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Increase the capital gains and dividends taxes for higher-income taxpayers
Increase capital gains and dividends taxes from 15 to 20 percent for those making more than $250,000 (couples) or $200,000 (single)
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No increase in capital gains taxes for high earners
Updated: Tuesday, December 21st, 2010 | By Angie Drobnic Holan
With 2010 coming to a close, President Obama brokered a major deal on taxes, agreeing to continue the current tax rates for high earners. He said repeatedly during the campaign that he intended to let them expire. The tax rates, passed during President George W. Bush's administration, were set to go up in 2011.
That would also have meant higher taxes on investment income such as capital gains and dividends. During the campaign, Obama said he wanted higher taxes for these types of income. The tax compromise Obama signed into law continued the current rates on capital gains for another two years.
We should note that although he gave in on his campaign promise, Obama got some other things in return. The current tax rates were extended for couples who make less than the $250,000 cut-off, and some tax cuts that were part of the 2009 economic stimulus law were also continued. Additionally, Obama won another year of unemployment benefits for workers who qualified, and he won a one-year reduction of Social Security taxes, putting 2 percent of pay back into workers' paychecks.
Obama said he still opposed keeping the same tax rates for the wealthy, even though he agreed to the extension.
"I'm as opposed to the high-end tax cuts today as I've been for years," Obama said in a press conference on Dec. 7, 2010. "In the long run, we simply can't afford them. And when they expire in two years, I will fight to end them, just as I suspect the Republican Party may fight to end the middle-class tax cuts that I've championed and that they've opposed."
There's a case to be made that Obama is not completely backing off his campaign promises. He agreed to only a two-year extension of the rates, not making them permanent.
However, this promise was part of a major campaign theme of Obama's to increase taxes on high earners. The tax rates are now scheduled to expire at the end of 2012, just as Obama completes his first term. At that time, we'll revisit this promise to see where it stands. For now we rate it Promise Broken.
That would also have meant higher taxes on investment income such as capital gains and dividends. During the campaign, Obama said he wanted higher taxes for these types of income. The tax compromise Obama signed into law continued the current rates on capital gains for another two years.
We should note that although he gave in on his campaign promise, Obama got some other things in return. The current tax rates were extended for couples who make less than the $250,000 cut-off, and some tax cuts that were part of the 2009 economic stimulus law were also continued. Additionally, Obama won another year of unemployment benefits for workers who qualified, and he won a one-year reduction of Social Security taxes, putting 2 percent of pay back into workers' paychecks.
Obama said he still opposed keeping the same tax rates for the wealthy, even though he agreed to the extension.
"I'm as opposed to the high-end tax cuts today as I've been for years," Obama said in a press conference on Dec. 7, 2010. "In the long run, we simply can't afford them. And when they expire in two years, I will fight to end them, just as I suspect the Republican Party may fight to end the middle-class tax cuts that I've championed and that they've opposed."
There's a case to be made that Obama is not completely backing off his campaign promises. He agreed to only a two-year extension of the rates, not making them permanent.
However, this promise was part of a major campaign theme of Obama's to increase taxes on high earners. The tax rates are now scheduled to expire at the end of 2012, just as Obama completes his first term. At that time, we'll revisit this promise to see where it stands. For now we rate it Promise Broken.
Sources:
The White House, Fact Sheet on the Framework Agreement on Middle Class Tax Cuts and Unemployment Insurance, Dec. 7, 2010
Thomas, HR 4583
The White House, Press Conference by the President, Dec. 7, 2010
U.S. Senate Finance Committee, S.A.4753: The Reid-McConnell Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010
Thomas, HR 4583
The White House, Press Conference by the President, Dec. 7, 2010
U.S. Senate Finance Committee, S.A.4753: The Reid-McConnell Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010
Obama budget asks for capital gains and dividends tax increases
Updated: Thursday, February 26th, 2009 | By Angie Drobnic Holan
President Obama's Office of Management and Budget unveiled a broad outline of its plans for the 2010 budget on Feb. 26, 2009, highlighting investments in health, energy and education.
To pay for some of those items, Obama proposed allowing the Bush tax cuts to expire as scheduled on people who make more than $200,000 and couples who make more than $250,000. For those same income levels, he also plans to raise capital gains and dividends taxes to 20 percent from their current level of 15 percent.
It's not clear from the budget documents released whether the tax increases would go into effect in 2010 or 2011. We'll be looking for more detail in the weeks ahead.
But tax increases for capital gains are clearly part of Obama's budget proposal, which still must be approved by Congress. And Republicans are likely to oppose any effort to let any of the Bush tax cuts expire. So for now, we rate this promise In the Works.
Sources:
Office of Budget and Management, Budget Documents for Fiscal Year 2010 , accessed Feb. 26, 2009
Office of Budget and Management, Summary Tables , Table S-6, page 123, accessed Feb. 26, 2009
CSPAN, Peter Orszag briefs reporters on the 2010 budget plan , accessed Feb. 26, 2009
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