Obama Calls on Republicans to Extend Middle Class Tax Cut
FILED TO: Economics
From the LA Times:
By calling on Republicans to approve a one-year extension of tax cuts for families earning less than $250,000 a year, President Obama escalated the election-year focus on taxes, emphasizing a key distinction between the two parties and seeking to create a mandate for a tax plan after the election.
Neither White House officials nor congressional leaders expect a tax bill to pass before November. Mitt Romney and fellow Republicans want to extend existing cuts for all taxpayers, regardless of income. Obama says the country can’t afford the cost — the price tag for the upper-income tax cuts is about $800 billion over 10 years.
White House aides said Monday that if he was reelected, the president would veto any move to extend all of the upper-income tax cuts.
The tax cuts passed during theGeorge W. Bushadministration expire on Dec. 31, along with the payroll tax cut approved under Obama. If all those cuts go away, a middle-income family that makes about $70,000 a year would face a tax increase of about $3,000. Higher-income families would feel a much bigger bite.
Those tax increases, along with automatic spending cuts scheduled to take effect at the same time, would shrink the federal deficit in half overnight. But many economists say the sudden impact would also throw the nation back into recession.
Congress probably won’t let that happen — lawmakers won’t want to inflict that much pain on so many voters and risk lasting damage to the economy at the same time. So some tax cuts will probably be extended. Which ones will depend on who wins in November.
Over the next four months, both parties hope to frame the issue to their advantage, with much depending on how voters view Americans earning more than $250,000 — the top 2% of the income scale, as Democrats emphasize, or the “job creators” that Republicans talk about.
Even before Obama made his announcement, the Romney campaign sought to push its interpretation, issuing a statement, echoed by congressional GOP leaders, that accuses Obama of seeking to “raise taxes on families, job creators and small businesses.”
Later, in a radio interview, Romney called Obama’s plan “a massive tax increase on job creators and on small business.”