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I recently wrote about a new paper from AEI’s Aspen Gorry and Matt Jensen that looks at the real annual cost of servicing the debt for households at various income levels — including a potentially higher tax burden — under the most recent Obama budget:
As the table below illustrates, a household making between $100,000 and $200,000 a year could find its tax liability higher by roughly $2,400 every year. Over ten years, that works out to $24,000.
And when you add in the debt already accrued the past four years under President Obama, that’s another $1,600 a year. So now we are now talking about $4,000 a year, $40,000 over ten years.
My friends at the Center for American Progress take issue with this study. A recent blog post, “How Romney Uses Bad Math To Falsely Claim Obama Will Raise Middle Class Taxes,” made two main points (although neither point actually disputes the study’s math):
1. Although the new Obama budget would indeed create a $2,400 annual tax liability, that is less than the $3,700 annual tax liability created under current policy going forward. So with the Obama plan, taxpayers are $1,300 to the better than they would be otherwise.
2. Obama shouldn’t bear responsibility for most of the debt accrued during the past four years since “tax cuts, wars, and a recession” weren’t Obama’s policies.
1. If a car is headed toward a cliff at 80 miles per hour, is slowing down to 60 really a great improvement? Obama’s budget is still greatly adding to America’s future tax burden from current levels and leaving the budget on an unsustainable pace as this White House chart shows:
The fact that the burden is less than one in some theoretical baseline should be of little comfort.
2. CAP also gives Obama a pass on the debt accumulated during his term, as if he were powerless to alter that fiscal reality through spending cut or policies that would have boosted growth and thus tax revenue. A good chunk of this blog has been devoted toward disputing that notion.
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