12]

Romney’s Tax Plan Would Require Middle-Class Tax Increases To Avoid Higher Deficits

Romney Proposes To Cut All Tax Rates By 20 Percent Without Increasing The Debt And Without Raising Middle-Class Taxes According to New York Times: “Mr. Romney’s tax proposal is built on three central pillars. He has pledged that he will cut all of the marginal tax rates by 20 percent — so the top tax rate would fall to 28 percent from 35 percent, and the bottom tax rate would fall to 8 percent from 10 percent. That by itself would reduce the government’s revenue by hundreds of billions of dollars a year. Second, Mr. Romney has promised that his plan will be ‘revenue neutral,’ meaning it would pay for those rate reductions by clearing out the underbrush of loopholes and credits in the tax code. […] Third, and finally, the Romney campaign has said that it would not raise taxes on the middle class.” [New York Times, 9/9/12]

Conservative Tax Expert: Romney Approach Sound, But Numbers Aren’t. From the New York Times: “‘It’s not as if the entire philosophical approach he’s pursuing is doomed,’ said Alan D. Viard, a tax expert at the right-of-center American Enterprise Institute. ‘But he’s going to need to cut rates significantly less than 20 percent if he wants to honor his other goals.'” [New York Times, 9/9/12]

Tax Policy Center Found That It’s “Mathematically Impossible” To Devise A Tax Plan That Fits Romney’s Promises Without Raising Middle-Class Taxes. From the Washington Post‘s Ezra Klein: “To help Romney, the center did so under the most favorable conditions, which also happen to be wildly unrealistic. The analysts assumed that any cuts to deductions or loopholes would begin with top earners, and that no one earning less than $200,000 would have their deductions reduced until all those earning more than $200,000 had lost all of their deductions and tax preferences first. They assumed, as Romney has promised, that the reforms would spare the portions of the tax code that privilege saving and investment. They even ran a simulation in which they used a model developed, in part, by Greg Mankiw, one of Romney’s economic advisers, that posits ‘implausibly large growth effects’ from tax cuts. The numbers never worked out. No matter how hard the Tax Policy Center labored to make Romney’s promises add up, every simulation ended the same way: with a tax increase on the middle class. The tax cuts Romney is offering to the rich are simply larger than the size of the (non-investment) deductions and loopholes that exist for the rich. That’s why it’s ‘mathematically impossible’ for Romney’s plan to produce anything but a tax increase on the middle class.” [WashingtonPost.com, 8/4/12]

• Romney Campaign Attacked TPC Study As Partisan, But Cited TPC’s “Objective, Third-Party Analysis” During Primary. From the Washington Post‘s Ezra Klein: “First, the campaign called the analysis ‘just another biased study from a former Obama staffer.’ That jab refers to Adam Looney, one of the study’s three co-authors, who served in a staff role on the White House Council of Economic Advisers under President Barack Obama. But the Tax Policy Center is directed by Donald Marron, who was one of the principals on George W. Bush’s Council of Economic Advisers. Calling the Tax Policy Center biased simply isn’t credible — a point underscored by the fact that the Romney campaign referred to the group’s work as ‘objective, third-party analysis’ during the primary campaign.” [WashingtonPost.com, 8/4/12]

TPC: Even With Most Generous Assumptions About Possible Economic Growth, Romney Plan Requires Middle-Class Tax Hike. From the Tax Policy Center’s analysis of Romney’s tax plan: “Our major conclusion is that a revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed … would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers. This is true even when we bias our assumptions about which and whose tax expenditures are reduced to make the resulting tax system as progressive as possible. For instance, even when we assume that tax breaks – like the charitable deduction, mortgage interest deduction, and the exclusion for health insurance – are completely eliminated for higher-income households first, and only then reduced as necessary for other households to achieve overall revenue-neutrality– the net effect of the plan would be a tax cut for high-income households coupled with a tax increase for middle-income households. […] Although reasonable models would show that these tax changes would have little effect on growth, we show that even with implausibly large growth effects, revenue neutrality would still require large reductions in tax expenditures and would likely result in a net tax increase for lower- and middle-income households and tax cuts for high income households.” [TaxPolicyCenter.org, 8/1/12]

