In last night’s debate, President Obama took up a familiar though confusing case, simultaneously deriding Republicans and Romney himself for proposing tax cuts, but then defending himself on the grounds that he’s cut taxes, too. There is some truth to his assertion, sure, but he overrates what he’s delivered, and over-promises relative to his actual policies. He said:
Four years ago I stood on a stage just like this one. Actually it was a town hall, and I said I would cut taxes for middle-class families, and that’s what I’ve done, by $3,600.00. I said I would cut taxes for small businesses, who are the drivers and engines of growth. And we’ve cut them 18 times. And I want to continue those tax cuts for middle-class families, and for small business.
The president is indeed correct that the average middle-class family has seen its taxes reduced by $3,600, but that’s over four years of his administration. The combination of the (temporary, now expired) Making Work Pay tax credit in the stimulus (up to $400 for individuals and $800 for married filers, over two years) and the payroll-tax cut ($1,000 a year for the average family for two years now) does add up to $3,600. But not least because people think of tax cuts as affecting their income year-to-year, not a sum that the government’s dished them over time, the $3,600 number is a bit disingenuous.
His 18 small-business tax cuts are also less than impressive, as they’re not rate cuts that improve incentives, but mostly one-time credits and rebates (most of them are part of the stimulus bill, and per definitionem temporary). And further, while Romney and Republicans are as responsible for this as the president, there’s no singular economic virtue to small businesses, and no reason to offer them tax cuts unavailable to all businesses (Veronique de Rugy has written about how this should be considered just another corporate-welfare category).
Most important, though, is that the president has not proposed to “continue those tax cuts for middle-class families and for small businesses.” For one, most of the small-business tax cuts were temporary and some are already gone, and one of the two policies allowing the $3,600 in tax cuts mentioned above has already been discontinued. Secondly, the president hasn’t proposed extending the payroll-tax cut in 2013; it’s currently scheduled to expire on January 1, increasing the average family’s tax bill by $1,000 next year. So if he “wants to continue” those tax cuts, he’s not showing it — either when he pushed the policies as written (to be temporary) in the first place, or now when he’s made no effort to keep any of them.
Of course, Obama does want to continue the tax cuts George Bush passed for the middle class, and if you put some snake oil in your budget calculator, that is a tax cut relative to current law, but since people would pay the same as they do under current policy, it’s not exactly an Obama tax cut. Vice President Joe Biden actually claimed in last week’s debate, when asked whether middle-class families would see their taxes rise or fall under the next administration, that “the middle class will pay less and people making $1 million or more will begin to contribute slightly more.” For one, many more than just “people making $1 million or more” will see their taxes rise, but the Obama administration also has no proposals whatsoever to reduce taxes on the middle class. They’re currently about to let them go up by 2 percent on all income earned below about $110,000, by ending the only remaining middle-class tax cut of the ones Obama boasted about last night.