Obama's Tax

The media assert that President Obama is proposing a tax increase on wealthy Americans. But this is untrue. He’s proposing that everyone receive a continuation of the Bush tax cuts on the first $250,000 of their incomes. Any dollars they earn in excess of $250,000 will be taxed at the old Clinton-era rates.

Congress’s Joint Tax Committee estimates that in 2013 about 940,000 taxpayers would have enough business income to exceed the $250,000 ceiling, and they’d pay additional taxes only on dollars earned above $250,000. So fewer than 3 percent of small business owners would even reach the $250,000 threshold, hardly a job-killing proposal.

The only people who’d pay substantially more taxes under Obama’s proposal are those earning far in excess of $250,000 and they aren’t small businesses. In fact, most of these people’s income is capital gains and dividends that are now taxed at only 15 percent.

If the Bush tax cuts expire on schedule, the capital gains rate would return to the same 20 percent it was under Bill Clinton, whose administration presided over an economy that created 22 million new jobs.