President Obama crisscrossed the country to scare Americans about sequestration. But what are really frightening are the 13 Obama tax hikes that took effect in 2013.
These tax increases, which range from new health care taxes to a payroll-tax hike on workers, will slow the economy. Incoming Heritage Foundation president Jim DeMint has noted that these tax hikes have the potential to cause more harm than the budget cuts that will happen as a result of sequestration.
So how do the tax hikes compare to sequestration? It’s a whopping $149.7 billion in taxes versus $85 billion in spending cuts.
Tax increases take money out of the economy that could have been spent on hiring workers, and they change the incentives against productive work and investment, which slows growth over the long term.
We don’t expect Obama to mention these tax increases as he campaigns against the sequester. But consider this list of Obama’s 13 tax hikes put together by Curtis Dubay, a senior policy analyst at Heritage.
Tax increases the fiscal cliff deal allowed:
• Payroll tax – increase in the Social Security portion of the payroll tax from 4.2 to 6.2 percent for workers. This hits all Americans earning a paycheck – not just the “wealthy.” For example, the Wall Street Journal calculated that the typical U.S. family earning $50,000 a year will lose an annual income boost of $1,000.
• Top marginal tax rate – increase from 35 to 39.6 percent for taxable incomes of more than $450,000 ($400,000 for single filers).
• Phaseout of personal exemptions for adjusted gross income of more than $300,000 ($250,000 for single filers).
• Phasedown of itemized deductions for AGI of more than $300,000 ($250,000 for single filers).
• Tax rates on investment – increase in the rate on dividends and capital gains from 15 to 20 percent for taxable incomes of more than $450,000 ($400,000 for single filers).
• Death tax – increase in the rate (on estates larger than $5 million) from 35 to 40 percent.
• Taxes on business investment – expiration of full expensing (the immediate deduction of capital purchases by businesses).
Health care tax increases that took effect:
• Another investment tax increase – 3.8 percent surtax on investment income for taxpayers with taxable income exceeding $250,000 ($200,000 for singles).
• Another payroll tax hike – 0.9 percent increase in the Hospital Insurance portion of the payroll tax for incomes of more than $250,000 ($200,000 for single filers).
• Medical device tax – 2.3 percent excise tax paid by medical device manufacturers and importers on all their sales.
• Reducing the income-tax deduction for individuals’ medical expenses.
• Elimination of the corporate income-tax deduction for expenses related to the Medicare Part D subsidy.
• Limitation of the corporate income-tax deduction for compensation that health insurance companies pay to their executives.