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The Campaign Spot

Election-driven news and views . . . by Jim Geraghty.

Obama’s Already Breaking His Promises on Tax Hikes



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Campaign Spot reader Cary in Ohio notices another addition to the Obama Statement Expiration Date file:

President Barack Obama — State of the Union Speech – Tuesday February 24th:

In order to save our children from a future of debt, we will also end the tax breaks for the wealthiest 2% of Americans.  But let me perfectly clear, because I know you’ll hear the same old claims that rolling back these tax breaks means a massive tax increase on the American people:  if your family earns less than $250,000 a year, you will not see your taxes increased a single dime.  I repeat: not one single dime.

From the front page of The Wall Street Journal this morning regarding proposed tax hikes on the wealthy reducing the mortgage interest and charitable deductions that are to be part of his budget blueprint released today:

For the 2009 tax year, the 33% tax bracket starts with couples with taxable earnings of $208,850, when adjusted for personal exemptions and various deductible expenses. A taxpayer in the top bracket paying $1,000 of mortgage interest, for example, would see a tax break worth $350 reduced to $280.

Last time I checked, $208,850 is less than $250,000.

All statements from Barack Obama come with an expiration date — sometimes as little as 24 hours later.

UPDATE: Another reader offers the President a loophole:

Farbeit for me to defend Obama, but the $208K versus $250K is not, necessarily, a broken promise.  You have to remember that Obama can out-Clinton Clinton, and what he said was if your “family earns less than $250K.”  This depends on the meaning of the word “earns.”
 
The $208K number is Adjusted Gross Income, which excludes above the line items like 401(k) contributions, medical, dental and insurance premiums, etc.
 
Assuming a family has two wage earners, each earning a gross salary of $125K.
Deduct the maximum 401(k) contribution for both: $32,000
Deduct medical, dental and otehr pretax premiums (assume only one pays): ~$3,500
Deduct medical flexible spending contributions:$10,000
Deduct transportation/parking/dependent care flexible spending: $4,500

 
Total above the line deductions: $50,000
AGI:                                       $200,000.
 
So, technically speaking, you can “earn” $250K, but still be in the $208K tax bracket.
 
Of course, if you only have one major wage earner (and your wife/husband stays home to raise the kids, or, heaven forfend, takes a job as a community organizer) those deductions are halved (your spouse cannot contribute the max to their 401(k) and probably will not max out on the FSAs).
 
The point is, Obama can plausibly claim that he was talking about gross income, not AGI.

Tags: Barack Obama , Bill Richardson , Chris Dodd , Fred Thompson , Hillary Clinton , Horserace , Joe Biden , John Edwards , John McCain , Mike Huckabee , Mitt Romney , Newt Gingrich , Rudy Giuliani , Sarah Palin , Something Lighter , Tommy Thompson


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