What Did Obama’s Tax Bill Do for the U.S. Deficit?
Last week, we looked at the average American tax dollar and how it breaks down into various government expenses, from debt interest to healthcare to education. We looked at cost of living in Washington, D.C., and Rep. Jim Moran’s (D-Va.) proposal for a living stipend for Congress members in light of the minimum wage increase currently frozen there as states make moves on their own pay raises.
This week, we get to take a look at President Barack Obama’s 2013 taxes and wage, just in time for the tax filing deadline on April 15, as well as at how other high-income earners have decreased the federal deficit. Vice President Joe Biden also had his taxes released. The president and First Lady Michelle Obama showed an adjusted gross income of $481,098, with taxes paid at $98,169, and 12.3 percent of their adjusted gross income donated to charities at $59,251. For state income taxes, the two paid $23,328.
The Obamas’ tax releases also highlight an issue that was, for a time, of major concern: the current administration’s tax policy change on 2013 high-income individuals. Back when high-income earners were first seeing that tax increase, there was a great deal of speculation as to the eventual economic downside to such a move. So far at least, this doesn’t seem to be the case, USA Today reports. “In advance one always hears the squeals of the oxen who would like everyone to think they are about to be gored,” James Galbraith, an economist at the University of Texas, Austin, told USA Today. “Then it turns out that they are only nicked, and life goes on.”
Life goes on, and goes on with a considerably reduced national budget deficit, with a projected collection of $3 trillion, a 9.2 percent increase from 2012. That said, the additional increases from the new healthcare reform have led the upper end of the income range to see the highest marginal tax rates since 1986, according to USA Today.
Mark Zandi, chief economist at Moody’s Analytics, said that the tax increase for higher earns has been felt, but that it shouldn’t continue. Zandi points out that the tax yanked 0.25 percentage points from the 2013 gross domestic product, but told Bloomberg Businessweek, ”For the most part, by summertime, the negative effects on the economy will have abated. Most of the pain has been felt.”
Rep. Paul Ryan’s (R-Wis.) newest budget proposal, passed in the House but not looking like a success in the Senate, would reorganize the tax code once again, though it would not affect the tax dollars brought in by the government — just decrease the rates for top earners while continuing to keep the proportion of taxes paid by high and low incomes the same.
While many Republicans have been putting pressure on Democrats with harsh rhetoric on their resistance to the bill, Rep. Orrin Hatch (R-Utah) showed an awareness of the reality of the political environment. “We know we can’t do it with Democrats in control of the Senate, so it’s going to be a feckless effort,” he told Bloomberg Businessweek.
More From Wall St. Cheat Sheet:
- 4 Strategies for a Tax-Efficient Retirement
- Senate and Caterpillar Prepare to Face Off Over Tax Avoidance Strategy
- This is How Washington, D.C., Spends Your Tax Dollars
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