Conservative Economist Made Romney’s Tax Promises Add Up By “Sharply Increasing Taxes” On Income Between $100,000-200,000 In Order To “Cut Them On Very Rich Taxpayers.” From the Washington Post’s WonkBlog: “For all that, the two estimates don’t really contradict each other. If you look at the original TPC study, they say that if you eliminated all deductions (except for those benefiting savings and investment, which Romney has pledged to keep) starting from the richest taxpayers and going down the income scale, you could get the numbers to work when you got to taxpayers making around $75,000. By using somewhat more extreme assumptions in terms of growth and eliminating the standard deduction, [conservative economist Martin] Feldstein has gotten that up to taxpayers making round $100,000. That’s a matter of degree more than kind. So here’s where we are: It might be mathematically possible to make Romney’s plan work by sharply increasing taxes on people making between $100,000 and $200,000 so you could cut them on very rich taxpayers. It’s not possible to make the numbers add up if you refuse to raise taxes on people making less than $200,000.” [WashingtonPost.com, 9/10/12]

Under Obama, Massive Monthly Job Losses Have Turned Into Steady Private-Sector Gains

Recession Officially Ran From December 2007 To June 2009, Making It The Longest Since World War II. From the National Bureau of Economic Research: “The Business Cycle Dating Committee of the National Bureau of Economic Research met yesterday by conference call. At its meeting, the committee determined that a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion. The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months. In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month.” [NBER.org, 9/20/10]

• Recession Resulted In 8.3 Million Job Losses. According to the Associated Press, “the Great Recession killed 8.3 million jobs, compared with 1.6 million lost in the 2001 recession.” [Associated Press via Yahoo! News, 5/4/12]

Bush Recession Was So Severe That Economy Was Still Shedding Over Three-Quarters Of A Million Jobs Per Month Through First Few Months Of President Obama’s Term. According to the Bureau of Labor Statistics, the economy shed 839,000 jobs in January 2009, 725,000 in February 2009, 787,000 in March 2009, and 802,000 in April 2009, for a four-month average of 788,250 lost jobs per month. [BLS.gov, accessed 5/3/12]

Since The Recession Ended In June 2009, The Private Sector Has Added 3.4 Million Jobs While Public-Sector Employment Has Fallen By 670,000. According to the Bureau of Labor Statistics, there were 107,933,000 private-sector jobs in June 2009, and 111,400,000 private-sector jobs in August 2012, an increase of 3,467,000 jobs. The BLS also reports that there were 22,570,000 Americans working in the public sector in June 2009, and 21,900,000 working in the public sector in August 2012, a decrease of 670,000 jobs. The private-sector gains and public-sector losses add up to a total increase of 2,797,000 jobs.

The following chart shows the cumulative private-sector job gains and public-sector job losses since the recession officially ended in June 2009:

[BLS.gov, accessed 9/7/12; BLS.gov, accessed 9/7/12; NBER.org, 9/20/10]

• Conservative AEI: The Public Sector Is Shrinking, But Private-Sector Growth Is Above Average. From American Enterprise Institute scholar Mark J. Perry: “In the second quarter of 2012, ‘public sector GDP’ decreased -1.44%, and that was the eighth straight quarter of negative growth for total government spending, averaging -2.88% per quarter over the last two years. In contrast, there have been 12 consecutive quarters of positive growth for private sector GDP averaging 3.07% per quarter in the three years since the recession ended, which is slightly higher than the 2.8% average growth rate in private real GDP over the last 25 years.” [AEI-Ideas.org, 7/31/12]

• GOP-Favored “Government Downsizing” Has Been “A Drag” On Job Growth. From the Associated Press: “Conservative Republicans have long clamored for government downsizing. They’re starting to get it — by default. Crippled by plunging tax revenues, state and local governments have shed over a half million jobs since the recession began in December 2007. And, after adding jobs early in the downturn, the federal government is now cutting them as well. States cut 49,000 jobs over the past year and localities 210,000, according to an analysis of Labor Department statistics. There are 30,000 fewer federal workers now than a year ago — including 5,300 Postal Service jobs canceled last month. By contrast, private-sector jobs have increased by 1.6 million over the past 12 months. But the state, local and federal job losses have become a drag on efforts to nudge the nation’s unemployment rate down from its painfully high 9.1 percent.” [Associated Press, 10/25/11]

The Private Sector Has Added 4.6 Million Jobs Over 30 Consecutive Months Of Private-Sector Growth. The following chart shows the monthly change in private-sector jobs dating back to January 2008.

[BLS.gov, accessed 9/7/12; MSNBC.com, 9/7/12]