Monday, March 09, 2009

FACT CHECK: Obama 'Tax Hikes' a Matter of Words

From The Associated Press:

President Barack Obama says he would lower taxes on 95 percent of Americans now and raise them on the rich in 2011. Republicans say he will increase taxes for all and in the midst of a recession to boot.

So who's right?

Yes, all Americans would pay more under the president's policies. His own aides concede that.

But no, Obama would not raise taxes in the midst of a recession, as long as his economic assumptions bear out.

The president's budget lowers taxes immediately for middle- and low-income Americans — about 95 percent of working families. It also raises taxes starting in 2011 on households that earn more than $250,000 a year.

But Obama also would impose a tariff on industries that pollute. Obama's top budget and economic advisers say those costs will get passed along to consumers. A tax? Indirectly, yes. Felt by most Americans? Yes, again.

Republicans also have asserted that Obama's tax increases would occur in the midst of a recession, a bad idea when the economy needs consumers to spend more.

But the tax increases won't occur for two years. The tariff on greenhouse emissions won't generate revenue until 2012, according to the president's budget. Obama's economists are counting on being out of the recession by then, and the chairman of the Federal Reserve Bank has said "there is a reasonable prospect" that 2010 could be a year of economic recovery.

But Obama is ANNOUNCING tax hikes and fee increases in the midst of a recession. And that, Republicans say, is bad enough.

"People may read it as a tax increase, even if, effectively, it's not for 18 months, let's say," said Sen. Charles Grassley of Iowa, the top Republican on the Senate Finance Committee.

THE CLAIM: "The president's budget increases taxes on every American, and does so during a recession," said Rep. Dave Camp of Michigan, the top Republican on the tax-writing House Ways and Means Committee.

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