Yesterday a liberal commentator scoffed at a Washington Free Beacon report on the Obama campaign’s latest gimmick: an online tax calculator suggesting that all individuals and couples earning up to $999,999,999 per year will enjoy “tax savings” under President Obama’s tax plan.
The results are peculiar given the president’s repeatedly expressed desire to raise taxes on families earning at least $250,000 a year, and on individuals and small businesses earning at least $200,000 a year.
The tax calculator also contradicts Obama campaign spokeswoman Jen Psaki, who in a specific reference to the calculator, told reporters Thursday: “If you’re a millionaire or billionaire, it’s probably not looking good for you in our plan.”
However, according to the campaign’s tax calculator, an individual or small business earning $1,000,000 annually would enjoy “tax savings” of $5,353 under the president’s plan, as would any individual or small business earning up to $999,999,999 per year. (See screen shots below.)
There are a number of other bizarre discrepancies in the results produced by the calculator. For instance, a married couple with no dependents earning $150,000 per year is shown to receive tax savings of $4,727. That is several hundred dollars less than the calculated savings for a couple earning the same amount, but with two dependents.
The tax calculator also shows a slightly larger benefit for married couples earning $1 million a year, compared with those earning just $400,000 a year.
At best, the disparities suggest a flaw in the equation used to calculate the figures. At worst, the Obama campaign website is deliberately misleading.
Salon reporter Alex Seitz-Wald, a former blogger for the left-wing Center for American Progress Action Fund, argued that the Free Beacon’s “math” was “stunningly wrong,” describing the piece in question as a “gleefully snarky post…premised on a fundamental misunderstanding of the way taxes work.”
However, the Free Beacon post did not include any original calculations; it simply reported the results as determined by the Obama campaign’s own tax calculator.
Seitz-Wald claims that the WFB report is flawed due to a misunderstanding of marginal tax rates, the process by which different levels of income are taxed at different rates.
“Obama wants to end the Bush tax cuts on income over $200,000 a year, not people who make $200,000 a year,” he writes. “The debate is over what happens after that, to the 200,001st dollar of income and above” (italics original).
Seitz-Wald’s observation is correct, but also immaterial to the question of whether the Obama campaign’s calculator is fooling voters about the tax burden they will face if Obama’s tax hike were to become law.
President Obama’s stated position is that he wants to raise the marginal tax rate on individual income above $200,000 from the current rate of 35 percent to 39.6 percent.
Under the president’s proposal, an individual or small business earning $1 million per year would continue to have their income up to $200,000 taxed at the current rates, which have been in effect for nearly a decade. The Obama campaign claims this will produce “continued tax savings” of $5,535, when it is merely a reflection of the status quo as compared with tax rates under President Clinton.
That same individual or small business would also see their income above $200,000 taxed at the higher rate under Obama’s plan. But this fact does not appear to be reflected in the tax calculator’s results.
A Free Beacon analysis found that the impact of the higher rate on income above $200,000 could be as much as $32,500 for an individual or small business earning $1 million. For the Obama campaign and its boosters to make no mention of this effective tax hike and describe it instead as a “tax savings” of thousands of dollars is an effort to deceive, not to inform.
Ike Brannon, director of economic policy at the American Action Forum, told the Free Beacon he was “confused” by the Salon post.
“I'm not sure how a million dollar earner would get a tax savings under Obama if rates are going up on them,” he said. “The relevant question that Americans have right now is whether the tax rates they pay in 2013 is higher than what they pay in 2012. President Obama has said that it will be for those earning over $250,000 a year, and that he is prepared to let rates go up for everyone if he has to, in order to put a stop to Republican intransigence.”
Obama and other prominent Democrats have threatened to let all the current tax rates expire if Republicans do not agree to raise taxes on wealthy earners.
“Salon is telling people that if they are paying the same rate next year as this year that it is really a tax cut, and if you don't acknowledge it you are producing agitprop,” Brannon said. “I'm not sure if there's anyone outside of the Ways and Means Committee who buys that logic.”
Seitz-Wald is best known for his declaration on the Kremlin-funded propaganda channel RT that he would be willing to abstain from sex for a year rather than give up the Internet.