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Top 1% Would Pay Two-Thirds of Higher Taxes Under Obama

U.S. President Barack Obama & OMB Acting Director Jeffrey Zients
U.S. President Barack Obama speaks in the Rose Garden of the White House with acting director of the Office of Management and Budget Jeffrey Zients, right, in Washington, D.C. The inflation change included in the budget plan, suggested as part of Obama’s pitch for a bipartisan budget deal, would break the president’s campaign promise to prevent tax increases for married couples making less than $250,000 a year and individuals making less than $200,000. Photographer: Andrew Harrer/Bloomberg

April 22 (Bloomberg) -- The top 1 percent of U.S. taxpayers would pay 67 percent of the higher taxes called for in 2023 under President Barack Obama’s budget proposal, according to an analysis released today by the nonpartisan Tax Policy Center in Washington.

Households making as little as $30,000 a year would pay some higher taxes. By 2023, households making between $30,000 and $40,000 would pay an average of $54 more than if lawmakers made no changes. Households making between $500,000 and $1 million would pay an average of $13,474 in higher federal taxes.

High-income and low-income families would encounter different tax increases in Obama’s budget plan, which was released on April 10 and calls for raising about $1 trillion more over the next decade.

Top earners would be subject to a minimum tax rate of 30 percent, limits on their deductions and an increase in the estate tax rate to 45 percent from 40 percent. They also would have limits on the ability to contribute to tax-favored retirement accounts and wouldn’t get to pay lower capital-gains rates on their carried interest.

Lower-income households would receive benefits from expansions of tax credits for child care and college tuition. For some, those would be outweighed by increases in tobacco taxes and Obama’s proposal to link tax brackets and the standard deduction to the slower-growing chained Consumer Price Index.

Campaign Promises

The inflation change included in the budget plan, suggested as part of Obama’s pitch for a bipartisan budget deal, would break the president’s campaign promises to prevent tax increases for married couples making less than $250,000 a year and individuals making less than $200,000.

“It is something we are prepared to do as part of a balanced deficit-reduction package,” Treasury Secretary Jacob J. Lew told the House Ways and Means Committee on April 11.

Amy Brundage, a White House spokeswoman, didn’t respond to an e-mailed request for comment.

To contact the reporter on this story: Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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